The Retirement Piggy Bank You Are Probably Overlooking

The one thing that absolutely no one addresses with reverse mortgages is: what happens if you outlive the equity that you have in the home? For example, you have $x.xx amount of equity in your home and you take it out monthly, like an annuity, and it is expected to last 10 years. Then you live 15 or more years. You have no more equity in the home. Are you evicted? Does the bank let you live in the home indefinitely for free? True, the sad part is that you have little to pass on to dependents afterward.

Is there a reson that selling and using the proceeds toward rent on a nice aoartment isn't included? I do have the sense that this newsletter is aimed at folks who are fairly comfortable financially, but I'm considering selling (in Atlanta) and renting in Denver because I couldn't afford to buy in Denver (where I grew up), but I could afford to rent. Does anyone want to suggest downsides to this idea?

I too, am disappointed this article did not address selling and then renting. An idea I am seriously considering as well.

I am planning on selling and renting also, it makes more sense to me, I would also like to hear a little more on this subject.

good idea. I have also considered the sell and rent option, as it makes it easier to then move again if you change your mind or just get an itch to move along.

Mike,

People that take out a HUD backed reverse mortgage can maintain residency in the house for as long as they are able to live there whether they have equity or not, as long as they pay the taxes, homeowner's insurance and maintain the property. It's still your home with a lien against it, just like when you buy a house with a regular mortgage.

Any remaining equity in the property would go to their heirs, but if they have a loan balance higher than the value of the home the only thing that can be used to satisfy the loan is the home itself. And their heirs can purchase the home for 95% of the value even if they have no remaining equity in the property.

Ken,

Thanks for the answer!

This is my two cents on renting vs. buying. If you had a home and sold it and then decided to rent. Let us say you have a house worth $200,000 and you sell it and put the money in the bank. Then you rent an apartments for, as an example, $1,000 a month. That is $12,000 a year eating up the original $200,000. at that rate it would last approx. 16.5 years not counting any interest earned over the years. If you should rent a 'better' apartment at $2,000 a month then your money would last about 8.25 years. Then what do you do when the money runs out? Maybe a better option would be to sell the $200,000 home, buy the smallest home you can deal with, pay cash and put the difference in the bank. To me, renting has it's advantages such as no worries of maintenance but in the end you have nada. Not to mention, you are always at the landlord's mercy to 'fix' things. As a kid my parents lived in a two family house and the landlord who was a tightwad controlled the thermostat . We would be chilled to the bone and sometimes would go upstairs and 'beg' the old codger to turn up the heat. You also never know what kind of neighbors will live up above you or below you. You could live next to an apartment full of unruly children, young adults that play loud music day and night, apartments with barking dogs...I am sure many of you could fill in the blanks with more scenario's.

Louise = AMEN - right on.
Robert

This article is about ways and ideas on how to get more money to retire better financially. The writer suggests 3 ways by: 1. downsizing and keep the difference to save, 2. selling and then buying less expensive house to reduce property tax expenses, or 3. getting a reverse mortgage. Some feedbacks want to harbor opinions about selling current house and then renting afterwards as another alternative. My opinion is, #1 and #2 ways above are somewhat more mainstream and might be combined to save even more funds, while people should carefully consider to take #3 based on their individual needs and wants.

In regards about owning vs. renting, if I have the cash around I would opt to buying rather than renting, like on top of Louise's above comment - for reasons such as proud of ownership, and the hope of building up home equity as time goes on. On the other hand, renting in the long run to me is like throwing money out the window with no return in equity (but yes, there are always exceptions to the rule of course). Just remember though, like this article also mentions, owning a home entails expenses, such as paying Property Tax, maintenance and repair, and for some others paying Homeowner Association (HOA) fees or Mello-Roos tax (in CA). So good luck everyone!

