Archive for 'Senior Citizens'

Seniors to Get a Real Raise in Social Security

Senior Citizens

Social Security gave out a zero increase in 2016 and a measly 0.3 % increase in 2017 which was just enough to cover the added cost of Medicare premiums for most seniors. Essentially a zero increase in spendable cash to offset inflation. This coming year, in 2018 we’ll finally see a decent, not great, but decent increase of about 2.2%. This could help a lot of retiree’s as it’s estimated that about 25% rely on Social Security as their only source of income.

There are several major changes to the Social Security and Medicare programs that are slated to take effect a few months from now, beginning in 2018. Some consist of good news, relatively speaking. One change is not so good and will be decried by seniors who enjoy traveling to national parks.

Biggest Social Security Raise in Five Years

Coming off of a zero cost-of-living adjustment in 2016 and a miserly .3 percent COLA in 2017, the predicted raise of 2.2% for 2018 is a big deal, yet still relatively small. After all with inflation running around 2.0% a 2.2% raise doesn’t leave much room for error.

It also serves us well to remember that the inflation rate faced by the group affected by this Social Security change is in most cases higher than the quoted 2% inflation rate. This is because the senior population is faced with medical, medical insurance, deductible, co-pay and drug cost inflation that easily can top 10% or more.

Depending upon what portion that these medical expenses represent in the retiree’s budget, that 10% inflation rate applied toward those expenses could easily wipe out the benefit of a 2.2% COLA adjustment.

So, all in all, this was a modest, yet qualified piece of good news that came out of Washington, D.C. when the Social Security and Medicare trustees projected that Social Security recipients would receive a 2.2 percent cost-of-living adjustment in 2018.

It would be the largest increase since 2012, when the COLA rose 3.6 percent. Social Security recipients received no cost-of-living adjustment in 2016 and just 0.3 percent in 2017.

Average Social Security Benefit Impact

According to the Social Security Administration, the average retired worker brought home $1,368.67 a month in June 2017. Therefore, a 2.2% COLA would translate into an extra $361.33 a year in 2018, or $30.11 a month.

Social Security provides vital income protection to workers and their families. Benefits are indexed annually for inflation When the SSA determines, as they did in 2016 that inflation is 0%, then no COLA will be applied to the following year’s benefit.

Unlike savings accounts, which can be run down, Social Security benefits last a lifetime. Because of this aspect, many investors have come to view their S.S. benefit akin to an annuity, or guaranteed bond component, even better than a fixed income investment because it is inflation-adjusted.

Social Security incorporates a progressive benefit formula that ensures that those with low lifetime earnings receive proportionately larger benefits. Social Security plays a crucial role in reducing poverty among older people. Without Social Security, 41 percent of all older Americans would be in poverty. Because of this large role that Social Security plays in our economy, only 8.8 percent were below the poverty line in 2015.

Relative Importance Of The Social Security Backstop

Social Security is the main source of retirement income for most Americans. Approximately half of people age 65 and older depend on Social Security for more than half of their retirement income. About one-quarter rely on Social Security for all or nearly all of their income. As a reflection of how important this program is, among poor households headed by someone of retirement age, Social Security is virtually the only source of retirement income.

Retire smarter

 

Flintridge Partners is pleased to announce that construction of its new senior living community Crestavilla is slated to begin in early 2013. Unparalleled amongst senior living communities in the area, the resort-style community brings together a stunning location, beautiful architectural designs and the highest standards in services and amenities. It’s a place where enriching the health and well-being of seniors is apparent from literally the ground up and is scheduled to open in 2014.

Crestavilla represents a new brand of retirement living community, comparable to a five-star resort. Living at Crestavilla will provide residents with “inspired coastal living,” from the warmth and authenticity of its Spanish Colonial architecture reminiscent of the early days of California to the programs and activities fostering a healthy physical and emotional well-being.

“Crestavilla has been designed with seniors in mind, and to take advantage of the scenic vistas of its location, not to mention the unmet need for a retirement community of this caliber,” said Marlon Fenton of Flintridge Partners.

Crestavilla will offer independent living, assisted living as well as memory care for residents in one location. Situated on 11.5 lushly landscaped acres in Laguna Niguel, Crestavilla features timeless architecture, functional floor plans and elegant design, not to mention five-star amenities and services to complete the resort style living including restaurants, a spa, theaters and a spiritual resource center. Crestavilla is located near major transportation corridors, shopping centers, medical, cultural, and recreational venues.

At the heart of Crestavilla is over 80,000 square feet of indoor amenities. Spacious residences feature a custom selection of fine interior finishes to match the elegance of the entire community and will be available in studio, one, and two bedrooms ranging up to 1,190 square feet. Crestavilla is located near the intersection of Niguel Road and Crown Valley Parkway in Laguna Niguel, California.

About Flintridge Partners
Flintridge Partners, LLC, is a real estate development company focusing on a number of specialty markets. Irvine, California based Flintridge Partners is led by an experienced group of professionals who together combine their diverse and complementary skills to manage every aspect of the company’s real estate development projects.  For more information visit http://www.flintridge.us.

