Retirement

Apache is functioning normally

A payroll tax in Washington state that is designed to establish a fund for older residents’ long-term care needs could be undone by voters this fall through a ballot initiative.

“WA Cares” is a payroll tax that is described as a “public long-term care insurance program” in which all working Washington residents contribute 0.58% of each paycheck to the associated fund. After 10 years of contributions, a long-term care benefit is accessible so long as there is an associated care need when requesting the benefit.

Those who qualify can begin accessing the benefit in July 2026, and they can access a benefit of up to $36,500 adjusted with inflation. Residents born before 1968 typically “have lower contribution requirements and benefits,” according to the state’s WA Cares Fund website.

But the mandatory payroll tax — created as part of the program by the Washington Legislature in 2019 — now faces an “existential threat” to its existence, according to advocates. A successful signature-gathering campaign has added a new voter initiative to the state’s ballot in the fall. Voters can choose to make the payroll tax voluntary.

Should that initiative be approved by Washington voters, what has been described as a “first-of-its-kind” effort to tackle issues of financial unpreparedness for long-term care needs by older Americans could be dealt a blow it would not recover from, according to advocates who wish to keep the payroll tax mandatory.

“Essentially, it’s framed as a choice, but it really kills the program,” according to state Rep. Nicole Macri (D) in a February interview with The Seattle Times. “[That’s] because like any other social insurance program like Medicare or Social Security, it depends on a broad, extremely broad, base of contributors in order for everybody to be eligible for a benefit.”

Recent polling to gauge voter interest in the initiative is not looking favorable for keeping the payroll tax mandatory. In polling conducted for the Seattle Times, 52% of likely voters would support the initiative to make the tax optional. Another 27% of likely voters said they would vote “no” on such an initiative, while 22% remain undecided.

While an overwhelming majority of Washington Republicans support the initiative (63%), so do a majority of Democrats (53%). The lowest share of support from those who identified their political affiliation came from Independents (43%).

Proponents for the campaign seeking to persuade voters to vote “no” on the initiative — and keep the payroll tax mandatory — expressed concerns about the poll’s language.

Long-term care is seen as a key attribute to allow seniors to age in place in their homes. A study by researchers at Rutgers University in New Jersey earlier this year found that home-based care is a leading outcome for older Americans, particularly as the U.S. population grows older more quickly.

Source: housingwire.com

Apache is functioning normally

While a lot of the conversation regarding the 2024 presidential election is focused on the historically high ages of the two expected major party candidates, the aging U.S. workforce often faces doubts about their own abilities that are “crudely conflating old age with physical and cognitive capacity.”

This is according to a recent NextAvenue column co-written by two aging experts: Robert Espinoza, CEO at the National Skills Coalition and a fellow at the Brookings Institution; and Leanne Clark-Shirley, president and CEO of the American Society on Aging.

Since the first presidential debate roughly two weeks ago, discussions pairing age and fitness for the presidency have dominated the political landscape. But conflating these ideas of old age and capacity to perform required tasks of a job is “wrong,” the pair writes. 

“Only a person’s medical team can offer that assessment, and age alone says nothing conclusive about one’s physical and mental health,” the pair wrote. “Further, to propose age limits for holding office with no consideration for individual differences is grossly ageist and discriminatory.”

On top of this, the conversations dominating the political sphere also serve to divert attention “from the more pressing concerns” facing older people, the authors state.

“Chief among them are the profound employment barriers facing older workers, a growing population that could help address a widespread labor shortage if our government properly supported them,” the column reads. “Yet these issues are glaringly absent from the election discourse.”

The 55-and-older population encompassed roughly 14% of the U.S. labor force in 2002, but that share is expected to reach 24% by 2032. On top of this, people 75 and older are the largest-growing segment of the workforce, according to data from the Pew Research Center.

“This trend is due to positive factors, such as healthier profiles and more age-friendly jobs, and negative factors, including more rigid retirement plans and policy changes that discourage early retirement,” the authors said. “Older workers personify the future of work, and let’s face it: most of us will age into this reality if we’re not there already, so it should feel personal.”

As workers grow older, they often face discrimination based on assumptions about their age. This can lead to older workers being passed over for advancement opportunities, with the assumption that “fresh thinking” is needed or that older workers are more expensive.

