Examiner Articles

Reprint of articles published by Judy Schwartz in the San Francisco Examiner on the 2nd and 4th Sunday of every month.

Delay Your Social Security Claim?

Saturday, 15 January 2011 18:31

HEADLINE: Delay Your Social Security Claim?

“If only I had a little more cash. I could delay my Social Security (SS) claim and get more money per month in the long run”.

I heard that the other day and, of course, said – “Is that real?” The tidal wave of 1946- born baby boomers turn 65 this year, but are not qualify for the full amount of Social Security benefits until age 66. Retirees who claim Social Security this year will get approximately 93% of their full monthly benefit. If the retiree could delay their social security claim, what would that mean?

Of course I am no Social Security expert, but DO live in the computer age. And so I logged in to the Social Security website: http://www.ssa.gov/estimator. Here’s what a “typical” statement says: “The amount you receive when your first start your benefits sets the base amount you will get for the rest of your life.”

Oooh – that raises another question: How long is “the rest of my life”? Again compliments of a web search, I found that Boomers turning 65 this year are expected to live until they are 85.2 years old - an average, of course; some will live longer some, some less. But it gave me a target for calculations.

So here’s what comes next. The SS web software doesn’t allow me to query for just anyone, so I couldn’t model a 65 year old. But here’s what I could find out – and of course, the amounts will vary depending on the retiree’s earnings during his lifetime.

For my test case, we’ll call “Joe”, Joe was eliglble for full benefits at age 66. At 66, the monthy benefit would be $2,379. If Joe needed to claim SS at age 62, then his monthly benefit would be $1,717. But wait ! – if Joe could defer his claim until age 70, then his monthly benefit would be $3,167. What a difference! So, doing the math, if Joe retired at 65, and if he could delay filing his social security claim until 70, he would receive a substantially greater monthly benefit, more than $700 per month.

For that 5 year period, Joe would need access to approximately $143k --- that’s no small change – replacing the income he would receive from SS if he began to receive his monthly benefit. But what if he only wanted to defer his SS claim until he reached age 66. Then he would need access to just $28k.

So where do you get $28k or even $143k? One resource may be right under your roof --- Your home can be used to qualify for a Reverse Mortgage.

What is a Reverse Mortgage? -- a financial tool -- a loan, insured by the US Government, that allows borrowers 62 and older to access a portion of the equity in their home, without selling, giving up title or making monthly payments. The loan is repaid when the borrower no longer lives in the home.

The loan is called a “Home Equity Conversion Mortgage” (HECM) and comes in two “flavors” with variations in each. In October 2010, the government introduced the “HECM Saver”. The loan has substantially lower closing costs with corresponding access to a little less equity. The prior type of Reverse Mortgage still exists and is now called the “HECM Standard”.

Under both loan program, fixed interest rate start at just under 5% and adjustable rates start at above 2%. Under the “Saver” loan, the government has nearly eliminated the 2% upfront government-mandated Mortgage Insurance Premium (MIP) which was capped at $12,510. This represents a HUGE SAVINGS in closing costs for access to about 20% less equity than available under the Standard program.

Is this a good idea? Truthfully, “it depends”. One factor is your personal longevity --- if living longer is part of your gene pool and your health is good, it definitely is worth a look.

Every borrower would benefit from an analysis of their personal situation. I specialize in turning “gobbledygook” into “AHA – now THAT makes sense!” I focus on education first (these articles are a start) and explain the variety of choices and details. If you would like a no-obligation consultation, please contact me at my office at (650) 591-4430.

Judy Schwartz

Reverse Mortgages Only

“If only I had a little more cash. I could delay my Social Security (SS) claim and get more money per month in the long run”.

So Whadya’ Get Mom and Dad?

