Editor’s Note: Patriot Lending and Capital Solutions of Miami Lakes, FL has stepped up their lending to support middle class seniors who are entering retirement now and to give them financial tools when financial ends don’t meet as the cost of living continues to rise against an income that doesn’t. Patriot Lending is launching a capital branch to support seniors who need financing to Fix n Flip real estate and other projects that will fill in the income gaps during retirement years. The HECM mortgage opens up home equity to support reduction of debt and income shortages. This in an effort to provide solutions to tight budgets and limiting income. The following describes the fix a lot of elder retirees find themselves in coming out of (or not) the recent recession.
America’s wealth gap between middle-income and upper-income families is [the] widest on record.” So reads the title of a Pew Research Center analysis by Richard Fry and Rakesh Kochhar that sheds new light on the persisting anxiety of middle-class Americans.
The analysis offers a useful definition of wealth as the difference between a family’s assets and debt. Wealth is an important dimension of household well-being, notes Fry, because “it’s a measure of a family’s ‘nest egg’ and can be used to sustain consumption during emergencies (for example, job layoffs) as well as provide income during retirement.” Wealth is an index both of resiliency in the face of shocks and of preparation for the future.
In the 30 years that the Federal Reserve Board has been collecting these data, the gap between upper-income and middle-class families has rough doubled. In 1983, the median net worth of upper-income families was 3.4 times that of their middle-income counterparts. In 2013, that figure stood at 6.6 times. Although the increase occurred by fits and starts throughout the past three decades, it accelerated dramatically during the Great Recession and its aftermath.
The key point, however, is not that the ratio doubled but why. Corrected for inflation, the median wealth of upper-income families has doubled since 1983, from $318,000 to $639,000. By contrast, the median wealth of middle-class families has stagnated during that period–$94,000 in 1983, $96,000 today. To be sure, middle-class wealth increased to $158,000 between 1983 and 2007 but the Great Recession reversed that gain, and the middle class has not participated significantly in the stock market surge that began in mid-2009.
While we should welcome the increased pace of job creation and early signs of wage gains, the middle class is unlikely to regain a sense of security until the nest eggs of average families reclaim the ground they have lost since the onset of the Great Recession.
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