I agree on the financial negatives for renting too. I used the rent vs buy calculators with a recent temporary work relo (3 years to retire, so I will move on again in just a few years). The calculators showed that buying was significantly more cost-effective even with the realtor fees, transfer taxes and other costs of owning. Not to mention the wear and tear on my stuff, which would have had to go into storage while I was in a temporary living situation if I rented. The idea of going from rental to rental while I try out different places is also not desirable to me. I hope to build something when I decide on a retirement location, so I think temporary housing is going to be inevitable. I'm not looking forward to it.

I disagree with some regarding the rent versus buy option. We are planning on selling our house in the $230,000 range and for a period of one or two years renting we will probably buy or build.

With about $200,000 after realtor fees and paying off a small mortgage we feel renting for this time makes sense as we are not sure where we want to live. Right now, living close to our only child is important for the next year or so and that will hopefully give us time to travel and research areas. We feel that we need to spend some time in each area to determine which place is most comfortable and welcoming for us. We can then invest the $200,000 which, with a 5% return, will provide us with $10,000 to pay rent. Some may say you are not guaranteed a 5% return, we feel this would be average.

When we do buy or build we are also considering getting a mortgage for the same reason, investing these funds in addition to $425,000 in 401k and IRA, coupled with $3,000 a month social will give us enough to make a monthly house payment.

Comments?

Vicki

Vicki,
As Buddy said there are exceptions to the rule. You have a well thought out plan to sell, rent, build or buy. You are talking about a temporary plan of action. I think a lot of people are questioning selling a house and renting for the rest of their lives. I can see where a couple or a single person may not want a big house any longer. It might make sense to at least try a very small 2 bedroom house. If it doesn't work out then it can be sold. Of coarse beware of buying a dump where it needs constant repairs. If it would be possible to get 5% interest as you suggested and applied that to your rental, that could make sense. However, in this economy, I am not seeing interest rates that high. Not to mention the stock market has been a roller coaster the last two weeks. My parents rented almost their entire married life and when they finally bought an older handyman special, they were in love with it. Before buying the house, they had to move numerous times due to different reasons like landlord sold home, another time the apartment building was turned into condos and it was buy or get out. Because they had to rent they could not save a lot to put down on a home. Both my parents passed away and I just sold their home as their only heir. The equity really built up and that was my Mother's dream to hand me down an inheritance. Another thing to think about for those who really don't have other income besides Social Security is to check into low income senior housing. They go by income and charge rent accordingly. We have two complex's in my town and a lot of seniors live there. What is nice about it too, is that they have busses and take the seniors to the stores and pick them up later on. I am sure they coordinate with the senior center too for other activities. After having a house, it really spoils you on living in an apartment again. Unless you find the ultimate rental! There are no rights or wrongs, each of us has our own reasons for owning or renting. Vicki, I also like the strategy on putting your money in the bank and getting a mortgage, thus allowing for a tax write off for IRS!

Although i agree that renting is like throwing money out the window, everything i have read tells me to rent first before i buy. I've read that until i experience the four seasons in an area, i may not be aware of a climate situation that i can't live with (frigid winters, summers more hot and humid than i can handle). Additionally, until i've experienced a full year somewhere, i won't know if and when the area is overun with tourists, roads clogged with vehicles, roads that ice over and don't thaw quickly enough, etc.
I've read that what may seem charming on a short visit, may seem overwhelming long term (like being surrounded by beautiful country, but needing to go 20 minutes to get to the nearest supermarket). I can add, based on my own observations, that until i truly know an area, i may not know which town i want to live in. For example, i KNOW the towns around me. Which are rural in flavor, surburban, etc. I know which have easiest access to highways, medical facilities, etc. I don't think a person can truly know and understand all this until they've lived in an area for a while. I don't want to end up saying, i wish i had know about ... before i bought my home.

