Smart Money Moves: Celebrating Financial Planning Month

October is Financial Planning Month, a time to reflect on the importance of sound financial decisions and the role they play in securing our financial futures. This month provides a perfect opportunity to explore smart money moves that can be tailored to your unique goals.  

Financial planning can take on a new level of importance during your retirement years. It’s a phase of life where careful consideration and strategic financial decisions become crucial to ensure a comfortable and worry-free retirement. Financial Planning Month is a perfect excuse for you to explore key aspects of financial planning in an effort to gain valuable insights and tips for making the most of your golden years.  

Assess Your Current Financial Situation 

Before diving into any financial planning, it’s essential to have a clear understanding of your current financial status. You can start by reviewing your assets, income, and liabilities, then by creating a list of your financial resources, including savings, investments, pensions, Social Security benefits, and any other sources of income.  

Here are six facets of financial planning that can help you assess your current situation and plan for a brighter financial future:  

1. Monthly Budget: A budget is the foundation of any effective financial plan – it’s important to develop a budget that accurately outlines your monthly income and expenses. Account for regular bills such as housing, utilities, groceries, insurance, and healthcare. Be sure to factor in occasional expenses like travel, entertainment, and gifts. And don’t forget to include possible emergency or unexpected expenses. A well-structured and well-thought-out budget can help you manage your finances more effectively. 

2. Retirement Income: For many seniors, retirement income comes from multiple sources. Ensure you have a comprehensive understanding of your income streams (if applicable): 

  • Social Security: Understand your Social Security benefits and consider the optimal time to start receiving them if you haven’t begun receiving them yet. Delaying benefits until full retirement age or even later can result in higher monthly payments.1 As with any decision, be sure to weigh the pros and cons and always consult a professional for advice.  
  • Pensions and Retirement Accounts: If you have a pension or retirement savings, consult with a trusted financial advisor to create a withdrawal strategy that provides a steady stream of income while preserving your nest egg. 
  • Investments: With a financial professional, review your investment portfolio and assess its alignment with your retirement goals. Your advisor can help you find the right investment strategy that prioritizes your capital preservation while generating income.  

    3. Healthcare Planning: Prioritizing healthcare costs is an important part of your financial strategy. Medicare is the primary source of healthcare coverage for many seniors, but it may not cover all expenses. Some opt to purchase supplemental insurance, such as Medigap or Medicare Advantage plans, to fill coverage gaps.2  

    4. Estate Planning: Estate planning is crucial for ensuring your assets are distributed according to your wishes. Working with an estate planning attorney can help you create a plan tailored to your wishes. Key elements3 of estate planning include: 

    • Will and Trusts: Having a will in place can specify how your assets will be distributed after you pass away. Trusts can be used for specific purposes, such as funding education for grandchildren. 
    • Power of Attorney: Power of attorney allows you to appoint someone you trust as your financial and healthcare power of attorney to make decisions on your behalf if you become incapacitated.  
    • Beneficiary Designations: Reviewing your beneficiary designations on life insurance policies, retirement accounts, and other financial assets can help you ensure they align with your current wishes. An insurance agent or other advisor can help answer any questions that may arise.  

      5. Long-Term Care: Long-term care is a significant concern for many seniors – and opting for long-term care insurance may make financial sense for you. Regular health insurance and Medicare generally don’t not cover long-term care.4 Planning for long-term care can help protect your assets and provide peace of mind. Confer with a trusted professional to create a plan that’s right for you.  

        6. Housing: Many seniors hope to age in place in the home they love, while others opt to relocate or downsize their homes to reduce expenses and free up cash in retirement or be closer to loved ones. Other housing options, such as senior living communities or retirement villages, may offer amenities and services tailored to evolving needs.   

          Financial planning is a multifaceted process that requires careful consideration of various factors. By assessing your current financial situation, and making smart moves like creating a budget, maximizing retirement income, planning for healthcare, and addressing estate and long-term care needs, you can help better ensure a secure and comfortable retirement.  