Wednesday, 15 December 2010 18:27
HEADLINE: So Whadya’ Get Mom and Dad? Thanksgiving and Christmas are both over. Just a few weeks ago, adult children were whispering among each other -- “So how do YOU think Mom and Dad are doing these days?” (Adult) “Kids” – today I am talking to you. (And oh-by-the-way, I’m a “kid”, too. My Mom is 88 and I’m observing the aging process, just as you are.) So what did you decide to get Mom and Dad for the holiday? Sometimes what Mom and Dad most need are patience, understanding and a good “listen”. They may still be fiercely independent and want to manage their own affairs. Yet they are overwhelmed by directions to “click”, “go to www.”, email or voicemail. They needs some help - but measured help. So what did Mom and Dad really SAY this year? Better yet – what did they DO? Are they having trouble getting around? Do they need further assistance like a walker, or slight modifications to the home - a grab bar? Are their hearing aids so old that they just amplify all the noise and so they turn them off? Are they having trouble seeing ? Would they benefit from less throw rugs and a few brighter lightbulbs (rather than the fluorescent penny-savers)? What do they say they need? (And how does that compare to what you see?) Would they benefit from the peace-and-mind of an emergency call service? Do they need help managing the checkbook? Are they missing doctor’s appointments and social engagements because they forget? Or do they need assistance with transportation (perhaps now afraid to drive in the dark or in the rain)? It is crucial that you keep an eye out for Mom and Dad. While they may want you to “mind your own business” --- Ohh, I’ve been told that so many times -- assisting may mean gathering the data and finding the resources to help Mom and Dad maintain their independence. If Mom and Dad aren’t able to name their needs, would they be willing to visit with a Geratric Care Manager to assess their needs and try to connect them to the right resources? There are oodles of resources available. But sorting through them is the tough part. One resource, where I am a member, is The Eldercare Network. The fifteen member companies includes service providers in home care and assisted living referrals, case management and counseling, in-home safety resources (like safety modifications, emergency response systems and even adaptive clothing), movement management and transportation, and medical house calls. The Network is comprised of locally owned businesses, each with highly skilled, trained and dedicated staff, providing services to older adults and their families. We know and understand the needs of seniors. Many owners, like myself, are retired from another profession. Many have or are watching our parents age and understand, first hand, issues of aging. We demand for ourselves and therefore provide to you -- outstanding service. We have become experts in our subject matter and have an extensive network of resources. If we cannot help you, we can probably recommend you to someone who can. To learn more whether a member company can provide the resources you need, please call the network at (415) 820-1439. Oh yeah, I am the group’s Reverse Mortgages specialist. A Reverse Mortgage is a financial tool, available to homeowners 62 and older, that allows the homeowners to access a portion of the equity in their home, and make no payments until they no longer live in their home. It is most frequently used for “aging in place” needs. For many seniors, remaining in the family home is the best option for successful aging. The space is familiar and the home holds many comforting memories. For more information about the Eldercare Network, please call (415) 820-1439. For more information about Reverse Mortgages and how one can benefit your family, please call me at (650) 591-4430. Judy Schwartz www. ReverseMortgagesOnly.com Thanksgiving and Christmas are both over. Just a few weeks ago, adult children were whispering among each other -- “So how do YOU think Mom and Dad are doing these days?” (Adult) “Kids” – today I am talking to you. (And oh-by-the-way, I’m a “kid”, too. My Mom is 88 and I’m observing the aging process, just as you are.)
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Time for “Plan B”?

Saturday, 01 January 2011 18:29

HEADLINE: Time for “Plan B”?

So many things happen at the beginning of each new year. Resolutions, reviews, re-organization. Getting your finances in order is an important part of the process, too.

If you are 62 or older, your investment strategies are probably a bit more conservative – you can’t afford to take large risks, especially given the past volatile performance of the market. So although 2010 was a year with some return to growth, you may still be wondering how you can get access to additional monies.

Would having the ability to pay off your $75k mortgage be important to you? How about helping your son or daughter with just a little extra cash? What about easy access to a nest egg when you need it?

All these things can be possible using a resource right under you roof – your home.

Your home can be used to qualify for a Reverse Mortgage. In October 2010, the government introduced a new type of Reverse Mortgage, called the “HECM Saver”.

The Saver is a very viable“Plan B” to access the quiet equity in your home. The loan has substantially lower closing costs with corresponding access to a little less equity.

The prior type of Reverse Mortgage still exists and is now called the “HECM Standard”.

HECM stands for Home Equity Conversion Mortgage, a federally insured Reverse Mortgage -- a financial tool that allows borrowers ages 62 and older to access a portion of the equity in their home, without selling, giving up title or making monthly payments.

In this era of “tight credit”, few lenders were offering equity lines to borrowers who did not have large income streams. And, traditional equity lines required monthly repayments. Access to equity can still be accomplished with a Reverse Mortgage – and no monthly payments are required.

Here’s an example, using a fixed rate under the current HECM Saver program, a 75 year old borrower can borrow approximately $351k (prior to closing costs)as long as their home appraises at-or-above $625,500 (the “national lending limit”). Loan proceeds can be used for any reason whatsoever. But existing morgages must be paid off before additional funds can be released to the borrower.

This type of “Saver” loan no longer has the 2% upfront government-mandated Mortgage Insurance Premium (MIP) which was capped at $12,510. Rather the MIP is set at .1% (one tenth of one percent) or $62.50, and that is often paid by the lender. This represents a HUGE SAVINGS in closing costs for access to about 20% less equity than available under the Standard program.

What does this all mean? There is now a Reverse Mortgage option for borrowers who may need access to some equity but who want much lower upfront costs. This can be a great solution for someone who simply needs to pay off an existing mortgage or wants access to funds for small remodeling projects or just wants access to the nest egg sitting in their home.

Every borrower would benefit from a healthy analysis of their personal situation. With the complexities in the details of the loans, there should be no immediate assumption that one type of loan is better than the other. This analysis is best done by someone who understands the nuances in product offerings and differences in lender pricing.

I specialize in turning “gobbledygook” into “AHA – now THAT makes sense!” I focus on education first (these articles are a start) and explain the variety of choices and details. If you would like a no-obligation consultation, please contact me at my office at (650) 591-4430.

Judy Schwartz

Reverse Mortgages Only

So many things happen at the beginning of each new year. Resolutions, reviews, re-organization. Getting your finances in order is an important part of the process, too.