Ella, Vicki, others -- it makes perfect sense to rent in a new area to see if you like it, before investing in property. And for some people who prefer to rent and will travel a lot and just don't want to be burdened with a house, that's great too. It seems that the mistake to avoid is to buy property in a new area before you've had a chance to live there at least a year, and experience the full year's cycle there, etc. As for a mortgage, when my husband and I move, we hope to sell our house and buy a smaller, cheaper house in a less expensive community (and we have that one picked out already -- used to live there and have friends now living there) -- we will invest that profit (minus the costs of moving and perhaps have to get a short-term rental), but we will also pay cash for the new-to-us, cheaper house. For some people, a mortgage might make sense. When you're both healthy and there are two of you, then great. But when one dies, there goes that person's social security (and even if you do a survivor's benefit, you can't take your own as well), and I'd rather not worry that if our income from investments tanks, whether or not I can pay the mortgage. I'll still have to pay property taxes, insurance, etc but that's the plan that WE will be most comfortable with. At least that's how it looks now. Ask me in two years when we actually get to implement this plan! Until then, hi ho, hi ho, it's off to work I go while DH stays home retired....bless him. And his newly discovered cooking skills. :)

Hi,
Well my kids want meto sell my manufactured home on real property and then move Az. They will purchase a tiny house for me to live on their property. That's what I plan to do.....

Jeannie

I just wanted to mention to all of you who are planning to buy a pre-owned home. There is 'warranty' insurance you can buy (my realtor told me about it) to protect you in case of various problems with things in your house. The warranty covers a lot of things plumbing, electrical, and including appliances. When I sold my Mother's home I bought it and it was a great selling feature to the prospective buyers. You can buy the insurance two ways. While you are selling the house they will cover things for you and once you have sold the house it transfers to the new owner. I didn't have to use it but being an older home from 1930 potential problems lurk everywhere. The warranty lasts one year and if the homeowner wants to renew it each year they can do so. I have forgotten how much it was but I think around $350. It might be something some of you might want to check out. It gave the new owners confidence knowing they were buying an old home but the warranty would help protect them from financial hardship during the first year. The house was in excellent condition but one never knows what will happen even with a new house.

Oh, I forgot to mention, when you have a problem you call the insurance company and they send out a qualified tradesperson to fix the problem. I do not believe you have a choice on who comes to fix the problem. Like if you have a favorite plumber or plumbing company you might not be able to get them. I would suggest if you have favorite companies, ask the insurance company if you have choices in who they send out. The insurance company also told me if they cannot fix an appliance, they will replace it at no extra cost. Does anyone actually FIX appliances anymore? Seems as if we are a throw away society today! Most appliances seem to have a ticking time bomb attached to them and as soon as the warranty expires, the appliance dies! I had a refrigerator that was 14 months old, I believe it was a Maytag, and it kicked the bucket. However, when I sold Mom's house, her washer and dryer were from 1990 and were still running at 23 years old. That's when the last of the well manufactured appliances were made!

Hi,
Rent vs buy: There is another option to consider. You could become a landlord for your house and rent as you learn about new areas. You don't need to sell until you finally decide. If you are not going to be local, then use a manager. If you own your home, or have a small mortgage, then your home will become an income source. That income source may be greater than any other way you could invest the money...even after the maintenance and management.
Just another option.

Lulu

Jane Bryant Quinn, the finance expert, had an article on this topic in the last issue of the AARP Bulletin called Rent or Buy: Is one better for you? She says that "you might resist the change (to rent versus buying) because rent is supposedly money down a rat hole. It's not, if it frees up cash to keep you living well. Besides, insurance, upkeep and most of your real estate taxes go down the rat hole too. Why own a house and build equity for your heirs if housing expenses crimp your income and limit what you can do during your freedom years?" Just another take on the topic.

Carole, another thought = With new programs some people can qualify for a "no money down" option for the purhase of a new home/old(?) as long as it is not in the city limits of some states. "USDA" or "Vet" program. Example - if one were to purchase a home for $100,00 or lower (downsize seniors) and in a State such as NE TN or SC and the person is over 65 yrs of age with their Senior discoounts their taxes, mortg & ins would be somewhere below $800.00 (perhaps lower if you purchase a reduced price home). Point being its very difficult to find a "good" apartment for that price just about anywhere and in the mean time you have a lovely home that if (God forbid) something should happen to prohibit you from remaining there and paying the mortgage you have the option of selling (perhaps making a profit although in these days doubtful) or which ever way you choose to handle the situation and in the mean time you have lived in a nice home CHEAPER THAN PAYING RENT and at the discretion of raised rent everytime the land lord choose to do so.

