Reverse mortgages can be very intriguing to those that are reaching retirement age. Additionally, they can be intriguing to those that are in retirement and concerned about cash flow.

So, just what is a reverse mortgage?

Why do people take them out?

And, are they good or bad?

Reverse Mortgage Defined

A reverse mortgage is a loan you can take out against the equity on your home to provide you a cash flow, often in retirement.

Contrary to a regular mortgage, the bank will pay you an agreed on sum of money each month, instead of you paying them. Consequently, that is why it is called a reverse mortgage.

Home Equity Conversion Mortgages (HECM) is the technical name for a reverse mortgage. The FHA insures them. Moreover, they are “non-recourse” loans. This means that even though there might be interest applied, the repayment of the loan will never be more than the actual value of the house when it is sold.

Does My House Qualify for a Reverse Mortgage?

To be able to do a reverse mortgage, you must have equity in your house. This means you have to owe less on your house than it is worth and then have value on it beyond that to draw cash from.

Moreover, the government states you must only have a “small balance” left on your current mortgage, or you must own the home outright. Which makes sense if you want to borrow against it.

Why Do People Take out Reverse Mortgages?

As pensions become less common and 401k’s end-up smaller than one hoped, seniors need to get creative. A home is often times one of the biggest assets retirees hold when they stop working.

Consequently, when other assets are not as robust as they need to be to provide for living expenses, seniors turn to their home for cash.

Are Reverse Mortgages Good or Bad?

As a tool to provide cash flow in retirement – reverse mortgages are neither good nor bad – they are neutral. They are good for providing cash flow in retirement, if your house is one of the ONLY places you have access to cash. However, they can be bad if you take one out incorrectly or without carefully considering how to use one responsibly.

What to Consider Before Taking out a Reverse Mortgage

Reverse mortgages can be useful, but there are things to consider carefully before taking one out.

• First, you must be very careful who you work with when you take out a reverse mortgage. There are mortgage scams and frauds out there.
  
• Second, you must still pay your property taxes and homeowners insurance each year or your house could end up in foreclosure. According to the US Government Accountability Office, defaults increased 2% from 2014 to 18%. These defaults were mostly due to borrowers not paying taxes/insurance or failing to meet the occupancy requirements. Which brings us to the next point.
  
• Third, the house you reverse mortgage must be your primary residence.
  
• Fourth, you must be at least 62 years old to take out this kind of mortgage.
  
• Finally, in addition to owning your home or only having a small balance left on it, you must also not have any outstanding debts to the Federal government. (For example, back-taxes.)

How Do I Start the Process?

First, if you are considering a Reverse Mortgage, the first step is a required consultation by an approved HECM counselor. You can find a counselor on this government search page.

Then, to find a HUD (U.S. Department of Housing and Urban Development) certified lender, you will also need to visit this government web-page.

For more information, and to get your specific questions answered, please visit the FHA Resource Center.

Further Retirement Reading

If you are looking for other ways to generate cash flow in retirement, that do not involve mortgaging your house, please start with our very popular article series – The New Rules of Retirement.

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This article, “Jobs for Retired People” is the second article in our New Series: The New Rules of Retirement.

Jobs for Retired People? Doesn’t retired mean “NOT WORKING?” Maybe, but maybe not! In our Series – The New Rules of Retirement, we are exploring what it means to re-define retirement to fit your needs and lifestyle.

In our last article, we discussed how the “Average American” close to retirement age these days might not have as much saved as they would like. We also did some math to discover what amount of side income might be needed for the majority of Americans to still “retire” when they wanted to.

In our case study, the “Average American” with the most average of savings might need an extra $1,295 a month to live the lifestyle they envisioned in retirement.

Retire Early???

Some of these side gigs might even allow you to quit your job earlier than you thought possible. We have heard stories of people LOVING their side job so much, and actually making good money from it, that they were able to retire from their full-time job early.

Side or Part-Time Jobs for Retired People

The Best Side Jobs for Retired People & People Saving Extra For Retirement

This article will help you to find a fun or creative “Side Job” / “Side Hustle” / “Part-Time Work” or another source of passive income to help you retire or save more for retirement.