“Many older workers deal with all these factors and have always worked in low-wage jobs with limited benefits — as care workers, taxi drivers, food servers, grounds maintenance workers and many others, segregated into these occupations by decades, even centuries, of racially discriminatory policies,” the column explains. “They form the backbone of our economy and are essential to its success, yet they are egregiously neglected by government at all levels.”

Source: housingwire.com

Apache is functioning normally

Members of Generation X are more concerned about their post-retirement ability to support the lifestyles they’ve grown accustomed to when compared with other generations — including baby boomers and millennials — according to the results of a recent survey conducted by Allianz Life.

In the company’s 2024 Annual Retirement Study, respondents indicated that 62% of Gen Xers “feel confident about being able to financially support all the things they want to do in life,” compared with 82% of baby boomers and 77% of millennials. But more than half of Gen X respondents (55%) also said they “wish that they would have saved more money for retirement,” a feeling that is more severe among Hispanic (63%) and Black (56%) members of the cohort.

“Gen Xers are reaching crunch time for retirement planning. For Gen Xers, retirement is no longer this far off idea. That can feel stressful, but by preparing now, they can create a strategy that will help them seek their ideal retirement,” Kelly LaVigne, vice president of consumer insights at Allianz Life, said in the report. “The good news is that it is never too late to prepare for retirement. You can wish you started sooner, but you’ll never wish that you waited longer.”

The most common action that the cohort is taking toward their long-term financial goals is in paying down debt (64%), building up an emergency fund (58%) and aiming to make choices that result in a material credit-score improvement (55%).

But high costs are also keeping many Gen Xers from saving more for retirement. They say that “expenses for day-to-day necessities (61%), credit card debt (40%) and housing debt (39%)” are the key culprits keeping them from saving more.

“Saving more overall is foundational to retirement,” Lavigne added. “However, Gen X may need to take this a step further and remember that a retirement strategy isn’t just about one big final number in the bank. Once you retire, you are going to need to draw from those assets for income.

”A sound retirement income strategy will help use your assets efficiently and include contingencies for risks that can cause you to spend down savings faster than anticipated. You need to ensure the money lasts.”

Despite the difference a long-term plan can make, few Gen Xers employ one, the study found. Only 35% of Gen X respondents said they use the services of a financial professional, compared to 46% of millennials and more than half of baby boomers. But Gen Xers are also thinking more about retirement than they have before, the results found.

“Nearly two in three (63%) say one of their top three goals in the next five years is to save enough and make plans to live a comfortable retirement,” the report stated. “This increased from 56% in 2023. Gen Xers who are Asian/Asian Americans (68%) were more likely to say this than white (61%), Hispanic (61%), and Black/African American Gen X respondents (55%).”

Older members of Gen X are increasingly approaching retirement age. Most researchers agree that the generation begins around the mid-1960s, and those born in 1965 will turn 59 in 2024.

While most members of the cohort are too young to qualify for a Home Equity Conversion Mortgage (HECM) through the Federal Housing Administration (FHA), several leading reverse mortgage lenders offer proprietary reverse mortgages that allow the eligible borrowing age to be as young as 55 in some states.

Source: housingwire.com

Apache is functioning normally

Only 15 percent of U.S. adults believe the nation will be able to adequately care for its aging population, and nearly three-quarters (73%) of adults under the age of 65 are concerned that the Medicare program may not exist by the time they are able to qualify for it. This is according to survey results released this week by Gallup.

In conjunction with health care nonprofit West Health, the organizations released their 2024 Survey on Aging in America report based on data compiled from both traditional mail and web-based surveys from Nov. 13, 2023 to Jan. 8, 2024.

Concerns about the solvency of the Medicare program are growing. Nearly three-quarters of survey respondents are worried that Medicare will not be there for them when they are able to qualify for it, up from 67% in 2022. This share rose most acutely among those ages 50 to 64, according to the survey results.

But concerns over Medicare pale in comparison to the level of concern related to the Social Security program, with 80% of respondents under 62 and 86% of people ages 40 to 49 afraid it will not exist by the time they can begin taking benefits.

