Reverse Mortgage Information
Last Updated : 12/14/2012
By Thomas A. Mastromatto 12/14/2012
Get your Highest Social Security Benefits using your savings or doing a Reverse Mortgage
Using:
- Restricted application
- Divorced spouse Benefits
- Simultaneous entitlement
- File and suspend
- Spousal switching survivor strategies
- Windfall Elimination Provision
- Government Pension Offset
- The minimum possible age to claim early Social Security retirement Benefits is age 62. More than 70% of Americans exercise this option. However, this can conflict with reverse mortgage funding.
- By hurrying their claim prematurely, many Americans are leaving cash on the table and also disregarding their need for income later in life.
- Yes, there are certain people who require the income sooner than others. But for others who are eligible for a reverse mortgage, it is smarter to use these funds and utilize the Social Security Strategies.
Consider this …
Social Security Benefits have guidelines and restrictions that can make important distinction to the Benefits and amounts you can receive in monthly and total lifetime Benefit amounts.
For Instance …
- If you start your claim at 62, you will receive only 75% of the amount you would receive at your Full Retirement Age (FRA). If you delay until age 70, the Benefit changes to 132% higher than at your regular FRA.
-The amount of money you receive by taking your Benefits earlier is much less than what you could receive if you claim later using the multitude of rules that could work to your gain ... such as simultaneous entitlement, file and suspend, spousal switching, survivor strategies, divorced spouse Benefits and others!
Social Security retirement income works the same as life insurance, guarding you from the concerns retirees frequently encounter:
Your Life Span-Social Security is guaranteed lifelong income. By employing some ideas to make your claim when you are older, can result in an increased monthly income later on. By receiving your Benefits earlier, you will probably just spend and not save.
Cost of Living:Social Security keeps pace with inflation, but it may not always keep pace with increasing prices. A better strategy for your security is getting more money in the future.
Health: our medical spending increases as we age, but Medicare doesn't include all expenses. Delaying your Social Security Benefits leads to higher income, so you can get the medical care you will need at this stage of your life.
Benefits for Survivor: A larger survivor amount can be realized by waiting to claim Benefits later as a survivor receives only the highest amount of a couple’s Benefits, not both.
Economic conditions have caused difficulties for the Social Security trust fund in the past few years. Recently, the fund has not grown satisfactorily, due to more people collecting with less people contributing combined with poor market performance.
Projections tell us that the fund can continue at present payment amounts until at least the middle of the 2030s with no adjustments, but there are many ideas out there to alter the deficits.
We can be assured that Social Security will endure, so we can be confident in a decision to delay payments to get more.
For the essentials, such as food, housing, healthcare, utilities, transportation and insurance, a typical retiree will need an average of $28,500 a year.
Some retires may require a smaller amount some larger, but it is essential to be accurate about what you will need.
Social Security was never envisioned to cover every expense you may have. It was developed to cover the difference in savings and your needs.
Are your savings sufficient to fill in the spaces that Social Security won’t fill?
What if your savings aren’t making the kind of interest that you estimated?
You can build the change you need to make an enormous adjustment to your income with Reverse Mortgages and Social Security Strategies.
Reverse Mortgage Annuity Lifetime Monthly Income (Tenure):
Age 62 Home Value $300,000 no debt $863 Monthly Income
Age 62 Home Value $600,000 no debt $1755 Monthly Income
Note: This figures are NOT included in below
Example 1
- Bill and Cindy, ages 62 and 60
- Bill's full retirement Benefit: $1,491
- Cindy's full retirement Benefit: $1,088
Poor Strategy
Because Bill and Cindy didn't know the rules around Social Security, their plan was to file early like over 70% of Americans. Actually, both of them wanted to file as soon as possible. This would have paid Bill $1,123 per month, and Cindy would get $818 per month.
Bill and Cindy found the complex switching strategies frustrating and did not take full advantage of their Social Security retirement Benefits. They were conquered by the complex rules and just figured claiming early was the smartest option. Doesn’t it make sense that the longer you collect - even a reduced amount - the more you'll get in the end, right? NO!
Saved!
Luckily, they found out about "file and suspend" strategies they could earn them $1,458 more every month over their lifetimes. Their lifetime collective Benefit amount with our recommended solution will be $708,010.
Example 2
- Susan is 65
- Single
- Plans to retire from her job at 65 and begin Social Security Benefits
Scenario A
Susan claims at age 65, her Full Retirement Benefit of $1,511 will be decreased to $1,391 monthly if she claims at age 65 because she is retiring before her full retirement age of 66. Her lifetime total Benefit will be $333,601.
Scenario B
Susan waits until age 70 to begin her Benefits. Her monthly payment will be $1,996 because her Full Retirement Benefit will receive delayed retirement credits. That's an additional $606 per month for the remainder of Susan’s life! Her lifetime total Benefit will be $377,672.
Example3
- George age 65 and Jean 62
- one has begun Benefits
- Jean’s Full Retirement Benefit: $1,367
- George’s Full Retirement Benefit: $1,875
Situation
Jean hasn’t started her Social Security Benefits and needs advice on when to begin Benefits to maximize their lifetime Benefit. George retired at age 62 and started his retirement Benefits. Since George filed early at age 62, his Benefits were impacted and he receives $1,406. This will be his monthly payment for life.
If Jean like George retired at age 62, and claimed her Benefit, her monthly amount for the rest of her life would only be $1,093. She would be filing before her Full Retirement Age, and would automatically receive the higher Benefit of either her own retirement Benefit or her spousal Benefit. Her own retirement Benefit would be higher than her spousal Benefit, so she would get that for the rest of her life. Their lifetime cumulative ceiling would be only $725,416 and the survivor Benefit will be $712 less each month.
Best Strategy
If Jean files a "restricted application" for spousal Benefits only when she is 66, she will be entitled to a spousal Benefit and a retirement Benefit based on her earnings. Since she will be 66, she can choose between the two Benefits. Jean's spousal Benefit, at Full Retirement Age of 66, will be half of George's Full Retirement Benefit, or $938 per month. If she claims only the spousal Benefit while she is 66 – 70, her own Benefit will receive delayed retirement credits the longer she waits to claim. When she is 70, she should switch to her own retirement Benefit of $1,804 per month. Their lifetime accumulated limit will now be $850,000
Example 4
- Peter and Cathy, both 62
Complex situation
Peter worked in a school district for much of his career that will provide a nice pension when he retires. But the school district does not participate in Social Security. However, Peter has been employed in jobs that did pay Social Security taxes on his wages such as: teaching summer sports , tutoring, retail in high school and college, and a few years in one school district in another state that did pay taxes. Peter was not planning to get Social Security Benefits from these other jobs as they were not significant.
Cathy's full retirement Benefit is only $1,189.
Peter and Cathy learned that Peter will qualify for a Social Security Benefit, even though it could be reduced through the Windfall Elimination Provision rule, it will give Peter and Cathy a small amount each month. Also, they found extra procedures that could enlarge Cathy's Benefit if Peter passes away before her.
Summary
Critics will say that the money from age 62 to 70 will never make up for it. But I have talked to many seniors 70plus and they say they wasted it and never saved it and wish they had a $3000 check today instead of a $1600 check. Also doing a Reverse Mortgage at today`s record low rates is better than in the future at higher rates.
Get your Highest Social Security Benefits using your savings or doing a Reverse Mortgage
Thomas A. Mastromatto
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