HECM offers another option to delay taking Social Security benefits until age 70.
One of the most significant financial decisions baby boomers will make involves deciding when to begin taking Social Security Agency (SSA) benefits. Making the wrong decision could end up costing an individual hundreds of thousands of dollars over his or her retirement lifetime. It’s essential that those approaching retirement study their benefit options and understand how each will impact their financial future. There’s no one-size-fits-all answer as to when to begin receiving SSA benefits. It all depends on each individual’s unique financial landscape and retirement goals.
The decision to begin receiving Social Security benefits will impact a number of financial aspects, such as:
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As the leading edge baby boomers enter their 70s, they’re beginning to plan for the next phase of life. Ensuring their assets survive them and not becoming a burden to their children represent two of their top financial planning priorities. Experts estimate that as people advance past age 65, 70% will experience a long term medical need during their lifetime (US Dept. of Health & Human Services). On average, men have a long term care need of 2.2 years and women 3.7 years.
Mitigating Long Term Medical Cost with a HECM
Just under 80 million baby boomers (born between 1946 – 1965) live today in the US. Every day, 10,000 boomers turn 65 years old. Boomers will likely live 2-4 years longer than the preceding generation (the Traditional Generation). Quality of life factors like interest in physical fitness; active engagement in life post retirement; encore career and heavy volunteerism; close relationships with children and grandchildren; and a cultural sense of optimism drive the boomers’ extended longevity. Due to this extended life expectancy, the boomers will likely require more long term health care as they age.
A New Breed of Home Equity Line
We typically advise clients to pay down debt, including the mortgage on their primary residence, as they approach and enter retirement. Even so, we encourage them to take out a home equity line of credit for unexpected contingencies, as a ‘just in case’ option.
Life’s unexpected turns can create an urgent need for immediate cash. You might end up needing money to cover the cost of long-term medical care; offer financial assistance to a struggling family member; finance a major home repair. When these things pop up, our clients come to us seeking advice in identifying the best source from which to withdraw funds.
If current markets make it an inopportune time to withdraw cash, or if the distributions will create a taxable event, a home equity line of credit allows our clients to quickly access cash on a tax-free basis.