“Threats to Medicare and Social Security loom large, and people are worried policymakers won’t do enough to protect and strengthen them,” Timothy Lash, president of West Health, said in the report. “These safety net programs are part of the fabric of aging that millions of older Americans rely upon, so any potential disruption or question mark around them is cause for alarm and deserving of greater attention and action from policymakers.”

Despite population trends showing that the U.S. is growing older at a faster rate, most respondents do not feel that the U.S. government is prioritizing policy issues that impact care for the elderly.

“When asked in the survey how much the government prioritizes issues affecting older Americans, 74% say ‘not very much’ or ‘not at all,’” the results explained. “This sentiment is felt by 80% of those 65 and older. Over half (57%) of Americans report they are either ‘somewhat more likely’ (37%) or ‘much more likely’ (20%) to support a candidate for public office that makes issues affecting older Americans a top priority.”

Such a sentiment increases with the age of the respondent and is highest (77%) among those ages 65 or older, the results showed.

A vast majority of respondents also said that the U.S. will not be able to adequately care for its aging population. This sentiment is compounded by 2018 U.S. Census Bureau data showing that Americans ages 65 and older will outnumber those under the age of 18 for the first time in 2034 (77 million to 76.5 million). This would mark the first such occurrence in U.S. history and impacts nearly one-quarter of the country’s total population.

The full survey included a sample of 5,149 adults from all 50 U.S. states and the District of Columbia. Panelists who are 65 or older “were oversampled to increase the stability of results for this segment of the population,” Gallup explained. Qualitative interviews followed up the initial responses over a few weeks in March.

Source: housingwire.com

Apache is functioning normally

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Almost  nineteen years into early retirement now, I’ve come to realize that the complete freedom of this lifestyle can be a double-edged sword.

You’ve already heard me raving plenty about the upside: having the freedom to raise a son from the day he was born to beyond his eighteenth birthday with no compromises. And then to put thousands of hours into everything else I value as well: family, health, friends, adventures, building stuff, and even writing the occasional blog post. No complaints about any of this.

But if I can indulge you to play me a brief Tiny Violin of First World Problems solo, even this perfect life comes with one flaw: I never have to do anything I don’t want to do.

To most people, this sounds like a dream come true. Especially if you combine total freedom with plenty of money, life is just a non-stop blissful playground of self actualization, right?

Well, maybe, but maybe not. In reality, the answer depends on who you are.

 Freedom and money reveal a person’s true strengths and weaknesses, and the result is a spectrum with “Unlimited drugs and booze on the couch” at one end, and “Create and manage a series of nonprofit foundations which employ thousands of people to research and invest in medical advances and clean energy” at the other.

For most of my journey so far, I seem to have found the balance pretty naturally. My Dad job was very intense for the first decade, but somehow I also had time to build and restore quite a few houses in the neighborhood, take plenty of intense trips to interesting places, give some talks and make some videos, and still write a few hundred blog posts. 

But in these last few years, I have started slowing down, and it has become more and more difficult to wrangle and focus myself to get these things to happen as often.

Instead of constantly bouncing around the construction site building cool things, or falling into laser focus on the keyboard finishing an article that I just had to share with you, I found myself retiring to the couch earlier and earlier each afternoon, seeking distraction on the phone and wishing I had the energy and focus to do those other more enjoyable things.

So I fought back, by learning more about health and wellness. Trying to study and train my way into more energy and focus and motivation. And you’ve seen some of the results here, in articles I’ve shared about daily habits, steering clear of excessive comfort, and more.

And all of these things really work, IF you take the knowledge and actually put it into action. And therein lies the problem:

I kept learning effective new things, and successfully incorporating them into my life. They would work for a while, but gradually my brain would invent various excuses to stop doing them consistently, leaving me with plenty of knowledge but far too little accomplishment to show for it. 

Until finally, just a few months ago, I realized that I had been sabotaging my own progress by turning my biggest life advantage into a disadvantage:

I have been using my freedom too much – in order to avoid doing things that I didn’t feel like doing.

See, freedom is great if it frees you from leaving your children at 5am so you can drive an hour through a traffic jam to sit in an office building for nine hours. But that same freedom goes to waste if you then just plunk the kids down in front of a playlist of cheap cartoons while you lounge in the corner to scroll Facebook all day.