A few things to keep in mind:

• First, these are jobs to supplement your retirement savings. They may or may not be HUGE money makers – often they are just a way to make some extra income.
• Second, they are meant to also be enjoyable and creative! Yes, they are still work, but with a retirement flavor and happy attitude. Some keep you active or challenge you mentally. Others are creative, and some even keep you social!
• Finally, you can start these jobs before you retire. Use them as a second job to give your retirement savings an extra boost. In addition, many of the passive income generating jobs take some time to develop. That means the earlier you begin them, the more you can sit back and just maintain them later.

Side Job Category One: Jobs that Keep You Active

Pet Sitter / Dog Walker

Listen, retirement is not getting any cheaper or any easier. Everyone thinks they have enough saved for retirement as they near their golden years, however, the truth of the matter is that majority of people have nowhere near enough money saved. This is likely why you’re looking for a side job in retirement. Either that, or you’re just plain bored.

Either way, becoming a pet sitter or dog walker is a great opportunity to make a little extra money. 

Sites such as Wag! or Rover make it easy to do this. You’re probably already going to a morning walk anyway, so why not bring a furry friend with you and get paid to do it. If you’re really feeling adventurous, you could let the furry friend sleep over and get paid even more.

You could earn several hundred dollars a week all by just living as you normally would, but having an awesome four-legged companion with you. (From Austin with TheLogicofMoney.com)

Handy-Person

If you are good at fixing things, there are a lot of people that are not, and they need your help. People all over need help with small house projects and light outdoor work.

Becoming a “handyman” or “handywoman” might be as simple as making some quick business cards and passing them out to everyone you know. It is a great word-of-mouth, referral business, for those with a solid network of friends, family and co-workers. If you need help finding people to help-out and are comfortable online, services like TaskRabbit, can point you towards people looking for help.

Category Two: Jobs that Keep You Social

Vacation House/Room Renter

Tom Blake, from ThisOnlineWorld, suggests Airbnb as a way to stay both active and social in retirement while making extra money. He includes this in his list of “The Best Gig Economy Jobs – Make Extra Money On The Side.”

Airbnb allows you to make your house, or a room in your house available for rent to travelers. You can make decent side-income renting your home if you live in a well traveled area.

Tom mentions Airbnb is a great way “to make use of any extra space you might have in your home (in case you haven’t downsized) as well as meet new people!” Many of our friends have great Airbnb stories from both sides of the service. It’s a unique travel culture that can provide exciting experiences to an otherwise quiet retirement.

Drive for Uber or Lyft

Uber and Lyft are good ways to make a little extra money while interacting with new people. If you are in a touristy town and like to talk up your local hot spots and events, then you will find your happiness with a driving service.

On the other hand, driving services can also work out for people that don’t like to constantly chat (or drive around tipsy people late at night). Everyone needs trips to the airport, especially in the quite early mornings. Moreover, if you really aren’t feeling social, Uber Eats allows you to drive around food instead of people.

Category Three: Jobs that Keep You Creative

Selling Crafts – Online or In-Person

Craft Fairs are still hot! If you like to craft, you can tour your state (and beyond…) selling your creations. Makers Markets, Junk Stocks, Fundraising Craft Fairs, State Fairs and Flea Markets abound and are fun for all involved.

For those of you like enjoy selling online, the popular markets include Etsy, Artfire and Bonanza. To learn more about how to sell on Etsy and everything it entails, I recommend this article on Successfully Simple Sisters.

If you need help with setting up an online shop, hop onto a site like Fiverr and search for “help with etsy shop” or something similar. You will find freelancers that will help you get started!

Freelance Writer

For those of you that like to write, look into becoming a freelance writer. Online publications (and some local in print ones) are always looking for people to add valuable content to their sites for their readers. We suggest reaching out to the smaller ones you might already read first.

In addition, you can find places to write for by searching for “best sites for freelance writing” or something similar. Here is one article we found to start you off. Insert your specific area of interest to make it more relevant. For example, “best sites for music freelance writing.”

Category Four: Jobs for Retired People that Keep You Busy

Taking Surveys

If you are looking for a way to make money on the side that doesn’t take a whole lot of effort, then taking surveys is a fun way to pass your time. You can sit on the couch, listen to music or the TV, and provide your opinions to people who want them.

Popular online survey sites include Pinecone Research (which I did for a couple years and loved!), Opinion Outpost, Inbox Dollars, and the National Consumer Panel.

If you want to take this one into the “real world,” then look for paid opportunities for participating in Focus Groups and Health Studies.