Just another thought,
Robert

My husband and I sold our modest house in 2006 and walked away with a lot of equity. We bought a new condo, which cost more than we sold our house for, but we could do it because we had all that equity. We thought we would retire in the condo, but conflict in the condo association and expensive repairs needed on the building led us to sell in 2011. Home prices had deflated, so after paying the realtor, we walked away with only a fraction of the equity we had put into buying the condo. We are now renting. We made up what we lost within two years by not paying property taxes and home insurance. And now we have the advantage of no maintenance costs. We do have a good landlord who fixes things right away, and in the three years we've rented here, our landlord has replaced our washer and dryer and our microwave. If we were to buy now, we would have to deplete our savings to make a down payment. My husband is now retired and I will retire in a year. We both have pensions. At this stage in our lives, we'd rather hang onto our savings and allow it to grow rather than put it all into a mortgage for which we would only see a financial gain in the future if we sold it. For us, renting makes sense.

As a single working woman following a divorce, I rent a house and will also rent wherever I end up when I retire. My grass is cut for me, my snow is plowed, roof shoveled off (we get 200-300 inches of snow each winter), when the stove broke I was given a new one - they even dropped off a furnace filter and probably would have changed the filter for me had I been home - all included with the rent. I will have a very limited budget in retirement and, when I rent, I will know exactly what my costs are each month - no surprises. Works for me.

I suppose it also makes it a lot easier for the family if we're in apartments. My father-in-law was in an apartment when he passed away, and it was easy to just go and remove his stuff. A house or condo would have been a lot more complicated. I anticipate buying a place because I want to have more square footage than most apartments would give me and I want to personalize my surroundings in ways that you can't do in an apartment (kitchen design, flooring, etc.). However, I have given some thought to whether my kids would be able to unload my future home after I die. There may be a nice demand for 55+ communities today, but if I'm wondering whether there will be any resale market for them in 20+ years when the baby boomers are gone. If I put a few hundred thousand into an asset, I'd like to think that the asset has a chance of preserving its value.

I do like what Sarah said "when I rent, I will know exactly what my costs are each month – no surprises"

That is so true with home ownership, you never know what hidden expenses will pop up. Two years ago we had a snowstorm on Halloween and the leaves were still on the trees. This caused a lot of damage to the trees as the snow was heavy and broke tons of large branches and broke some trees in half. We had to hire a professional tree company to do the work and it was around $1,500 that we did not expect to spend. The pump in our well stopped working which required a plumbing company to come out and pull it out and replace it. More unexpected money and insurance didn't pay for it. We just had our house roofed, vinyl sided, new ac for living area, new boiler installed over the last year. Very expensive! However, these improvements will increase the value of our home.

There are a lot of hidden costs of home ownership. It is the little things that will kill you. If you need to hire someone to plow, mow and other maintenance things it can add up and if you do it yourself you have to invest in mowers, plows, snowblower, and other yard things like rakes, shovels, hoes...and much, much more! My husband is at the hardware store almost every weekend buying something.

We have a truck with a plow, a snowblower, two John Deere mowing tractors, various leaf blowers, a trailer for hauling stuff with the truck and a garage full of various tools that would take a year to sort out if we sold them! Not to mention two utility barns on our property filled with who knows what! We have lived in this house for almost 40 years and never moved. So, we have accumulated way too much stuff! That is another problem with home ownership is that you have 'room' and you keep getting 'stuff' to the point where you have so much 'stuff' you don't know what to do with it all! When you have an apartment, you are limited!