You need to use it to do things that are even more valuable than the job you just quit. And if you can’t do that, you might as well just keep the damned job.

This is what I was doing, while lying about it to myself. I would focus on the easy things which are still good for me, like taking care of the house or hanging out with friends who live nearby. But I avoid doing the harder things – which for me means the things that require more planning, energy or focus. Even though these are the things that allow me to lead the life I enjoy most.

Let’s use workouts as an easy example. I already know that on a minute-for-minute basis, this is the single most effective thing almost anybody can do with their time because it drastically improves every other area of life. But despite knowing this, I was still following this pattern:

“I want to get in a really good weight training workout today.
Because I know it’s the best thing I can possibly do for my health and wellness. 
But I don’t feel like doing a workout because it’s hard.
So I’ll try to grease the wheels for myself so it’s easier to achieve. 
I’ll pick the perfect time of day when the weather is nice, and my energy level is high.
 I’ll set up my gym in advance the night before.
And when that golden moment of perfect conditions hits,
I’ll hit the gym!“

But between you and me, that moment didn’t always come. Some weeks I’d achieve it 2-3 times, some weeks I’d get “busy” and make excuses like “well at least I walked a lot today”. Some days I would complete a great workout, but when recording it in the journal I’d see that the previous one was over a week ago.

And the results of this lackluster effort were exactly what you’d expect: lackluster fitness.

Then something changed and I learned that there’s a much better way to get those workouts done. It’s by replacing the long, meandering, frankly wussypants dialog above with this one:

I want to work out today.
I don’t feel like it.
^^^ AHA!! I JUST CAUGHT MYSELF TRYING TO SELF SABOTAGE! ^^^
I am now already putting on my shoes and walking to the gym.

I’m using workouts as an example because this is the behavior I managed to change most successfully, but the exact same technique applies to everything else that you or I want to do, but fail to do regularly. 

The key is learning to watch over yourself like an Eagle and identify that exact moment of hesitation.

And then instead of using it as a trigger for excuses, you use it as a trigger for action.

It’s so counterintuitive at first, but then obvious in retrospect. Hesitance feels shitty in the moment, and it really can ruin your life if you listen to it too often. But the ultimate solution is usually to run directly towards, rather than away from, the stuff you don’t want to do.

So really, Hesitation can be the ultimate life coach.

Using Extremely Badass People as Fuel

As part of writing this article, I shared the idea around with friends to test it out first. And I was initially surprised to get mixed results. About half of them could relate with me: they felt they were underachieving in life and wanted to do more. The other half though I was crazy: these people feel they are already doing too much, raising multiple kids and managing multiple businesses and training for ironman triathlons in the mountains.

The overachievers go through life nicely buzzed but often stressed. When hearing them describe their schedules, I was absolutely not envious. At the same time, they weren’t impressed with my schedule either because it’s too easy. We could both benefit from making adjustments towards the center.

Enter Goggins

Typical Goggins results on Youtube

Impressive overachiever friends are one thing, but the thing that really flipped the switch for me was hearing a podcast interview with our planet’s most extreme example of driving yourself beyond your former limits, David Goggins.

I learned about his life story with a mix of awe and horror. Severely beaten as a child, he grew up with a looming wall of psychological demons and issues, but his reaction was the unique part: he has been driven to compulsively seek out and overcome extreme hardship, not just to unimaginable levels but hundreds of times beyond that.

From pushing through several near-death experiences just to qualify for a Navy SEALS career, to breaking his own legs, heart and lungs from the constant exertion of things like running 240 miles over four days without sleeping, to setting a world record of 4025 bar pull ups over 24 hours (shredding his hands to look like ground beef in the process), the man does things I would never have thought are even close to possible for a human.

And that flipped a switch for me, by putting my own incredibly easy, under-achieving life into perspective. 

Because while I absolutely do not want any part of the Goggins life, and I’ll would gladly live my life never having run more than 10 miles at a single stretch, I do find it incredibly helpful to learn that pretty much all of our barriers are entirely mental, not physical or placed upon us by the outside world. 

