Monthly Archives: September 2018

Widowhood: The Loss Couples Rarely Plan for—and Should


“See my personal story at the end of this article,” Warren Strycker

No one is ever ready, emotionally, for the death of a spouse. But you can prepare financially for the decision-making and reduced income you may someday face.

ONE PERFECT FALL MORNING IN 2012, Erin was waiting for her husband to return from dropping off their twins at preschool. He never came home—her 42-year-old husband suffered a massive heart attack in the parking lot of the preschool, and by the time Erin got to the hospital, he had passed away. At the age of 41, Erin found herself a widow with four children, ages 7, 6 and the 4-year-old twins.

Losing her husband at such a young age places Erin in the minority—only 6% of the 1.4 million people who lose their spouses every year are under 441—but the shock and grief she felt are universal emotions that all widows and widowers experience. On top of her grief, Erin very soon found herself dealing with such issues as filing for life insurance and her husband’s Social Security benefits, removing her husband’s name from their joint accounts, and worrying about how she would plan for her children’s financial future—alone. Recalls Erin, “Beyond meeting our day-to-day needs, I was most worried that our c

While older widows and widowers may not be burdened with similar concerns about their children’s financial future, they often find themselves dealing with another serious consideration: Will they be able to afford the care they might one day need? This can be particularly worrying for those who’ve gone through a prolonged and expensive period of caregiving for their lost loved one—a situation many widows find themselves in.

To better understand this profoundly difficult—but for most couples inevitable—life event, Merrill Lynch partnered with Age Wave, a thought leader in the study of aging, to conduct research on widowhood and how this loss can affect the surviving spouse’s life and finances. Among the key findings: Men and women who prepare for losing a spouse fare much better in terms of stress and grieving, but a full 53% of current widows and widowers say they had no plan in place for what to do if one of them died.1

Plan Ahead to Help Your Spouse Manage Loss

A Practical Guide to Moving Forward Alone

A widow’s financial journey

The financial burdens that come with the loss of a partner are immense and immediate. Erin’s position as assistant headmaster for Institutional Advancement of a private boarding school gave her an advantage that few widows have. “I was fortunate that as part of my compensation the boarding school offered housing,” Erin says. According to the Merrill Lynch/Age Wave research, 60% of men and women who lose their spouses are immediately burdened by financial expenses, including housing costs such as mortgages or rent. The fact that 50% of those who lose a spouse also face a 50% reduction in income only compounds the problem.2

“Most widows and widowers—78%—describe the loss of their spouse as the single most difficult and overwhelming life experience.”—Maddy Dychtwald,co-founder of Age Wave

In addition to the financial demands, critical paperwork and decision-making begin their steady creep right away. “Most widows and widowers—78%—describe the loss of their spouse as the single most difficult and overwhelming life experience,” says Maddy Dychtwald, co-founder of Age Wave. “And two-thirds say that they had so many things to do, they were not sure where to even start.” That’s when help from a knowledgeable professional can be invaluable.

For instance, in consulting with her Merrill Lynch private wealth advisor, Richard Salvino, as well as Lilia Shemesh and Matthew Saland of her advisory team, Erin learned that decisions she made about managing the benefit from her husband’s life insurance policy could affect her children’s eligibility for future financial educational aid—a major need for her with four young children.

“Only 14% of widows and widowers say they were making financial decisions by themselves before their spouse died,” Dychtwald says. “But once they are widowed, the overwhelming majority—86%—report having to do so.” 3This is even more daunting when you have dependents at home. “Research suggests that any financial decision that isn’t time-sensitive should be put off until you’re feeling less emotionally vulnerable,” adds Dychtwald.

“The most difficult thing is the constant worry,” notes Erin, pictured with her children at left. “That started early on, and it continues nearly six years later.” Over time, Erin’s advisor helped her work through issues involving her return to full-time work and saving for retirement. “We looked at all sorts of expenses and what decisions would need to be made in order to achieve the goals I had for the kids. What’s realistic; what isn’t. What would need to take place to achieve my family’s goals.”

Erin recalls that the day-to-day financial pressures were so great that she told her advisor she might cut back on what she was setting aside for retirement. “And he advised me not to—that retirement needed to be one of my first priorities so I could take care of myself in the future,” she says.

“Seventy-two percent of widows and widowers say they now consider themselves more financially savvy than other people their age, and that is empowering”—Lisa Margeson,head of retirement client experience and communications at Bank of America Merrill Lynch

Salvino made her long-term financial health a focus. “Given that she was young, continuing to contribute to her retirement plan was important,” he says. “She had many years ahead of her to save and let the compounding effect of wealth work in her favor. You can always borrow for your children’s education, but you can’t borrow for your retirement.”