Right now we have a dumpster sitting in the yard ready to fill up again. This is probably the 3rd 15 yard dumpster we have rented, not to mention we gave a truckload of stuff to a charitable organization a few months ago and had 1800gotjunk come several months ago too. By the way, they are expensive but a good way to get rid of junk if you don't have room for a dumpster.

Renting does have it's advantages and disadvantages as does home ownership.

Lulu, I really like you idea of renting your home out until you figure out where you want to live. I have heard quite a few stories of how people have sold their homes and moved out of state and then wished they would of stayed where they were. Not only will your home still be there if you change your mind but you will continue building equity until you know where you want to live and whether or not it would be more beneficial to buy or rent. After such a harsh winter last year, I am wondering how many northerners are moving south, I know if I wasn't still working I would probably already be gone.

Paula,

I love a man who can cook! I can only imagine how comforting it will be for you to arrive home to DJ's home-cooked meals after a long day at work. Go DJ!

Ella, it IS a wonderful perk for me to come home and not have to deal with dinner (I do, however, still usually load the dishwasher up -- I can pack almost twice as much in it as DH can -- but he washes the pots and hand-wash onlies). The thing we now need to work on is the planning, so that when I grocery shop I can have on hand what's needed. But it's a work in progress -- it shows that when one mate is retired and another not, you need to make adjustments. And that will probably mean all along the way.

Louise, sounds like you have a LOT to clear out after 40 years!! We've moved residences at least every 7 years, except for this last house, in which we just celebrated 13 years. And STILL stuff to clean out. But we've lived in small houses, too, that we bemoaned the lack of storage (as you do with considering an apartment). But as we get ready to buy a smaller home in a couple years in NW Ohio (currently in upstate NY), we WILL buy a smaller place, although we'd love a basement (tornado country, after all). At this point in life, I don't want to keep buying new stuff. In fact, am now going through the house (when not at my job) and assembling a variety of nice items and will advertise and hold my own Black Friday elegant garage sale, advertising it as a Christmas/holiday gently used gift and holiday items sale. I am tired of putting up our full-size artificial tree each year, and it's time to divest of SO many ornaments and decorations. I'll keep a few for a tabletop tree, and will enjoy seeing so much stuff find its way to new homes. Might not make much money but it's all part of downsizing. We have no children so it's not hard, at this point, to give away some family things that I've held onto for years from relatives now gone.
And I imagine that after this next (last) house, at some point we will rent, too, when DH can no longer do the yard work, etc. There are several stages in this -- I'm thinking about in 10-12 year increments.

But by selling our house (hopefully can get about $220,000 for it when we sell, taxes now about $5300/yr), and buying a not-new house in Perrysburg, OH that is no more than $165,000 (with taxes no more than $3,000), we'll have money left over to move/establish the new house and still have a good little pot for either trips or to invest. Or to hold onto for that eventual step into assisted living. If I were single, I'd most likely opt for a condo or apt. -- I don't mind living so close to other people -- but my husband hates it, and for now we can still manage it. Compromise, compromise, eh?

Sarah, I am glad that the house you rent works out great for you. Not all rental houses have the lawn cut for you (in fact all active adult do not either). All landlords are not as responsible as yours in repairs. For others, I looked into renting out one of prior houses if it did not sell in certain time period. Although I would have used a property management service, I still got to hear horror stories. One of my prior students spent $$$ and time trying to evict his tenet. And make sure you have a CO detector if you rent. While it works out well in the vast majority cases both as a landlord and renter the same due diligence is needed for this, well as anything else in retirement.