Category Five: Jobs for Retired People that Keep You Challenged

Start a Blog

Oh boy, if you are up for the challenge, then try starting a blog! People actually do make money from their blogs these days – especially niche blogs. However, there is a steep technology learning curve, if you are not already very comfortable creating online.

Blogging can be a great way to generate passive income. Typically, you can make good money after years of effort, lots and lots of writing, and much search engine optimizing. If you enjoy learning and writing more about a subject you are already passionate about, then you will love blogging. On the other hand, you will also have to find learning about blogging interesting, because half of your time will be devoted to that.

Tutor or Teach

Both in person and online, tutors and teachers are in demand. If you have a field of expertise or passion for helping a certain age, then start there. This is a great business to grow by word-of-mouth if you have a decent network of friends and family to reach out to, but there are also businesses that can bring you students. Tutoring centers exist both online and in physical locations and are always looking for qualified help.

If you have graduate degrees in certain areas, you can look into teaching at your local universities and community colleges as an adjunct professor. Certain fields are always looking for people with Master’s degrees and beyond to teach both online and in person classes.

Jobs for Retired People Conclusions

There are so many opportunities to create the kind of retirement and work-life you want in our new economy. The New Rules of Retirement say you have the creative power to shape your life.

You can work and play at the same time with these part-time jobs.

We will be continually adding to this list. We would also love to hear your suggestions and what has worked well for you. Please email us or comment below.

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Retirement is changing, whether you like it or not… whether you are prepared for it or not. Let’s lay down the new rules of retirement and how to follow them, bend them and break them for your needs.

This is the introduction article to our New Series: The New Rules of Retirement. The Next Article in the Series is Jobs For Retired People.

Rethinking Retirement

You have the freedom to define the word “retirement” to best suit you and your needs. Retirement might have been cut and dry for the previous generations, but it is all over the board for those pondering it now.

We all know the old playbook – put in your time at a company – retire after 40 years – receive your pension and social security. This playbook was scrapped for many in the baby boomer generation on. Events beyond our control may have set us back or have caught us off guard.

Depending on if this happens to you later in life or earlier in life, there are still ways to enjoy a “retirement.” Moreover, some might find the new ways of providing for retirement even more fulfilling than the old ways.

A Case Study in The New Rules of Retirement: The “Average American”

Let’s say that you are the “Average American” who is of retirement age. (We are talking – the most average of average.) You decide to retire at 66, the current full age of retirement. Right now, the average Social Security check for the Average American is $1,461 a month.

In addition to Social Security, the “Average American” will have about $172,000 in retirement savings at age 66. This is based on a (median estimate instead of average).

Then, let’s assume you made about $60,000 a year in your last years, and you are about to retire today. You estimate that you will need about 70% of that amount to live in retirement. So, you need $42,000 a year, or $3,500 a month to fund your modest American retirement. (This is all in current dollars, not future money for this example.)

To be reasonably safe, we will assume you will live to about 90 years old and your savings will stay in the stock market with a 5% rate of return in conservative investments.

Just How Screwed/Set are You – The “Average American”?

If you live to 90, for this case study, the math says you will need about $470,000 in savings to compliment your social security (in today’s dollars). However, you only have $172,000. In this scenario (living off of $42,000 a year) you are short $298,000.

You will have $2,205 a month to spend instead of $3,500
= a deficit of $1,295 a month.

This adds up to living off of $26,460 (including social security) instead of $42,000.

Plus… TAXES!

On top of this, we have not even taken into account taxes! Depending on how much you withdraw each year, and where you have your money stashed (401k? Roth?), you may need to pay taxes on your retirement income. Austin, at The Logic of Money, does a good job on quickly breaking down retirement taxes in this article here.

So, What Do You Do?

Many Americans will accept their fate and live on their fixed income, or they may decide to stay in their full-time job longer. However, that does not need to be you! Being retired does not need to be a do nothing sentence.

In Comes the New Rules of Retirement

The New Rules say you can make up the difference by making passive income and participating in side jobs. (This is what the kids call side hustling!) Moreover, you can still maintain your retired status find ways to do things you love (or hopefully come to love).

With your side job, you can showcase your skills/expertise or learn a new skill. You only need to make about $1,300 a month, so there the pressure is revealed to find something that just “pays the bills.” Retirement is a time to spend time doing things you enjoy with people you enjoy. You can tailor your experience to meet your needs with a little bit of planning and initiation.