Sure, we do have different starting points and different amounts of luck. But instead of thinking of life like this:

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I now realize that things are more like this:

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And that’s a really empowering way to think about life, that feels like the sky has opened way up.

Ongoing Inspiration

So the podcast was just an introduction. I wrote down a particularly concise quote “You already fuckin’ know what to do.” on a piece of cardstock, stuck it to my bathroom mirror, and started acting on it immediately.

Suddenly, I was able to hit the gym every single day because I had two ways to approach it: wanting to put in a workout, and not wanting to put in a workout, either of which became a trigger to work out immediately.

And of course, once I finally put in the effort, it started working. Even though I’ve been sorta into this type of training since I was a teenager, I have mostly floated along on a plateau for years. But with this change in attitude, I gained ten pounds of lean weight over the first four months, returning to the strength and flexibility that I had at age 25, and every single joint in my body feels like it has been upgraded to a study, well oiled spring.

Middle aged man reclaims youth through motivation.

I also used the “catch yourself at the moment of hesitance” to get myself to run instead of walk more often (over 20 runs since I got back to Colorado last month), get over to the MMM-HQ coworking space for more work and socializing visits, and even to sit back down at the computer to write this post for you. While I’ve found that too much blogger work (and internet “success”) is a bad thing, there is still a right level that works for me. But it takes a lot of discipline to be willing to do it, because of all the other easier and more thrilling activities I could be doing with this same stretch of time.

Refilling the Inspiration Tank

For me, fully internalizing this one powerful piece of inspiring profanity has been transformative. But I still find that returning regularly to the well makes all this work even better. So I downloaded both of the Goggins audiobooks and worked through them in little chunks on my morning walks over the period of a month. Then I moved on to Peter Attia’s Outlive, and Jocko Willink’s Extreme Ownership. 

While the intellectuals fret about the perils of “Bro Science” or the “Toxic Masculinity” of today’s tribe of health podcasters and question their motivation, I simply absorb the messages that work for me and discard the rest. Find people who make you reach a little higher, and feed on their energy.

And for me, being exposed to successful, strong, athletic people who squeeze a lot of work out of themselves is a big source of inspiration. It helps me do more with my day, which is exactly what works for me right now at this phase of life.

And I wish you more of what works for you too!

Source: mrmoneymustache.com

Apache is functioning normally

In early January 2024, I wrote an answer to reader-of-the-blog Vince’s question about his retirement portfolio. A quick summary of that article is:

If Vince’s portfolio is $4.2M and his annual spending needs are $100,000, he’ll be entering retirement following (essentially) a “2.38% Rule.” That’s way more conservative than the classic 4% Rule.

He doesn’t need to expose himself to undo risk. 60% stocks, 55% stocks, 50% stocks…Vince will be successful in any of these portfolios. Since he has “won the game” of career financial success, he can “stop playing the game” by taking some of his chips off the table a.k.a. reducing his exposure to risk assets (stocks).

Vince wrote back! He asked this week:

If the market goes down, should I perform my annual rebalance into stocks, or because we have 20 years of spending in our fixed income portion of our portfolio, should we only rebalance into bonds from now on when our equities get too high. It may come back to living comfortably vs. passing on more money to heirs. (I choose the former). 

Vince

Ahh! Rebalancing. Let’s dive in.

Two Sentences on Rebalancing

Rebalancing is the act of adjusting the asset allocation within an investment portfolio (how much in stocks? how much in bonds? etc.) to maintain the desired level of risk and return.

To learn more, here’s a deep dive on the topic of rebalancing.

Vince’s Question, Summarized

This is such an interesting question!

Vince is asking:

  • Should Vince’s rebalancing go in both directions?
  • If stocks are up compared to bonds, should Vince sell stocks to buy more bonds?
  • If stocks are down compared to bonds, should he sell bonds to buy more stocks?
  • Why does it matter? Because part of Vince’s portfolio approach is that his bond allocation represents 20 years’ worth of spending in his portfolio. He’s not measuring in percentages! He’s measuring in years’ worth of spending.
  • So, in essence, Vince is asking: should he rebalance, even if doing so results in him having “fewer years of bonds” than he’s comfortable with?

We need to understand two different schools of thought regarding portfolio construction. These two schools are definitely similar but with slight, nuanced differences.