Well ... what should I write more? Let's pause a moment here, folks. The title of the article is about "The Retirement Piggy Bank You Are Probably Overlooking". So a few days ago I started my comment by writing, "This article is about ways and ideas on how to get more money to retire better financially", and if you read the article again, the writer in fact spends a bigger part of it on discussing about a reverse mortgage for a way to be better financially! But judging from what I've read thus far, subsequent comments have been pouring in the realm of "buying versus renting" topic, and understandably with some quite strong fervor on both sides of the fence of arguments.
***A note to the Administrator then, may I suggest you to devote writing an entirely new subject on "buying versus renting for a retiree - the pros and the cons" or something similar to it? Or maybe an opinion survey or a vote polling on the subject? I feel this topic would enrich your catalog under your "Financial and taxes in retirement" category.***

For now in short, this is all I can say about buying versus renting: there is unfortunately no cookie-cutter 'one-size-fits-all' answer to it! For a retiree, any big financial decisions whether to take a reverse mortgage or in this case to buy/rent a smaller home, please take heed of what the writer wisely concludes, it surely "can have a huge and sometimes devastating effect on your lifestyle if made poorly.. So before you make any big move, carefully consider it and discuss it with your family and professional advisors." But of course aside from the controversies, everybody here can at least agree that having more cushions on your finance is a nicer alternative than none, isn't it? And thus it comes back to our dilemma, whether retiring is later or sooner, would you rather buying or renting a smaller home?

I still hold my previous response that, "In regards about owning vs. renting, if I have the cash around I would opt to buying rather than renting". Mind you that I say "if I have the cash around" because that is crucial to why I opt to buying rather than renting. Even so I also caution that "yes, there are always exceptions to the rule of course", and some other mindful responders like Louise already touch some of those exceptions so I won't elaborate them here. Another response by Carole quoting from Jane B. Quinn writing in the AARP Bulletin who seems to advocate renting than buying, I object the review there: in more careful reading, it's clear that Jane does not per say advocate renting without reservations. First, Jane herself admits as she ends her analysis stating, "I'm not renting now [implying she owns?], but I can imagine it, if I ever wanted to stretch my savings or travel more. Stay tuned." Second, to be fair, Jane's observations are defined under subheadings "It's all about income" and then followed by "Renting's rewards". In the nutshell, here is what she writes, "If you can pay cash for a house or condo and still have plenty of money to live on, you're a good candidate for buying. But if homeowning strains your lifestyle---even if you conserve cash by taking a new mortgage---you're a candidate for renting. In a very general sense, renting is cheaper than buying on the two coasts, where housing is especially expensive, and buying is cheaper than renting in the middle of the country, says Nicolas Retsinas, real estate lecturer at Harvard Business School (although some markets in the country's middle are expensive, too)". What Jane remarks in a sense which is inline with my personal opinion, buy a home if you can financially do so comfortably but rent a place if you can't afford to buy it. In fact, both buying and renting garner some blessings and burdens in each side.

All along I already point out my personal view that when I retire, if I can afford to pay cash for a house with all it entails (i.e. paying Property Tax, maintenance and repair, HOA as well as home insurances and other dues) then proud of ownership plus a hope of gaining equity (when selling it again or passing it to next generation) can safely justify buying than renting. Again, this after all IS an investment decision to make, and as in any other type of investments you could profit or lose your bets. If you should insist that renting is better for whatever personal reasons you may have, then go for it. I (family of 3) have been moving around different States throughout the years, so we have been both property renters (past) and owners (present) and frankly between the two choices, we much prefer to stay in our own little home in the long run. This saying is very true to us, "There is no other place like home!" But the real truth to conclude is this: smile folks, buying or renting on this earth is temporal and not eternal---do adjust it to make you happy :-) ... So good luck everyone!

Editor's note: Thanks Buddy for clarifying the discussion and the suggestion to have a separate topic on "Buying vs. Renting". We looked back and in the past have had 2 topics on that subject and both generated a lot of discussion. So folks interested in that might go there to see those comments:
This first one had over 100 comments:
http://www.topretirements.com/blog/real-estate/low-income-retirement-a-discussion.html/
and this one has a good description of renting pros and cons:
http://www.topretirements.com/blog/real-estate/buyrentor-stay.html/

Seeing how there is so much interest we will look to do more with this topic in future.

