Three Sources of Senior Citizen Retirement Income

26 Nov

Do you want to be a dependent senior citizen?

You likely are according to this conclusion by the Economic Policy Institute, “For the typical person approaching retirement, the value of expected future Social Security retirement benefits represents the largest single source of wealth.”  While this may be true, it’s a situation you don’t want to be in–dependent on the government and its political whims to determine your level of senior citizen retirement income.  The more you can control and rely on your other sources of retirement income, the more independent you will be.

Let’s discuss the ways in which you become independent with respect to your senior citizen retirement income.

If you have a home, use a reverse mortgage when you need it. Most seniors are simply ignorant about how reverse mortgages work and then act out of ignorance.  The other option is to find out how they work.  A revrse mortgage simply allows you to tap the equity in your home as an income source.  Right now, your home equity earns nothing, 0%.  Would you keep money in the bank at 0%?  Of course, when you die with a reverse mortgage, the equity in your home will be reduced to heirs.  But so what?  Shouldn’t you live more comfortably and enjoy a higher level of  senior citizen retirement income?  Don’t get a reverse mortgage until you need it as the payments are larger at older ages.

Another option is to annuitize your assets.  Here again, the idea is that rather than leaving an inheritance, you get the money to enjoy during your lifetime by consuming principal.  The risk in spending principal is that the principal could run out before you do.  But what if you could enjoy more senior citizen retirement income and not worry about running our of principal?  That’s exactly what an immediate annuity allows.  An insurance company will guarantee a lifetime income in exchange for a single deposit. For example, a 72 year old woman, for a deposit of $200,000 would receive a lifetime monthly income of $1590 (11/25/08).  This is likely more than the social security check received.  While this is not recommended for all of your assets (the payment is fixed and will not adjust for inflation), it makes good sense for a portion of your assets to supply senior citizen retirement income that you cannot outlive.

If you worry about leaving funds to your favorite charity, a goal you may have had for some time, you can use the option above in the form of a Charitable Gift Annuity.  Rather than deposit finds with a commercial insurance company, you deposit the funds with a charity and the charity provides a lifetime income.  The amount may be less than the commercial annuity so check and compare.  Additionally, you get a tax deduction that could shelter your income and reduce your tax bill for up to 6 years.

These are but a few ideas to increase Senior Citizen Retirement Income.  Consult an experienced retirement advisor for additional recommendations.

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