The new rules of retirement say you have the freedom to define the word “retirement.” You can still be retired and bring in extra income in our new economy.

Passive Income and Side Jobs for Retirement

Our next articles in our New Rules of Retirement series will help you explore all the avenues of making extra money. We will explore traditional jobs as well as new jobs available to retirees who need a little extra income.

READ IT HERE: Jobs for Retired People

You can also get a jump start by reading about our favorite retirement money books here.

The post New Rules of Retirement appeared first on Medicare Life Health.

For those of you that are near retirement, but not quite there, this is your crunch time. Your money should be working in overtime by the time you are 5 to 10 years away from leaving employment. So, let’s look at some of the best retirement books that will give you the most return on your hard earned investments.

Even the busiest of individuals should spend at least a couple hours with each of these books as they have the potential to not just help you save money, but potentially earn thousands of dollars more.

It should be your goal to not only take advantage of your best earning years and best investing years, but to also use this time to set yourself up for the most advantageous tax situation possible. All of this can mean the different between a comfortable retirement and an excellent one.

Don’t want to “read”? Then listen instead!

If you are “not a reader” I would encourage you to consider listening to these books. With an Audible account, you can knock a book out a week on your daily commute. Medicare Life Health readers can get two Audible books free by clicking on this link!

The Power of Zero by David McKnight

The Power of Zero, Revised and Updated: How to Get to the 0% Tax Bracket and Transform Your Retirement by David McKnight is one of the best retirement money books out there. You could even get away with reading it in retirement to take advantage of some of McKnight’s financial recommendations.

McKnight is an expert on putting your money in the right financial accounts to get you to a place where you can keep your taxes as low as possible in retirement. He will even teach you how to structure your savings and withdrawals to keep you in the zero percent tax bracket! Even if you have thousands or millions of dollars saved to enjoy in retirement.

The best parts of this book are:

• It’s short and to the point – but packed with information.
• It gives you a game plan that is very doable for the “average retiree.”
• However, it is a different way of thinking. McKnight teaches a unique solution to how to structure your retirement accounts to keep taxes low.

Bonus Books by David McKnight: Look Before You LIRP: Why All Life Insurance Retirement Plans Are Not Created Equal, and How to Find the Right One for You

This book goes into more detail on one particular retirement finance vehicile: IUL’s or Indexed Universal Life Insurance. We have an article that introduces you to IUL’s as well. They are a good option for people that are looking for another tax advantaged way to save/use money in retirement.

You Can Retire Sooner Than You Think by Wes Moss

I like that this book is one part psychology, one part finance. Wes Moss very much wants you to be HAPPY in retirement. However, no specific amount of money saved up will make you happy. What you can do, to help in the happiness department, is to make lifestyle and money choices now that will ensure a base level of happiness later.

In addition to sharing profiles and attributes of happy retirees, Moss has five helpful money secrets of happy retirees to share with you. He distilled these secrets from his listeners on his popular radio show and also from his clients as is a financial adviser. These secrets are not revolutionary. However, they will give you a great place to start preparing for retirement. This is true especially if you are ten years out or less.

The best parts of this book are:

• Moss’s two way approach to preparing for retirement – mentally and and financially.
• The book is full of practical advice and interesting statistics.
• Moss makes a good case on the side of paying off your mortgage in the debate of mortgage vs. no mortgage.
• One of Moss’s “Secrets” covers having multiple streams of income in retirement. I think this is one of the most essential parts of retirement in this century. It will only get more important as our social structures continue to change.

Your Money or Your Life by Vicki Robin

I am recommending Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence: Revised and Updated for the 21st Century by Vicki Robin to those of you that might need a reboot in order to make it to your retirement goals.

This book is usually recommended to younger people that are just starting to save for retirement. However, it is really a book for anybody that wants to reshape their relationship to money and retirement. Everyone should read this book (I have read it more than three times.) In this instance, I want to call out one group of near retirees that need to read this book NOW:

If you are like “most Americans” who have an average of $84,821 saved for retirement, you need to step up your game in these last few years before retirement. This book will help. It will show you how to save more money fast, so you can retire even faster.

What’s the best retirement book you’ve read?

We are now in the “New Age of Retirement”. These books will help you in defining what that means to you. Then, they will help you to get there.

Let us know what you would add to the list. What are your best retirement books? Please comment below!

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