Archive for September, 2018

Why You Need to Prepare for Retirement, Loss of Independence, or Death Now

Sunday, September 30th, 2018
Prepare for retirement

If you fail to plan for retirement, loss of independence, and death, you plan to fail your family. Get prepared!

Death, it isn’t a favorite topic of conversation for most people. But it is an event all must face someday, some sooner than later. And what about your retirement? Have you taken the time to prepare for retirement? Are your affairs in order for those who must go on without you? What if you were to lose your independence? Have you made your wishes known, written them down, so your loved ones can handle your affairs as you want? Sadly, many people don’t or haven’t.

Why Should You Prepare for Retirement, Loss of Independence, or Death?

Before the housing market crash of 2008, paying off the mortgage was what Americans did as they reached retirement. And being debt-free or largely debt-free was part of that plan.

But nowadays, people aren’t prepared for retirement, the possibility of their loss of physical independence, or even death. And it causes a lot of unnecessary trouble for their families who are left behind.

Interest.com says, “Today, more of us are carrying home loans into our golden years, or even taking on new mortgage debt by tapping our home equity to pay the bills.

Data from the U.S. Bureau of Labor Statistics indicates 30% of Americans ages 65-74 still hold a mortgage, and even 14% of us who are 75 and older are saddled with home debt.

Those numbers have risen dramatically since 2001, according to an earlier study by the Consumer Financial Protection Bureau, as has the average mortgage balance older Americans are carrying.”

And they’re only talking about home debt.

Prepare for Retirement

Save. That’s pretty simple, huh? Start saving money to prepare for retirement and pay off debt now. When it comes to saving money for retirement, the sooner you start the better off you’ll be in retirement.

Okay, so save for retirement. But how much? And when should I start?

The question, “How much should I save,” is typically answered with “As much as you can.” But many financial planners recommend saving ten percent to fifteen percent of your income for retirement. And when should you start? In your twenties.

But let’s get real and little more specific. I mean, how many of you reading this post are already past your twenties? And how many of you started saving ten to fifteen percent of your income in your twenties?

You need to establish a savings goal that shows you how much to set aside now in order to reach your retirement goals. Use an awesome online calculator to help you determine a realistic savings goal for your retirement at your age now.

CNN Money also states: “As a general rule, you’ll need at least $15 to $20 in savings to cover each dollar of the annual shortfall between your income and your expenses. So for example if your projected retirement expenses exceed Social Security and pensions by $20,000 a year, you might need a nest egg of $300,000 to $400,000 to bridge the gap.”

Fisher Investments offers a FREE downloadable 15-Minute Retirement Plan™. This pdf will help you develop a retirement investment strategy for your goals and your financial situation.

Prepare for Loss of Independence

Prepare for retirement

Just like saving your money for retirement, preparing now for the loss of independence is best. No, loss of your independence may not happen. But what if it does? Shouldn’t you be prepared for your own sake and the sakes of your family members as well?

Planning early for the loss of independence is important because disability can happen at any age, even before you hit 70. Believe it or not, this includes conditions such as dementia or Alzheimer’s. And yes, before the age of 70.

Also, establishing a plan for care involving dementia or Alzheimer’s differs greatly from establishing a plan for care due to physical limitations or disabilities. This is another important reason to prepare for retirement early.

Both mental disability and physical disability must be considered and planned for early for the sakes of those who will care for you. Many times assistance and care are needed for a long time. If this kind of care becomes necessary, your family could struggle greatly financially to pay for your care. And why would anyone want to do that to their family? Early preparation is vital.

Think about it. If you become mentally disabled, how will you make your desires for your care known to your family? How will they make decisions on your behalf if they don’t know what you want? They need your plan to guide them.

Prepare for Death

This hard to type and read, let alone think about. But are you prepared for death? I’m not talking about a diagnosis. I’m talking about estate planning. I’ve interacted with many families whose parent(s) has died, unprepared. Their affairs were not in order. Homes are going into probate or their heirs must deal with reverse mortgages. There are so many issues between family members created because of a lack of planning.

Investopedia has put together a 16-point checklist of things you need to do before you die. Why? Because “You must implement your plan and make sure others know about it and understand your wishes. As Benjamin Franklin’s famous quote goes, ‘By failing to prepare, you are preparing to fail.’”

Prepare for Retirement

Help is Available

Planning your estate is difficult. But you don’t need to plan alone. You have two very good options available to help you prepare for retirement, loss of independence, or death. Consider hiring a mediator and/or an elder law attorney.

Mediator or care manager – Mediators are experienced professionals who help families work through their decisions for the care of a parent or loved one. They also help families work through emotions they may be struggling with any issues that arise with different individual “agendas.”

Elder law attorney – Elder law attorneys are equipped to handle a wide range of legal matters. They can handle issues related to your health care, long-term care planning, guardianship, retirement, Social Security, Medicare/Medicaid, and more. You can hire them to help you write your will, trust, advance medical directive, or financial power of attorney so that your documents are legally valid. State laws are very specific about what can and cannot be included in a will, trust, advance medical directive, or financial power of attorney.

Hiring an elder law attorney is good for establishing some form of checks and balances for your family in the handling of your money. And in the case of elder abuse, because it does happen, they are able to handle such challenging situations.

Don’t Delay

Are your important documents in order? Do you still need to prepare for retirement, loss of your independence, or even death? I cannot overemphasize the importance of early planning.

Don’t delay. Have these unpleasant conversations with your heirs about your care of you as you age. Consider your financial situation and your range of care options if assistance becomes necessary. Then, execute those plans.