The first is the “bottoms-up, bucket method” described on the blog before. It recommends an investor assign a timeline to every dollar in their portfolio, then align those timelines with appropriate levels of risk in investment assets. The money with a 6-month timeline needs to be in cash or ultra low-risk Treasury notes. The money with a 30-year timeline should be in higher risk assets (like stocks) in search of greater returns.

The other common approach is the “expected risk, expected return” method. This approach uses historical data and the investor’s unique risk appetite (a combination of their age, their cashflow needs, their unique mental approach to losing money, etc.) to hone in on the “right” allocation for them. Younger, riskier investors can stomach more stocks, while older, risk-averse investors should own more bonds, etc.

Ideally, the portfolio’s future “expected returns” are then used to test the validity of the overall financial plan (e.g. via Monte Carlo simulation).

Which Method is “Right?”

Which method is right?

Both methods work. And, in theory, both should lead to very similar outcomes. The two methods differ more in mindset than in “brass tacks.”

I prefer the “bottoms-up, bucket method” because it puts planning first (“give the dollar a job and a timeline”) and then determines appropriate investments. I used that approach in my original response to Vince. He is also using that method in his new question today. Vince feels particularly safe with 20 years’ worth of spending in fixed income. Those dollars have timelines, and he’s built an appropriate cash, CD, and bond ladder for those timelines.

Is It Right to Rebalance?

Should Vince rebalance? Let’s start by using some reasonable numbers to add color to Vince’s question.

Let’s say Vince needs $100,000 per year from his portfolio. And, based on his personal risk tolerance, he wants 20 years of that annual spending in bonds**. Easy math. That’s $2 million in bonds.

**For what it’s worth, most of the time for most investors, their timelines beyond 10 years should not be in bonds. The math simply says otherwise – that money should be in a higher risk asset, like stocks.

But finance is personal. And many retirees are acutely aware of the fact that “this is all the money I have!” Extra caution – aka extra fixed income – is understandable. It’s helps the investor sleep at night…return on sleeplessness!!! And as long as that extra fixed income doesn’t damage the portfolio’s probability of success, I’m ok with it.

Ok. $2 million in bonds, meaning the rest of Vince’s $4.3M portfolio (as of this writing) is in stocks. That’s $2.3M in stocks. That’s a 55% stock, 45% bond allocation.

Looks like a 55/45 split, no?

Next, we need hypothetical returns.

Let’s say over the rest of 2024, bonds provide their expected 5% interest while stocks drop 8%. But Vince withdraws $100,000 (from bonds, because that’s why they’re there) to support his annual expenditures. Vince’s portfolio will shift to $2.1M in stocks, $2.0M in bonds.

That’s a 51% stock, 49% bond portfolio. Should Vince rebalance to 55% / 45%?! Let’s go back to first principles. Why did Vince end up 55/45 in the first place?

Because he wanted 20 years of bonds to cover his next 20 years of expenses, and everything thereafter went to stocks. And because his financial plan appears to be perfectly successful with that portfolio.

We should look through that exact same lens when considering rebalancing.

  • Does Vince still need 20 years of bonds to sleep at night? Or, with one more year in the rearview mirror, is he comfortable with 19 years of bonds? This is a mental/personal question.
  • Depending on that answer, does Vince need more/fewer bonds than he has right now?
  • And finally, does his financial plan’s probability of success change depending on his rebalancing? This is a math/brass tacks question.

Based on Vince’s investing rationale, his rebalancing decision is a function of bond prices.“I said I needed ~20 years of bonds to sleep at night; do I have them?”

The stock portion of his portfolio has little to do with that! If stocks go up 30%, but he still has 20 years of bonds, I don’t think he should rebalance into even more bonds.

Off the Balance Beam

As asset prices move, our portfolio allocations shift like desert sand beneath our feet. Our targeted risk and return can veer off course and our financial plan’s likelihood of success can decay. These are reasons to rebalance.

However, rebalancing isn’t always needed, depending on your portfolio and the unique rationale of your financial plan. As in Vince’s case, some market movements create more rebalancing needs than others.

Thank you for reading! If you enjoyed this article, join 8000+ subscribers who read my 2-minute weekly email, where I send you links to the smartest financial content I find online every week.

