Retirees Look For Alternatives To Home Equity

[Jan 6, 2009.]

 

In a recent MSNBC.com article, options are laid out for Americans nearing retirement who planned to tap their home's equity to get them through their golden years.

Many Americans have recently found themselves changing retirement plans after losing a substantial amount of home equity as the housing market and the overall U.S. economy struggle. These folks face years of living on fixed incomes from pensions, 401(k)s or IRAs, and Social Security, but don't have the time to recover their losses.

Americans need to implement new strategies to meet their retirement needs. The current market has clearly shown homeowners that their home equity is no longer the fail safe retirement nest egg they believed it would be.

Sell Off Assets

Seniors may benefit from taking an inventory of what they have and selling off some of their assets. Items like cars, vacation properties, expensive jewelry, and even insurance policies can be sold for substantial sums of money.

Downsize

Once a common trend among retirees is now becoming a requirement. Downsizing allows many retirees to either reduce their cost of living or shore up their retirement accounts with the left over sale proceeds. Moving in with other family is becoming a more popular option as well.

Work Longer

Many people facing retirement are now putting off the age in which they will retire. Working longer allows them to delay pulling money from their retirement accounts and delay taking social security benefits. Those that retire and then decide they need income are finding it much more difficult to re-enter the workforce versus having just pushed back their retirement age.

Ultimately, those Americans in or near retirement may need withdraw less from their retirement accounts, spend less than they had planned in retirement, and work longer than they had hoped.

 

About Author:

Chris Rocks is the Regional Director of the National Credit Federation (NCF), a consumer advocacy group that assists small business owners and consumers overcome debt and credit challenges.