Has anyone converted a traditional IRA or 401k to a Roth? I have been trying to find information but can't find anything specific to my questions. I am interested in converting one 401k account to a Roth. I see that there is a stipulation that the Roth has to 'age' for 5 years after conversion so there will be no penalties. These articles always seem to be geared for those under 59 1/2 years old. If I am 63 years old and I want to convert, will the 5 year aging stipulation be waived and I can start to withdraw money immediately without penalty?

Thanks in advance!

Louise, I recommend you contact the financial firm you have your traditional IRA or 401K with. They should be able to give you the answers you're looking for with absolute clarity.

Louise, You will need to pay taxes if you convert from an IRA/401k to a Roth. Taxes aren't paid when investing into an IRA/401k, therefore, you will be taxed if you move it to a Roth. Advantages to a Roth is that all money earned is tax free. It honestly depends on how long you plan to keep it in the Roth. If it's for a short time, it's probably not worth it. If you plan to keep it invested for several years, then I would seriously consider doing it. In our opinion it's the best investment tool out there, because we will not pay taxes when we withdraw it. We have friends that are withdrawing from their retirement like it's one big party and they owe lots of money every year on their income tax. This obviously is not a good plan. I'm scared for them actually. Ella is right, find a good financial firm and they will make your life a lot easier. Ours is worth every penny we pay him. Good luck!

Louise,

Sunnny's reply to you was great. I just want to add that any financial institution you have your IRA invested with is required to give you the answers to your questions free of charge. One phone call should do it. And should you get someone who doesn't seem sure of themselves (or the facts), just call again and speak to someone else!

I called the CPA who did our taxes and she gave me some disturbing facts on converting the whole 401k over to a Roth. The taxes would be very bad if we converted the whole thing over.She did suggest that we take out smaller amounts rather than the whole thing. She said to only take what you need per year if I should decide to do that. At this point I don't think I will convert it over. I think the suggestion of taking out smaller amounts was good advice.

Unfortunately I am at the peak of my earning years as I approach retirement so converting to a Roth would be a large tax bite. I wouldn't expect the funds to earn enough to offset the tax consequences from withdrawal. In my humble opinion, the Roth opportunity is much more valuable to individuals putting new money into retirement accounts than for retirees. Of course, this is one of those things that will be very specific to a particular family's tax situation and financial circumstances.

I plan to use a reverse mortgage next year when I retire to On Top of the World in Florida, leaving the high taxes and cold weather of Chicago. All of us baby boomers are not broke and destitute which leads many to believe we need a RM to make ends meet. I view RM as a savvy financial arrangement where I can keep more of my money working for me. When I buy my $250,000 home in Florida I have three method to buy it, all of which I am capable of doing (1) pay cash; not ideal, got money tied up in a non-income generating asset (2) take out a forward mortgage; bad, monthly payments using money that could be invested or used for anything else that pleases me or (3) HECM for Purchase (Google it). It barely got a mention in the article. This is a RM too that I cannot understand why it is not marketed and discussed more. With the H4P I will put down approximately 55% and never make another mortgage payment again. I do plan for this to be the last house I will ever buy and it is mind until the last one of us (me or wife) passes away.

I am interested in others that have used the HECM for Purchase for a new construction home in +55 communities and how receptive the builder and community was to it.

Thank you no3putts for this HECM information! This is certainly a wonderful option for us considering moving to a new state and buying a new home.

Here is an article that explains it a bit further.
http://www.kiplinger.com/article/retirement/T037-C000-S004-buy-a-home-with-a-reverse-mortgage.html

The great thing about this is that they do the traditional mortgage AND the reverse mortgage at the same time saving you closing costs.

no3putt, this article may explain the why's HECM is not widely known.

http://www.reversereview.com/magazine/feature-selling-the-hecm-for-purchase.html

The link to Jeffrey Fricke's website above does not work. Does anyone actually have it?

no3putt, we are also from the chicagoland area and are looking to move to Florida. When are you planning to move to OTOTW? Of the two developments now in consideration one has actively sent information on RM. How is your process going and have you seen any problems? Thanks for the info.