-Jesse

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Source: bestinterest.blog

Apache is functioning normally

Retirement at 65 has been a longstanding norm for U.S. workers, but older investors believe that not only is such an outcome unfeasible, but they’re likely to face more challenging retirements than their parents or grandparents.

This is according to recently released survey results from Nationwide, with a respondent pool that included 518 financial advisers and professionals, as well as 2,346 investors ages 18 and older with investable assets of $10,000 or more. The survey follows other ongoing research into the baby boomer generation as it approaches “Peak 65.”

The investors included a subset of 391 “pre-retirees“ between the ages of 55 and 65 who are not retired, along with subsets of 346 single women and 726 married women, Nationwide explained of its methodology.

Seven in 10 of the pre-retiree investors said that the norm of retirement at age 65 “doesn’t apply to them,” while 67% of this cohort also believe that their own retirement challenges will outweigh those of preceding generations.

Stress is changing the perceptions of retired life, especially for those who are closest to retirement, the results suggest.

“Four in 10 (41%) pre-retirees said they would continue working in retirement to supplement their income out of necessity, and more than a quarter (27%) plan to live frugally to fund their retirement goals,” the results explained. “What’s more, pre-retirees say their plans to retire have changed over the last 12 months, with 22% expecting to retire later than planned.”

Eric Henderson, president of Nationwide Annuity, said that previous generations who observed a “smooth transition” into retired life do not appear to be translating to the current generation making the same move.

“Today’s investors are having a tougher time picturing that for themselves as they grapple with inflation and concerns about running out of money in retirement,” Henderson said in a statement.

The result is that more pre-retirees are changing their spending habits and aiming to live more inexpensively. Forty-two percent of the surveyed pre-retiree cohort agreed with the idea that managing day-to-day expenses has grown more challenging due to rising costs of living, while 27% attributed inflation as the key reason they are saving less for retirement today.

Fifty-seven percent of respondents said that inflation “poses the most immediate challenge to their retirement portfolio over the next 12 months,” while 41% said they were avoiding unnecessary expenses like vacations and leisure shopping.

Confidence in the U.S. Social Security program has also fallen, the survey found.

“Lack of confidence in the viability of Social Security upon retirement (38%) is a significant factor influencing pre-retirees to rethink or redefine their retirement planning strategies,” the results explained. “Over two-fifths (43%) are not counting on Social Security benefits as much as previously expected, and more than a quarter (27%) expect to receive less in benefits than previously anticipated.”

The survey was conducted by The Harris Poll on behalf of Nationwide in January 2024.

Source: housingwire.com

Apache is functioning normally

I have been in the mortgage industry for more than two decades and have been working with reverse mortgages for about 12 of those years. Working in this space for so long, I thought I knew the ins and outs of a reverse mortgage, but it wasn’t until I experienced one firsthand that some things really hit home for me.

So many people have questions about reverse mortgages: how do they work? Are they the right choice? Can there be downsides? Since reverse mortgages generally are not talked about like traditional forward mortgages are, I want to walk through my experience with my parents’ reverse mortgage and talk about lessons I learned — even as someone who already had inside knowledge.

What happened

There are so many reasons that homeowners may seek out a reverse mortgage: funding retirement, sending kids to college, financing large purchases during retirement and the list goes on.

<img decoding="async" width="300" height="375" data-attachment-id="444493" data-permalink="https://www.housingwire.com/articles/qa-george-morales-on-new-role-with-mortgage-cadence-and-why-a-big-bank-could-enter-reverse/georgemorales_mortgagecadence/" data-orig-file="https://www.housingwire.com/wp-content/uploads/2024/02/georgemorales_mortgagecadence.jpg" data-orig-size="300,375" data-comments-opened="1" data-image-meta=""aperture":"0","credit":"","camera":"","caption":"","created_timestamp":"0","copyright":"","focal_length":"0","iso":"0","shutter_speed":"0","title":"","orientation":"0"" data-image-title="georgemorales_mortgagecadence" data-image-description="

George Morales, reverse mortgage veteran and sales official with Mortgage Cadence.

