Retirees can anticipate both negative and positive effects from the government's decision to implement major changes to the Federal Housing Administration's reverse mortgage program, called Home Equity Conversion Mortgage, which will take effect on October 2, according to this article on Forbes. Some said the changes could make the program less attractive to borrowers, but the changes could also improve the market, reduce costs for some borrowers and secure HECM’s long-term health. Despite the changes, the main goal of the HECM program remains the same and that is to permit seniors to tap into their home equity and be better prepared financially.
Debt is a major deterrent to enjoying retirement and making sure that these three debts - mortgages, student loans and credit cards - are paid off before a person retires will make life less worrisome, according to The Motley Fool. There has been an increase in bankruptcy rates among seniors and food insecurity is also major concern among nearly 3 million senior-headed households in 2015, therefore experts recommend that potential retirees prioritize retirement savings to avoid future financial mishaps, while also making sure that they eliminate these three debts one by one before they retire.
Health savings accounts, which have triple tax advantages, are not new but more companies are now offering access to HSAs as part of employee health coverage, according to Kiplinger. HSAs could become even more attraction because Congress has proposed that contribution limits to HSAs be doubled. Withdrawals from HSAs will be taxed as income and would be slapped with a 20% penalty if the money is not used for medical expenses.
Planning for retirement needs a lot of technical and mental preparation just like getting ready for a hurricane, according to Florida Today. One must balance IRA withdrawals and after-tax savings and manage marginal tax rates. Take note that Social Security benefits maybe taxable depending on total income. One can also look at reverse mortgage payouts that are tax free but there are several restrictions.
Clients should regularly review their Social Security earnings record so that there would be no issues once they collect benefits, according to Everett Herald. Go to www.socialsecurity.gov/myaccount to view your online Social Security Statement and taxed Social Security earnings. Clients should check their own records such as tax returns and W-2s sooner rather than later because tax documents may get lost and employers may no longer exist to provide correct payroll information.
