A Reverse Mortgage Could Limit Entitlement Benefits

8/02/2009

posted by N. Sioris

Stumble It!

Generally speaking, if you get a reverse mortgage your benefits from Social Security and Medicare are not affected or reduced in any way. In fact, one of the most prominent statements included in educational reverse mortgage guides and promotional ads, routinely say: "Social Security and Medicare benefits are not affected when you get a reverse mortgage on your home."


True - But With Conditions

This is absolutely true as long as you are speaking strictly about regular Social Security retirement income and federally funded Medicare. However, if you are a recipient of any local government or state backed programs, such as Medicaid, food stamps or other need-based assistance programs, you must be very careful when you get a reverse mortgage.

Most of the need-based programs require that your income and or assets remain below a certain level in order for you to continue to be eligible. Most of these programs have a monthly income threshold. If your income exceeds the threshold you will be disqualified from receiving the benefits. If you are considering whether to get a reverse mortgage or not, you will want to make certain before-hand what the income limitations are in order to maintain your current level of benefits.


Plan Ahead - Proceed With Caution

You can then structure your reverse mortgage loan proceeds to be disbursed in monthly increments that will keep you under the threshold for your entitlements. Just be careful, and make sure you do your research FIRST so that you do not find yourself in a perilous financial situation that possibly cannot be undone later.

If you are currently on Medicaid or you are receiving food stamps, you may wish to check with your local Medicaid office here. You can also call Medicare at 1-800-Medicare.

The American Bar Association has also rendered advice on this topic. You may wish to review what they have to say as well.

Retirees Can Benefit From Suspension of Required Minimum Distribution (RMD)

3/23/2009

posted by N. Sioris

Stumble It!

With the obliteration of Trillions of dollars of investment wealth as a result of the stock market meltdown, retirees can take a small amount of solace from the one-year suspension of the required minimum distribution (RMD) rule.

The RMD rule normally requires folks that are age 70 1/2 or older to take a specified amount of money out of their IRA, 401(k) or similar retirement accounts on an annual basis. The amount you must take out is based on age and account value at the end of the previous year. However, late last year Congress passed temporary legislation waiving the penalty if you do not take out the required amount. Under normal circumstances the penalty is an onerous 50 percent of the amount that you should have taken out of your account(s).

The temporary tax-law change allows seniors some flexibility about how much to withdraw from retirement accounts. Some may choose not to withdraw anything in order to give their balances time to recover from the decline. Others may wish to take only what they absolutely need in order to get by.

Financial and tax experts suggest that for anyone that has the ability to use income from other sources, they should keep withdrawals to a minimum in order to avoid locking in stock market losses. The experts also point out that not drawing down on these accounts now will help them last longer into the future.


A Word of Caution:

Tax law is complicated and everyone's situation is unique. This post is not to be construed as tax advice. Please check with your personal tax adviser regarding the strategy that will be best suited for you.

Retirees Are Battered By $12 Billion Loss of Dividend Payouts

2/10/2009

posted by N. Sioris

Stumble It!

The most severe decline in dividend income is expected to take $12 Billion out the pockets of shareholders in the coming months. Dividends are being cut at the fastest pace in 50 years. Many of the dividend cuts are coming from U.S. companies whose investors have been relying on dividends to provide income during this recession.

Retirees that have all ready been battered by steep market declines are now facing the loss of cash flow that many rely heavily upon to supplement their annual cash flow.

All ready this year, seven companies in the Standard & Poor's 500 Index have decreased their dividends. If the trend continues, this will be the worst year for dividend cuts since 1958, when annual payments fell 8.4 percent, according to S&P.

Of the seven companies that said they will cut dividends in 2009, six are in the financial industry and all reduced their payouts by at least 50 percent. The largest decrease has come from Bank of America, which said it will slash its dividend from $1.28 a share annually down to 4 cents a share. That alone, wiped out $6.2 billion in annual cash payments to investors.


Could It Be Worse Than The 50 Year Record?

Howard Silverblatt, senior index analyst at S&P, is quoted as saying; "It is easy to say this is going to be the worst in 50 years, but the bigger question is whether it is going to be much worse than that."

One solution for retirees that own a home with little or no mortgage balance is a reverse mortgage. A reverse mortgage allows seniors age 62 and older to tap home equity in order to supplement retirement income. No mortgage repayment is required as long as the home is occupied by the senior. Their are no income or credit qualifications, and the money is non-taxable.

Request A Free Reverse Mortgage Quote Today!