          In addition to these financial planning factors, there are other tools that can be helpful, particularly in later stages of life like your retirement years. Home equity solutions like reverse mortgages can be incorporated into a comprehensive financial plan and can allow you to continue living in your home while accessing your equity. Did you know seniors in America have over 12 trillion5 in equity tied up in their homes? If you’re a senior homeowner, you likely have a share of this housing wealth – why not put it to work for you!  

          Understanding Reverse Mortgages 

          A reverse mortgage is a financial product designed specifically for homeowners aged 62 and older. Unlike traditional mortgages where homeowners make monthly payments to the lender, reverse mortgages allow you to convert part of your home equity into cash without selling your home or taking on monthly mortgage payments as long as you continue to pay your property tax, insurance, and maintenance costs. Instead, the loan is repaid when a maturity event occurs, such as when you permanently leave the home.  

          Here are some key components of reverse mortgages: 

          • Home Equity Conversion: Reverse mortgages are a means to tap into the equity you’ve built up in your home over the years and convert it into cash. This can be a valuable source of funds for seniors looking to supplement retirement income or cover unexpected expenses. 
          • Optional Payments: One of the most attractive features of reverse mortgages is that you do not have to make monthly mortgage payments.6 This can free up cash for you to use however you’d like.   
          • Income Tax-Free Funds: The funds received from a reverse mortgage are income tax-free, providing seniors with a valuable source of funds that won’t increase their tax burden.7 
          • Homeownership Retained: Seniors who take out reverse mortgages can continue to live in and own their homes. The lender only gains control of the property when the borrowers permanently leave the home or no longer meet the requirements of the loan.6 

          Incorporating Reverse Mortgages into a Comprehensive Financial Plan 

          Now that we have a basic understanding of reverse mortgages, let’s explore different ways they can be incorporated into your financial plan: 

          • Supplement Retirement Income: If your income during retirement is not sufficient to cover all your expenses, especially as healthcare costs rise, a reverse mortgage can be an alternative funding source to help meet these needs. 
          • Home Improvements and Maintenance: You may need to make home modifications to accommodate Aging in Place. Reverse mortgage funds can be used to make these necessary or desired improvements, such as installing grab bars, ramps, or wider doorways. 
          •  Consolidate Existing Debts: If you have outstanding debts, like high-interest credit card balances or medical bills, funds from a reverse can be used to consolidate these debts, freeing up monthly income for other expenses. 
          • Create a Line of Credit: With a reverse mortgage, you can access a reusable line of credit to tap into as needed.8 This can be a valuable financial safety net for unexpected expenses or emergencies. 
          • Delay Social Security Benefits: You may choose to delay claiming Social Security benefits to receive higher monthly payments later, if that makes sense for your retirement.7 A reverse mortgage can help bridge the income gap during this period. 
          • Preserve Investments: By using a reverse mortgage to cover living expenses, you may have the opportunity to leave your investments untouched, allowing them to potentially grow over time. 
          • Estate Plan: You can work with an estate planning attorney or financial advisor to determine how a reverse mortgage fits into your estate plan. It’s important to consider the impact on heirs and beneficiaries. 

          Financial Planning Month is a great reminder that it’s never too late for you to make smart money moves and secure your financial future. Reverse mortgages offer a flexible and valuable tool that can be incorporated into a comprehensive financial plan tailored to your specific needs and goals in retirement. However, it’s crucial to work with qualified financial professionals who specialize in retirement planning to ensure that your plans align with your unique circumstances.  

          By carefully considering your financial options and seeking professional guidance, you can make informed decisions that will help you enjoy life to the fullest. If you’re interested in using the power of your home to secure a more financially secure retirement, contact our team today to learn more!






          6. Borrowers must continue to pay property taxes and homeowners insurance and maintain the home. 

          7. Consult a financial advisor and appropriate government agencies for any effect on taxes or government benefits. 

          8. Line of credit option is only available for adjustable rate HECM products. 

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