Transitioning from a steady paycheck to living off of retirement savings can be a difficult process. Not only is it a major financial adjustment it also can be a critical moment where assumptions about the future turn into costly mistakes down the road.

The most common mistakes people make about retirement are:

1. Not having a plan.
2. Underestimating life expectancy.
3. Low-balling their spending.
4. Failing to plan for unexpected extras.
5. Overlooking rising healthcare costs.
6. Ignoring inflation.

Although it would be easy to assume that an Annuity or a Reverse Mortgage would fix these mistakes, that would not be correct. Annuities and Reverse Mortgages are just a few of the tools that can help you avoid mistakes like these, but they would be meaningless without careful planning first.

In this section we will carefully walk you through the steps to understanding Annuities and Reverse Mortgages and if they are the right choice for planning your future.

In the following sections we will outline several sources of additional retirement income. Not all of these sources are perfect for every situation. However, a careful examination into how each of these work will give you the confidence to make an informed decision.

An annuity is an insurance product that pays out income and can be used as part of a retirement strategy. Annuities are a popular choice for investors who want to receive a steady income stream in retirement.

Here's how an Annuity works:

You make an investment in the annuity and it then makes payments to you on a future date or series of dates. The income you receive from an annuity can be doled out monthly, quarterly, annually or even in a lump sum payment. The size of your payments are determined by a variety of factors, including the length of your payment period.

Types of Annuities:

Fixed annuities are essentially CD-like investments issued by insurance companies. Like CDs, they pay guaranteed rates of interest that in many cases are higher than bank CDs. Fixed annuities can be deferred or immediate. In Deferred annuities, your money is invested for a period of time until you are ready to begin taking withdrawals, typically in retirement. Deferred annuities accumulate regular rates of interest.

Immediate annuities (sometimes called income or payout annuities), are pretty straightforward - basically a mirror image of a life insurance policy . Instead of paying regular premiums to an insurer that makes a lump-sum payment upon your death. With an annuity you give the insurer a lump sum of cash in return for regular income payments until you die. (Actually, you have several options, including payments for a specified period of time - say, 10 or 20 years - or payments that will continue for as long as you or your spouse are alive.) As the name suggests, immediate annuities start paying out right away, so they're are frequently used by people already in retirement. The convenience and predictability of a set payout makes a fixed annuity a popular option for retirees who want a known income stream to supplement their other retirement income.

Advantages:

Fixed annuities pay guaranteed rates of interest, which makes them appealing to investors wary of the stock market's ups and downs. The guarantees protect against the down swing of the stock market. What also makes them appealing are their low investment minimums - usually $1,000 to $10,000 - and the fact that the interest they pay escapes taxation until you pull it out. The biggest advantages annuities offer is that they allow you to sock away a larger amount of cash and defer paying taxes.

Unlike other tax-deferred retirement accounts such as 401(k)s and IRAs , there is no annual contribution limit for an annuity. That allows you to put away more money for retirement, and is particularly useful for those that are closest to retirement age and need to catch up. All the money you invest compounds year after year without any tax bill from Uncle Sam. That ability to keep every dollar invested working for you can be a big advantage over taxable investments.

Disadvantages:

Rates on Annuities can also be fixed for a limited period, and then drop. If you don't like the new rates and want to withdraw your money early, heavy surrender charges could kick in and cut into your returns. Plus, if you decide to opt for fixed lifetime payments, those payments will not rise to keep pace with inflation. As a result, the value of the money you receive will decline over time as inflation erodes the purchasing power of each dollar. So for example, if you retire young and plan to keep collecting annuity payments for a longer period of time, the purchasing power of your money could be a big concern.

How do I know if buying one is right for me?

If you're worried about coming up short, a fixed annuity can help you sleep at night. Because of their stability, fixed annuities might be well suited to those who want to make sure their money will be enough to carry them through retirement, and at least cover the bare minimum of fixed expenses.

Now that you have a good understanding of the various sources of retirement income, it's time to look at what your next steps are.

Prioritizing your specific needs is the first step we take in helping you make a decision. Call us toll free at (888) 845-0449 or use our online contact form and we will be happy to contact you at your convenience.

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Reverse Mortgages are quickly becoming the fasting growing source of steady income for seniors. Reverse Mortgages allow an eligible senior to use the equity in their home to receive a lifetime montly payment, a lump sum cash distribution, a credit line to use as you wish, and all with no mortgage payments for as long as you remain in your home.

Although Reverse Mortgages are gaining in popularity, that doesn't mean they are right for every situation. Careful planning and understanding the facts is most important.

We offer information and guidance on reverse mortgages in 3 formats:

1. Reverse Mortgage Guide - This 42 page guide contains all the information you'll need to make an informed and confident decision. The guide is available in PDF format and can be downloaded here.
2. Reverse Mortgage Articles - All of the information in our Reverse Mortgage Guide is available in a series of articles online. These articles offer a step by step approach to what you are looking for. Our Reverse Mortgage articles can be found here.
3. For a faster overview click on the "Step" tabs on this page. These tabs will provide a step-by-step summary of what you must understand and plan for, before making your decision.

Identifying Your Needs

The most important step in deciding whether a reverse mortgage is right for you is to identify your specific needs. There are 5 basic needs that we need to look at.
They are:

1. Managing Health Care Costs
2. Eliminating Mortgage Payments
3. Gain Financial Independance
4. Achieve a Better Lifestyle
5. Family Needs

Section 1 of our reverse mortgage guide explains why these needs are important and how they can be met with a reverse mortgage. You can link to this section, here.

Learn About Reverse Mortgages

Understanding how a reverse mortgage works will give you the confidence you need to make an informed decision. In this section of our guide you will learn:

• What is a Reverse Mortgage
• How do reverse mortgages effect Title and Home Ownership
• How to qualify for a Reverse Mortgage
• What are the types of Reverse Mortgages and how can I structure them to fit my needs.
• Reverse Mortgage Costs

To review this section click here.

Finding the right Reverse Mortgage.

Now that you understand how reverse mortgages work, it's time to find the right reverse mortgage product for your situation.
Remember that reverse mortgages are specifically designed to give you as many options as possible to make your retirment years all they should be. Because there are so many options availble it is important to carefully weigh your financial needs.

There are 5 basic questions we ask to help you determine the right product.

1. How much money do I need?
2. How long do I plan to live in my home?
3. How do I want to structure my loan?
4. How much monthly income do I need?
5. How much cash do I set aside?

The answer to each of these questions will guide you closer to finding just the right reverse mortgage. You can review this section of our guide here.

Finalizing Your Decision

Including family members or trusted advisors in your decision process is something we strongly recommend. Making a decision that everyone agrees with, gives you and the ones you love the peace of mind your retirment years should be about.

Section 4 of our guide is specifically for your loved ones or trusted advisors. This section offers several helpful tools that will give the ones you love the information to ask the right questions as well as the confidence to make an informed recommendation for you

Take the time to review section 4 of our guide, Finalizing Your Decision, here.

Now that you have a good understanding of the various sources of retirement income, it's time to look at what your next steps are.

Prioritizing your specific needs is the single most important step you can take. When you decide to contact one of our advisors, the first step we will take is to help you arrange your priorities. A custom solution is not possible without this careful step. Before you contact us, we encourage you to take our Priorty Needs Assessment. This 3 minute exercise will give you a head start into knowing what is most important to YOU.

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