Combining IRA investments, lifetime income annuities and a HECM into a plan we call IRA4Income could significantly increase your retirement income and liquid savings compared to traditional planning.
You’ve worked hard to save for retirement in your 401(k) and now IRA — and succeeded. But wait. Your work isn’t done.
If you adopt a plan that combines assets to the best effect, our new IRA study shows average starting income of an IRA4Income plan of 50% to 75% over traditional planning.
MoreWhile most retired families own an IRA and a home, very few are considering how they could work together in a plan for retirement income.
Sometimes, combinations are dramatically better than stand-alone inventions.
Before Steve Jobs introduced the iPhone, he realized the plastic screen on his prototype would be prone to scratching and breaking. He approached Corning and asked for superstrong glass. Corning created Gorilla Glass to meet Jobs’ specs, and the result was a consumer product that took over the world.
Conventional wisdom says don’t carry any mortgage into retirement, and if you can manage that debt-free feat, good for you. But there are other options.
The concept that retirees should pay off their mortgage stems from a combination of historical economic conditions, cultural values surrounding homeownership and debt, and financial planning principles aimed at ensuring security and peace of mind in retirement. This idea has been passed down through generations, although individual circumstances today may lead to different approaches.
Nearly 40% of retirees, for instance, have a mortgage. And the average mortgage balance is over $100,000, which translates to average annual mortgage payments of $10,000 that will last at least 12 years or more.
That doesn’t mean retirement plans are doomed to fail if they include a mortgage. Rather, we think that in designing your plan for retirement, you ought to consider the equity in your home, and then decide whether a mortgage, either existing or new, belongs in your plan.
Traditional planning for the cost of long-term care (LTC) doesn’t reflect the realities of what the costs are and where they’ll be paid from.
We’re living longer in retirement, and more of us want to age in place rather than sell the family home. A recent policy paper by AARP listed the goals of the age-in-place population:
Those goals all seem reasonable and smart. Our focus is around # 4 — and about planning to preserve resources while meeting retiree objectives.
Let’s start with costs.
Here’s how to use your home equity in combination with an annuity contract to produce late-in-life income.
Editor’s note: The earlier article How Your Home Can Fill Gaps in Your Retirement Plan discussed the “why” of incorporating the equity in your home in your plan for retirement income. This article discusses the “how.”
In retirement, your home means something more than it did while you were raising kids, getting promotions at work, and dreaming about how the future might unfold.Now, it can provide the opportunity that helps you realize your future in retirement — financially at least.
For most of us, our house carries much more equity than it did when we were just starting out. Home prices have more than doubled in the past 20 years. How to use that equity to benefit you and your family is a key retirement question that your home can answer. But as you will see, it may work better when combined with an annuity contract that produces late-in-life income.