CONTACT: Stacia Kirby, +1-206-363-1492, stacia@speakeasy.net

Web Site: http://www.flintridge.us

Reverse Mortgages: The Controversy Continues

A Consumer Alert was issued by the Reverse Mortgage Critic™, LLC today to bring awareness to the fact that lenders are steering seniors into unsuitable fixed-rate reverse mortgages.

The alert, available at http://www.ReverseMortgageCritic.com, claims that lenders are steering seniors in this direction because the fixed rate is more profitable for them despite the fact that it can end up costing a borrower and their heirs an average $131,000 in lost home equity.

“We are the first to uncover and bring reverse mortgage lender steering to the public’s attention,” Lyn R. Link, CSA, President of the Reverse Mortgage Critic, said. “By drawing attention to this despicable lending practice, I hope to help seniors avoid becoming victims.”

A reverse mortgage enables homeowners 62 and older to borrow against their home equity with no monthly repayment of principal and interest for as long as they live in their home. One of the most important decisions seniors must make when considering a reverse mortgage is whether to choose a fixed or adjustable rate.

The primary issues in comparing the fixed- and adjustable-rate reverse mortgage are:

  • Interest rate: lower with the adjustable rate.
  • Payment options: more flexibility with the adjustable rate.
  • Home equity preservation: adjustable rate can help preserve equity while the lump-sum payout required with the fixed rate can deplete equity.
  • Undue risk: the 5 payment options with the adjustable minimizes the risk of being defrauded unlike the lump sum with the fixed.
  • Jeopardizing benefits: because of the payment options with the adjustable rate, a borrower can avoid jeopardizing their SSI and Medicaid benefits.

Despite the disadvantages with the fixed rate, in nine short months it went from 2.7 percent of the total reverse mortgages made monthly to 68.9 percent: a staggering 2,452 percent increase.

Lenders have increased their profitability by steering seniors into the fixed rate despite being fully aware of the suitability concerns for their senior customers. They have made as much as 2 to 3 times more from the fixed rate than from the adjustable rate.

“In no way do I or the Reverse Mortgage Critic suggest that all lenders are steering. The alert that we have issued is simply to make consumers aware that some lenders are guilty of this practice so seniors may be on their guard,” Link said.

About Reverse Mortgage Critic

Lyn R. Link is the Reverse Mortgage Critic with more than 22 years of experience in reverse mortgages. He is the first to uncover and bring lender steering to the public’s attention. The Reverse Mortgage Critic has just recently published a hard-hitting tell-all e-book titled “Reverse Mortgages: The Good, The Bad, & The Ugly.”

Contact:
Lyn R. Link, CSA
President
Reverse Mortgage Critic™
Phone: 417-483-0335 (cell)
Email: lyn@ReverseMortgageCritic.com

CONTACT: Lyn R. Link, CSA, President, Reverse Mortgage Critic, +1-417-483-0335 (cell), lyn@ReverseMortgageCritic.com

Web Site: http://www.ReverseMortgageCritic.com

Many seniors are discovering the risks of this popular lending tool.

Over 30,000 homeowners with reverse mortgages in the United States are now in “technical foreclosure.” Reverse mortgages, which allow seniors over 62 years of age to remove equity from their homes, have come under renewed scrutiny as a result. In a 2010 study conducted by A New Horizon Credit Counseling, a nonprofit credit counseling firm, it was observed that reverse mortgages have worsened the financial woes of an increasing number of clients seeking help.

Steven Stark, Chief Operating Officer of A New Horizon Credit Counseling, explains that “although a reverse mortgage permits a homeowner to withdraw equity value from their house through payments by the bank, many seniors first obtain reverse mortgages because they’re struggling with their finances.” Although seniors with reverse mortgages do not make payments on their loans, they can face “technical foreclosure” when financial difficulties cause them to fall behind on paying their property insurance premiums or property taxes. In Florida, where property insurance rates have skyrocketed, up to 8% of homeowners with reverse mortgages are now delinquent.

Experts believe that the high delinquency rate may be the result of consumers choosing reverse mortgages as a method of combating mounting debt. “Many seniors see the idea of releasing equity from their homes through reverse mortgages as a last resort to pay medical bills or credit card debt,” says Stark.

Delinquent homeowners with reverse mortgages have not yet been foreclosed on, but industry experts warn that banks may be considering it. Stark encourages senior citizens facing financial struggles to contact a nonprofit credit counseling organization before falling behind in their property taxes or insurance. “Many people don’t realize that credit counseling and debt management programs can really help them budget their finances and pay off their debt before it spirals out of control,” says Stark, “but it’s crucial that people act sooner rather than later.”

A New Horizon Credit Counseling Services is a nonprofit credit counseling organization that has been helping consumers since 1978. For more information about their programs, contact 1-800-556-1548. They can also be found on the web at http://www.anewhorizon.org, or reached via email at slieberman(at)anewhorizon(dot)org

Reverse Mortgages - Seniors Being Misled are Mounting

Reverse Mortgages - Seniors Being Misled are Mounting-Image via Wikipedia

As the market for reverse mortgages grows, concerns are mounting that an increasing number of seniors are being misled into signing up for a complicated financial product that may squander their equity prematurely or put them at risk for losing their homes.  In a new report released today, advocates for consumers and seniors are calling for stricter oversight of the reverse mortgage market and new consumer protections for borrowers.