Finding the courage—and financial confidence—to go on alone
Amid all the pain and difficulty that losing a spouse brings, there is also healing. The Merrill Lynch/Age Wave research found that 77% of the widows and widowers they interviewed said they discovered courage they never knew they had.

“They’re forced to jump into complex financial matters from the start of their journey and adjust to making financial decisions alone,” says Lisa Margeson, head of retirement client experience and communications at Bank of America Merrill Lynch. “In fact, 72% say they now consider themselves more financially savvy than other people their age, and that is empowering,” she says.

Gaining financial confidence can help sustain you through a difficult time. Erin’s private wealth team helped her stay true to her and her husband’s core priorities, she says. “They helped me see myself financially in a bigger picture than I could see myself. It’s been those discussions that have helped me the most.”

The FHA regulated HECM mortgage can put widows and widowers back on the road to security. “Use the time you have to consider it now. Call me when you are ready to talk about it,” says Warren Strycker, veteran mortgage professional. “I became a widower after 49 years and 9 months of marriage, two children and four grandkids, My wife became ill with chronic acute leukemia over a few days. She passed away in a distant city after two weeks, and I was alone. Other than my elderly father who lived with me and my dearest poodle, Sophie, I was alone and devastated. 

“I remember feeling like she was the lucky one and here I was alone, swinging in the wind. I know what it’s like to lose a spouse and what happens afterwards. Feeling sorry for myself for awhile, I realized that I only had one income and the bills were coming in. I would soon be broke and there were house payments to make. After a few months, I obtained a HECM mortgage, paid off the house and reduced my cost of living. It was some time before things were more normal. I went over those times when I was angry with her, losing my temper for her lack of cooperation, treating her unkindly to get my way — all that stuff. Eventually I accepted her forgiveness and survived, but it was as tough as this story explains.” See more and contact information on the home page under “Information” or call now 928 345-1200. “Let’s talk about the HECM mortgage. I’ve had one for some years and have confidence it was the right choice to make for me.”

 

Baby boomers are struggling to downsize — and it could create the next housing crisis

Deborah Kearns

Published 3:16 PM ET Tue, 11 Sept 2018  Updated 22 Hours AgoBankrate.com

Veronica Dy and her husband had their retirement plan all mapped out.

They recently sold their large family home in San Gabriel, California, for $850,000 and walked away with $250,000 in net proceeds to put toward a smaller home in Los Angeles to be closer to their son’s family. They figured it would be easy to find a quaint, two-bedroom home where they could age in place without overspending on housing.

They thought wrong. The couples’ home search came up empty week after week, and the few properties within their budget – about $550,000 – are selling well over asking price almost immediately, Veronica Dy says.

Now, the couple spends roughly $3,200 per month – nearly half of their monthly household income – on rent and other housing-related expenses farther out from the city as they keep looking. While they’re trying to remain optimistic, the uncertainty of their situation makes Veronica Dy, 61, doubt that they’ll retire anytime soon.

“I was waiting to retire when I’m 62 but with our current circumstances, now we’re playing it by ear,” says Dy, who works in health care. “I look every day for houses, but there’s nothing on the market that’s affordable. I wanted to live closer to our son and help them with our grandchildren, but it’s going to be hard.”

The Dys’ struggles are shared by a growing number of older Americans who wrestle with whether to downsize or age in place. The answer, as it turns out, isn’t so simple.

In its just-released 2018 Survey of Home and Community Preferences, AARP found that 76 percent of Americans age 50 and older prefer to remain in their current home, and 77 percent would like to live in their community for as long as possible. However, just 59 percent of older Americans think they’ll be able to stay in their community, either in their current home (46 percent) or in a different home still within their area (13 percent).

Rising mortgage rates, sky-rocketing home prices, and inventory shortages at the lower end of the market are converging to create a new housing crisis – this time for baby boomers, housing experts warn.

Aging in place vs. downsizing: Which is best

By 2016, there were roughly 74.1 million baby boomers (people born between 1946 and 1964) in the U.S, according to a Pew Research analysis of U.S. Census Bureau data. By 2030, when all baby boomers will be between 66 and 84 years old, Census predicts boomers’ numbers will drop to 60 million people.

As boomers age, an alarming trend has emerged: they’re entering their golden years with mortgage debt. Americans over the age of 60 were more than three times as likely to carry mortgage debt in 2015 compared to 1980, according to an analysis of Census data by the Center for Retirement Research at Boston College. Much of the increase in seniors’ mortgage borrowing is in households with below-median incomes and assets, and no pensions, the analysis found.