I have helped a lot of clients deal with homes that are going into probate and reverse mortgages lately. There are so many issues between family members because the elderly were not prepared. They didn’t have things in order.

Speak to an accountant or elder care lawyer. We all work so hard to get to a certain point in life. We must learn how to protect everything, especially our families after we’re gone.

I will continue to help people through issues with their families. It is important to me to focus on the whole family, not just the sale.

Contact me, Charles D’Alessandro, your Brooklyn Real Estate Agent with Fillmore Real Estate. Call (718) 253-9600 ext.206 or email [email protected] with your questions about how important it is to get prepared for retirement, loss of independence, or death today.



Brooklyn Real Estate Agent

 Charles D’Alessandro

Your Brooklyn Real Estate Agent

718-253-9600 ext. 206

[email protected]

Are Reverse Mortgages Really All They’re Cracked Up to Be?

Saturday, September 15th, 2018
Reverse mortgages

There are two sides to reverse mortgages. Educate yourself well on both sides before choosing to take out a reverse mortgage when you retire.

Like every story, reverse mortgages have two sides, good and bad, pros and cons, benefits and disadvantages.

What are Reverse Mortgages?

You’ve probably heard of reverse mortgages, but do you really know what it is?

According to reversemortgage.org, “A reverse mortgage is a loan available to homeowners, 62 years or older, that allows them to convert part of the equity in their homes into cash.

The product was conceived as a means to help retirees with limited income use the accumulated wealth in their homes to cover basic monthly living expenses and pay for health care. However, there is no restriction on how reverse mortgage proceeds can be used.

The loan is called a reverse mortgage because instead of making monthly payments to a lender, as with a traditional mortgage, the lender makes payments to the borrower.

The borrower is not required to pay back the loan until the home is sold or otherwise vacated.  As long as the borrower lives in the home, they aren’t required to make any monthly payments towards the loan balance. The borrower must remain current on property taxes, homeowners insurance, and homeowners association dues (if applicable).”

Why are Reverse Mortgages a Bad Idea?

Let’s address why reverse mortgages are a bad idea, or what about reverse mortgages some say is a bad idea. Here’s what contributor Marc Lichtenfeld had to say about reverse mortgages for  businessinsider.com in April 2018.

“Taking out a reverse mortgage is almost never a good idea — here’s why, basically:

  • Reverse mortgages are loans available to people over 62 who would like to borrow against the value of their homes.
  • They are often exorbitantly expensive — requiring additional premiums and fees.
  • Instead of interest compounding on a lower number every month, like a regular mortgage, reverse mortgages compound on a higher number because of the additional premiums.
  • In the case of death, your estate will have to pay off the remaining balance — and if you move out of the house, you have a year to close the loan.

In-Depth Reasons Why Reverse Mortgages are a Bad Idea

If a financial product needs a celebrity to convince you it’s a good idea, that’s a pretty good indication that it’s not.

Exorbitant Fees, Costs, and Mortgage Insurance Premiums

Reverse mortgages are exorbitantly expensive loans. Like a regular mortgage, you pay various fees and closing costs that total thousands of dollars. But unlike a regular mortgage, you pay a mortgage insurance premium.

You can avoid paying for mortgage insurance with a regular loan, provided your down payment is 20 percent or more of the purchase price. But since you don’t make a down payment on a reverse mortgage, you pay the premium on mortgage insurance.

The premium equals 0.5 percent if you take out a loan equal to 60 percent or less of the appraised value of the home. The premium jumps all the way up to an exorbitant 2.5 percent if the loan totals more than 60 percent of the home’s value.

For example, if your home appraises for $450,000 and you take out a $300,000 reverse mortgage, it will cost you an additional $7,500 on top of all of the other closing costs.

You’ll also get charged around $30 to $35 per month as a service fee. The total is charged based on your life expectancy. If you are expected to live another 10 years (120 months), you’ll be charged another $3,600 to $4,200. That figure is deducted from the amount you receive.

Most of the fees and expenses can be rolled into the loan, which means they compound over time.

The following distinction between a regular mortgage and reverse mortgage is important to note. When you make payments on a regular mortgage each month, you’re paying down interest and principal, reducing the amount you owe. Because you never pay down your reverse mortgage, the figure compounds month after month.

A regular mortgage compounds on a lower figure each month. A reverse mortgage compounds on a higher number.

When You Pass Away, Your Estate Gets Stuck

If you pass away, your estate pays back the loan with the proceeds from the sale of your house. If an heir is living or wants to live in the house, they’ll have to pay back the reverse mortgage or sell the home.

When You Choose to Move Out of Your Home

If you decide to move out of the home, you have a year to close the loan.

And what if you move into a nursing home? You’ll probably need the equity in your home to pay for the cost of living there. In 2016, the average cost of a nursing home was $81,128 per year for a semi-private room. If you owe a lender a substantial piece of the equity in your home, there won’t be much left to pay for living in a nursing home. Unless your kids step up to pay for it since you can’t, you’re going to a Medicaid facility. And having to live in a Medicaid facility isn’t the least bit ideal.

After All That …

Because of the high costs of reverse mortgages, it’s safe to say they aren’t worth it for most people. You’re better off selling your home and moving into a cheaper place. Keep whatever equity you get from your home and pocket it. This is far better than owing it to a reverse mortgage lender.”

Do you have questions about reverse mortgages? Contact Charles D’Alessandro, your Brooklyn Real Estate Agent with Fillmore Real Estate. Call (718) 253-9600 ext.206 or email [email protected] with your questions today.


Brooklyn Real Estate Agent

 Charles D’Alessandro

Your Brooklyn Real Estate Agent

718-253-9600 ext. 206

[email protected]