“Reverse mortgages are a very risky deal for borrowers who don’t understand the complicated terms of the loan and how quickly fees and interest charges can add up,” said Norma Garcia, senior staff attorney for Consumers Union, the nonprofit publisher of Consumer Reports.  “Reverse mortgages should only be a last resort for seniors who want to stay in their homes and have no other alternatives to supplement their income.”

Consumers Union released the report along with California Advocates for Nursing Home Reform and the Council on Aging Silicon Valley.  The report and accompanying tips for consumers are being issued as the newly authorized Consumer Financial Protection Bureau (CFPB) examines reverse mortgages and considers whether new safeguards are needed to protect borrowers from abusive industry practices.  The Federal Reserve Board is also considering a set of proposed regulations on reverse mortgages.

As the baby boomer generation retires, the market for reverse mortgages is growing fast.   Reverse mortgages enable borrowers who are 62 or older to obtain income through cash payment or lines of credit by tapping the equity in their home.  The reverse mortgage loan becomes due when the borrower dies, leaves the home for 12 consecutive months or more, or fails to maintain the property or pay homeowners insurance or property taxes.  Borrowers must pay a loan origination fee, closing costs, and compounding interests on the loan principal, which can be significant.

In their examination of reverse mortgages, the groups documented a number of concerns that underscore the need for stronger oversight by the CFPB, including:

Misleading marketing claims: Borrowers can be duped by misleading marketing claims.  A review by the Government Accountability Office (GAO) found that 26 marketers of Home Equity Conversion Mortgages (HECMs) engaged in questionable sales tactics and made potentially misleading claims that minimized the risk for borrowers.  The GAO found that required counseling provided by the Department of Housing and Urban Development (HUD) to borrowers was sorely lacking.

Seniors are particularly vulnerable to misleading marketing: Recent research has indicated that seniors are particularly susceptible to fraudulent marketing.  University of Iowa researchers concluded that 35-40 percent of elders studied had impaired decision making abilities that made them especially vulnerable to misleading advertising.

Cross promotion of other unsuitable financial products: Seniors are also targeted with aggressive cross promotion of other financial products like long term care insurance or annuities that may not be suitable for them.  While lenders and brokers selling HECM loans are prohibited from promoting annuities or insurance, insurance agents can legally direct senior clients to get a reverse mortgage to fund insurance products.

Reverse mortgage defaults are triggering foreclosures: HUD’s Office of the Inspector General found that an increasing number of borrowers had defaulted because they had not paid their taxes or homeowners insurance premiums as required.  As of March 2010, 20,631 reverse mortgage loans were in default.  Reverse mortgages are likely to generate an even greater number of foreclosures when borrowers die and their heirs are not able to take possession of the home by paying off the mortgage.

Reverse mortgage loan bailouts are on the rise: A Consumer Reports investigation found more cause for concern: loan bailouts have soared. The annual sum of reverse mortgages taken over by a federal insurance fund has more than quadrupled in four years, from $81.3 million in 2004 to $381.3 million in 2008.

“Lenders are aggressively marketing reverse mortgages while assuming almost no responsibility for whether the loans are suitable for borrowers,” said Prescott Cole, senior attorney for California Advocates for Nursing Home Reform.  “Now that reverse mortgages are becoming more widespread, it’s time for some common sense oversight to protect consumers and taxpayers.”

The groups recommended a number of reforms, including:

Ensure loans are suitable for borrowers: Lenders and brokers should be required to consider whether the loans put borrowers at risk of losing their homes, if the borrower understands the complex nature of the contract, and if there are more viable alternatives available to the borrower.

Establish a fiduciary responsibility for the loan: Lenders and brokers must be required to act in the best interests of the borrower and should be held liable for violating this fiduciary duty.

Outlaw deceptive marketing: All reverse mortgages should be required to include information to help borrowers determine whether the loans are suitable for them.

Adopt stronger prohibitions on cross promotions: Prohibitions against cross promotions of other financial products by lenders and brokers should extend to non-HECM loans.  Insurance agents and brokers should be held liable for selling an annuity when it is purchased with reverse mortgage funds.

Strengthen the quality and content of counseling: HUD counselors should be required to hold an in-person session with prospective borrowers to determine whether a reverse mortgage is suitable for the borrower.  The counselor should deny a counseling certificate to the borrower if the loan is not in the best interest of the senior.

Protect non-borrowing spouses and tenants: Spouses and tenants whose names are not on the reverse mortgage loan should be notified about their limited rights to remain in the home after the borrower dies or permanently moves out of the home.

“Seniors who take out reverse mortgages are at risk of using up all of their equity to cover unexpected costs later in life or even losing their home,” said Shawna Reeves, program coordinator for the Council on Aging Silicon Valley.  “The Consumer Financial Protection Bureau should act to rein in reverse mortgage abuses and make sure that seniors get the protections they need.”