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George Morales

” data-medium-file=”https://www.housingwire.com/wp-content/uploads/2024/02/georgemorales_mortgagecadence.jpg?w=240″ data-large-file=”https://www.housingwire.com/wp-content/uploads/2024/02/georgemorales_mortgagecadence.jpg?w=300″ src=”https://www.housingwire.com/wp-content/uploads/2024/02/georgemorales_mortgagecadence.jpg?w=300″ alt=”George Morales, reverse mortgage veteran and sales official with Mortgage Cadence.” class=”wp-image-444493″ srcset=”https://www.housingwire.com/wp-content/uploads/2024/02/georgemorales_mortgagecadence.jpg 300w, https://www.housingwire.com/wp-content/uploads/2024/02/georgemorales_mortgagecadence.jpg?resize=120,150 120w, https://www.housingwire.com/wp-content/uploads/2024/02/georgemorales_mortgagecadence.jpg?resize=240,300 240w” sizes=”(max-width: 300px) 100vw, 300px”>

George Morales

For my parents, specifically, they were aging and approaching retirement and were simply looking for ways to be more financially secure. They had retirement income but wanted an extra layer of financial protection while eliminating their mortgage payment.

This created a win-win for my parents and is a common reason older homeowners use a reverse mortgage: to leverage their home equity.

What I know

As someone who has worked in reverse for a long time, I knew that a reverse mortgage would give them peace of mind without putting their house at risk. A line of credit would simply allow them a safety net if the need ever arose.

I also knew a reverse mortgage would be a “set it and forget it” option, as there would be minimal interaction with the servicer — no mortgage payments, no due dates, no late payments, no phone calls, etc. For my parents, I knew it was important that they didn’t have a ton of back and forth to worry about or any additional due dates they needed to remember.

What I learned

As someone who was already well-versed in reverse, I knew there was still more to learn especially now that it was personal. I believe that experience is one of the best teachers and I am hopeful that my experience helps reverse lenders better serve their borrowers.

The first and most important lesson I learned is that borrowers will need education. In both forward and reverse lending, it’s common to have first-time borrowers that need to learn about the process they’re going through. While reverse mortgages are meant to be hands off, it was helpful to be hands on with helping my parents understand their loan options.

In my parents’ case, they faced a cultural/linguistic barrier that I was happy to help with, however, there were elements of a reverse mortgage that they – or anyone – would need some help to understand. For example, when they got their first annual recertification letter from the loan servicer, it worried them. They were not sure what it meant or what they should do about it.

After I explained the purpose and that it was routine, they were more comfortable and knew it would be coming each year.

Helping provide answers

Occasionally, they would have other questions they needed help with. For the borrowers that don’t have family that is a resource on reverse, they need to know they can reach out to their lender or servicer with questions. The way reverse works isn’t common knowledge for most people, so a little assistance and a little patience goes a long way.

Another lesson I learned is that reverse mortgages create a softer landing. This is something I already knew, but my personal experience really drove this idea home. Not only did their reverse mortgage help my parents during retirement, but it also helped my dad financially when my mom passed away.

Additionally, the relationship with the loan servicer after both my parents passed away did not create a huge burden on our family. Reverse mortgages allow you time to settle affairs after a homeowner passes away – it’s not like a traditional “forward” mortgage where a mortgage payment is due soon and, if not paid, late payment fees can start adding up.

Not to mention, the forward mortgage loan servicer starts to call your parents’ phone number looking to reach the borrower for a payment. None of those pressures exists with a reverse mortgage.

Settling the loan

As someone with loved ones who had a reverse mortgage, while you do have time after someone passes away, you still need to be mindful that the loan needs to be settled. Staying in touch with the servicer is recommended. Keep in mind that the estate has the option to sell or refinance the loan, the same as any borrower would with a traditional forward mortgage.

So much of these were things I already knew about reverse mortgages, but they came to life for me in a new way by helping my own family. After seeing it firsthand, I still strongly believe that reverse mortgages can be a great financial tool as part of an overall financial planning strategy.

This column does not necessarily reflect the opinion of Reverse Mortgage Daily and its owners.

To contact the author of this story: George Morales at [email protected]

To contact the editor responsible for this story: Chris Clow at [email protected]

Source: housingwire.com