Generally, past generations aimed to have their mortgage paid off before retirement to better manage their reduced incomes later in life.

Carrying mortgage debt may offer one explanation as to why many baby boomers prefer to remain in their current homes. Other factors, such as retaining home equity, staying in familiar surroundings, or a lack of affordable options, also drive the decision to stay put.

Aging in place, however, can be harder to do if boomers’ homes aren’t equipped to meet their future needs, says Jennifer Molinsky, senior research associate at the Joint Center for Housing Studies of Harvard University.

“There’s a growing linkage between housing and health care, and being able to stay in your house longer,” Molinsky says. “Making your house accessible for [in-home health care] is ideal, but this is harder to manage in lower density areas because of limited transportation and accessibility to doctors in rural areas. Communities need to think about how these services interrelate with housing, because that’s a real challenge for the future.”

Tapping equity to stay put

Mobility and health issues pose the greatest barrier to seniors who want to stay in their current homes. Older homeowners may need to add amenities, such as bathroom grip bars, walk-in showers, wheelchair ramps, and wider hallways and doorways to accommodate walkers or wheelchairs as their mobility declines. Some of these improvements are simple, but when you start redoing bathrooms, for example, remodeling projects can add up quickly.

Seniors who own their homes outright or have significant home equity typically borrow against their homes to help pay for modifications, says Sam Preis, regional director of sales with BBMC Mortgage.

Several loan products can help older homeowners pay for improvements that will make their homes livable for years to come. Preis recommends the following options:

Home equity loan – A home equity loan makes more sense if you have to make several modifications at once and need an upfront lump sum to pay for them.

Home equity line of credit, or HELOC – A HELOC works like a revolving line of credit that lets you withdraw on the line as often (or as little) as you need it for improvements in stages.

VA financing – Many older veterans who served in the military mistakenly think their VA benefits expire, but that’s not true, Preis points out. The VA offers cash-out refinancing, typically with no down payment requirement, to pay for home improvements. The VA also provides special grants for adapted housing for veterans with a service-connected disability. The grants help pay for a remodel or the purchase/building of a new home that accommodates their disability.

Reverse mortgages – A federally insured Home Equity Conversion Mortgage, or HECM, is the most common type of reverse mortgage. Insured by the Federal Housing Administration, HECMs allow people who are 62 or older to tap a portion of their home equity without having to move. You also can use a HECM to buy a home.
Low inventory, rising rates create barriers to downsizing
At the crux of boomers’ dilemma is the shortage of affordable homes on the market. That, along with rising mortgage rates – a trend that’s expected to continue – can create significant barriers to downsizing, says Laurie Goodman, vice president of housing finance policy and codirector of the Housing Finance Policy Center at the Urban Institute.

The national average rate for a 30-year fixed mortgage hit a record low of 3.41 percent in July 2016, according to historical data from Freddie Mac. As of Aug. 30, 2018, the average 30-year fixed rate was 4.52 percent – more than a full percentage point higher.

“Higher rates have a huge effect on mobility for everyone,” Goodman says.

Baby boomers who plan to stay in their current communities are likely to have the upper hand in competing for a smaller, less expensive home if they’ve paid off or have significant equity in their current home thanks to inflated appreciation. The key question is whether they’ll find the right home for their needs amid inventory shortages in the lower end of the market.

Seniors’ mobility could be impeded if they try to relocate to more expensive markets to be closer to family than where they currently live, especially given higher rates and rising prices, Goodman points out.

“There’s a limited supply of homes, along with rising prices – that’s a problem that’s not correcting and it’s getting worse and worse,” Goodman says.

Restrictive zoning laws and higher land costs are pushing builders to focus on producing luxury single-family homes (rather than economical multifamily projects) to remain profitable, Goodman says. The key to encouraging more building is a revamp of local zoning rules to enhance the variety of new housing projects, she adds.
Older Americans thinking outside the traditional housing box
In a lot of U.S. communities, a lack of housing variety complicates the picture for baby boomers who are seeking affordable options. And for some older folks, economic necessity is giving rise to creative solutions that buck tradition.

The AARP survey found that adults age 50 and older are open to housing alternatives, such as home sharing (32 percent), building an accessory dwelling unit (31 percent) and villages that provide services that enable aging in place (56 percent).

Whether it’s for economic viability or to gain companionship, seniors’ willingness to think outside the box is driving the growth of unconventional housing solutions, says Danielle Arigoni, director of livable communities with AARP. The “Golden Girls” style of roommates is one shared-housing arrangement gaining steam. There’s also intergenerational home-sharing; an online platform called Nesterly, for example, matches older adults with college students who are looking for roommates.

“An affordable housing crisis is brewing and, in many places, it’s already here,” Arigoni says. “[These solutions are] becoming less taboo and more accepted. And that’s partially just recognition of the financial realities we’re all accepting.”

The appetite for home-sharing is being driven by a resurgence in accessory dwelling units. An accessory dwelling unit is a smaller, secondary building that’s attached to the primary home or located on the same lot. This type of housing (think granny flat or mother-in-law suite) offers a livable solution for seniors who want to age in place and generate rental income, live near family, or eventually bring in-home care help down the road, Arigoni says. The key roadblock to add accessory dwelling units, though, is securing approval from local zoning or building authorities, she notes.

Whether downsizing or staying put is in your future, housing expenses will undoubtedly play a huge part of your overall retirement picture. Preis, with BBC Mortgage, suggests crafting a financial plan for retirement (if you haven’t already). Sit down with a financial advisor, a mortgage lender (if you plan to finance a home purchase or tap your home’s equity), and your accountant to figure out what options will help you live comfortably while maximizing your retirement income, Preis says.

The decision to downsize or age in place isn’t just about affordability or the place you call home. Consider how close you’ll be to family, friends, doctors, hospitals, transportation, parks, cultural attractions, and other key amenities that make a community truly livable, Arigoni says.

“You can talk to me anytime about this”, says veteran loan officer, Warren Strycker, representing Patriot Lending USA in Arizona. See contact information on the navigation bar on the home page or call me direct, 928 345-1200.

 

THE REAL LAWS OF NATURE YOU DON’T BELIEVE is TRUE..

Stolen by Warren Strycker for your rights to failures you’ve had.

UPSIDE DOWN TRUTHS YOU DON’T BELIEVE. You can add these to those other things you don’t believe and wait for the results. Sometimes, it takes a long time for these issues to reinsert themselves into today’s ups and downs. Be brave. Others around you have already accepted the results of these tenants. They blame this on the Devil, as I sometimes do.

 

I DIDN’T BELIEVE THESE LAWS AT FIRST, BUT HAVE FOUND THEM TO BE TRUE FROM ACTUAL EXPERIENCE!

1. Law of Mechanical Repair – After your hands become coated with grease, your nose will begin to itch and you’ll have to find the facilities.

2. Law of Gravity – Any tool, nut, bolt, screw, when dropped, will roll to the least accessible space.

3. Law of Probability – The probability of being watched is directly proportional to the stupidity of your act.

4. Law of Random Numbers – If you dial a wrong number, you never get a busy signal and someone always answers.

4. Supermarket Law – As soon as you get in the smallest line, the cashier will have to call for help.

6. Variation Law – If you change lines (or traffic lanes), the one you were in will always move faster than the one you are in now.

7. Law of the Bath – When the body is fully immersed in water, the telephone rings.

8. Law of Close Encounters – The probability of meeting someone you know increases dramatically when you are with someone you don’t want to be seen with.

9. Law of the Result – When you try to prove to someone that a machine won’t work, it will.

10. Law of Biomechanics – The severity of the itch is inversely proportional to the reach.

11.. Law of the Theater & Hockey Arena – At any event, the people whose seats are furthest from the aisle, always arrive last. They are the ones who will leave their seats several times to go for food, beer, or the restroom and who leave early before the end of the performance or the game is over. The folks in the aisle seats come early, never move once, have long gangly legs or big bellies and stay to the bitter end of the performance. The aisle people also are very surly folk.

12. The Coffee Law – As soon as you sit down to a cup of hot coffee, your boss will ask you to do something which will last until the coffee is cold.

13. Murphy’s Law of Lockers – If there are only 2 people in a locker room, they will have adjacent lockers.

14. Law of Physical Surfaces – The chances of an open-faced jam sandwich landing face down on a floor, are directly correlated to the newness and cost of the carpet or rug.

15. Law of Logical Argument – Anything is possible if you don’t know what you are talking about.

16. Brown’s Law of Physical Appearance – If the clothes fit, they’re ugly.

17. Oliver’s Law of Public Speaking – A closed mouth gathers no feet.

18. Wilson’s Law of Commercial Marketing Strategy – As soon as you find a product that you really like, they will stop making it.

19. Doctors’ Law – If you don’t feel well, make an appointment to go to the doctor, by the time you get there you’ll feel better… But don’t make an appointment, and you’ll stay sick. This has been proven over and over with taking children to the pediatrician.

Consider the upside values of the HECM (Reverse Mortgage) to make lemons into lemonade and turn LIFE around for you. See “information” in the home page navigation bar for Warren Strycker’s contact information.