Monday, November 13, 2017

Should you Retire with a Mortgage?

While the majority of homeowners manage to pay off their mortgages before retirement, more people than ever before are retiring while they still owe money on a mortgage.  According to a 2013 survey done by the Federal Reserve, in 2001 approximately 74 percent of homeowners had managed to pay off their mortgages prior to retirement.  By 2013, that number had dropped to only 61 percent.  The median mortgage loan still had 17 years left before it would be paid off.  For some senior citizens, a large, lengthy mortgage could put their retirement at risk. Others, however, will be able to handle the expense.  What should people consider before beginning retirement with a mortgage?

Can Your Retirement Budget Handle a Mortgage?

People who retire with a large investment income in addition to Social Security and/or a pension will often be capable of handling a mortgage, especially if they are able to maintain an income which is nearly the same as their pre-retirement income.  They may even find that the mortgage deduction they get on their taxes benefits them enough to make it wise to have a mortgage.

Homeowners with a modest retirement income will need to look at the numbers more carefully.  If they have owned the home a long time and can afford the payments, it may be wise to continue to live in the home until it is paid off, especially if they only have a few years left on their mortgage.  By that time, it would feel as if they were getting a raise in their retirement income, since their expenses would drop.  On the other hand, they need to realize that they may not get a tax benefit, since they may only be using the standard deduction when they file their taxes.  They need to look at their long-term financial situation.

What If You Cannot Afford Your Mortgage?

If you decide your retirement budget will not be able to handle your current mortgage, you have a few options.

You could try to pay off the mortgage prior to retirement, while you are still employed.  You could make extra house payments or refinance your loan into a 15 year mortgage, as long as you do it ten or fifteen years prior to retiring.  However, you do not want to take money out of your retirement savings accounts or add to other debts in order to pay off your home faster.  Those moves would either reduce your future retirement income or increase your other expenses, which would not actually solve the problems caused by having a mortgage you cannot afford.

A popular choice is to sell your current home and use the equity to buy another one which is less expensive.  You might even be able to pay cash for the new home.  If not, you will at least end up with a much less expensive mortgage which will better fit into your retirement plans.  You could look for a smaller home in your current neighborhood or consider moving into an active adult retirement community.  Many retirement communities have homes which are modestly priced and well designed for people who are aging.  This could also save you from spending money to modify your current home so it is accessible for someone using a wheelchair or walker, which could be an issue for you or your spouse in your later years.

Should You Consider a Reverse Mortgage?

Reverse mortgages can be very helpful for retirees who want to remain in their home until they die.  However, it is not a good idea to get a reverse mortgage too early in your retirement, especially if you hope to retain some equity in your home so you can leave to your children, or if you hope to use your equity to cover the cost of a nursing home or memory care facility at the end of your life.  Before getting a reverse mortgage, you need to weigh the pros and cons very carefully.

You do not need to pay back a reverse mortgage as long as you remain in your home.  However, the debt and interest continue to accrue and, eventually, you may no longer have any equity left in your home.  When you die or move into a nursing home, the mortgage company can sell your house and pay themselves back the amount of the loan, plus the interest and selling costs.  You or your heirs will only receive whatever is left.  If you have had the loan a long time, there may be nothing left.  That is why it is best to wait as long as possible before you turn to a reverse mortgage.

Whether or not you decide to retire with a mortgage depends on your personal financial situation.  However, it is important for you to weigh your decision carefully.

If you are interested in learning more about retirement planning, where to retire, common medical problems, Social Security, Medicare and more, use the tabs or pull-down menu at the top of the page to find links to hundreds of additional articles.

Watch for my book, Retirement Awareness: 10 Steps to a Comfortable Retirement, which will be published by Griffin Publishing in early 2018.

You are reading from the blog:

Photo credit:

Tuesday, November 7, 2017

Vacation Timeshare Risks and Benefits

There are over 9.2 million timeshare owners in the United States, and many of them are retirees.  Timeshares can be an affordable way to own a portion of a vacation home and many people love the time they spend in them.  They make it possible for owners to budget and pay for their annual vacation over time.  Millions of people look forward to spending a week or more each year in a luxurious condo in a beautiful resort.  Many timeshares give owners the ability to trade their week in one resort for a week in a different one, which means owners can travel to a wide variety of vacation destinations over the years.  Some of them even give owners the option to trade their week for a trip on a cruise ship.

Timeshare Costs

Prices range from about $10,000 to $40,000 and give the owner the right to stay in a resort for one week a year, for as long as you own the timeshare.  Used timeshares can sell for significantly less.  While some owners purchase the timeshares for cash, others make monthly payments for a set number of years, until the purchase price has been paid off.

In addition to the purchase price, the annual maintenance fee averages from about $500 to $1000 a year and owners must also share in paying the annual property taxes.  Owners should expect both of these expenses to rise with inflation.  The maintenance fee may go up faster than the inflation rate, because the property will age and need more attention.  There may also be special assessments whenever a major upgrade needs to be made.  Some timeshares bill the owners for the utilities for one week of usage a year.  For those owners who want to trade their week at one resort for a week at a different one, there may be an additional fee to make the trade.

If you own your timeshare for many years, you may come to see that purchase price as a real bargain.  The longer you own it, the less you will have spent per year on your vacations.  However, if you decide you do not want it after a few years, it can be nearly impossible to recoup your costs.

Risks of Owning a Timeshare

While timeshares may be a great deal of fun and used by your entire family, there are risks to this type of property ownership.   While buying a timeshare may seem like a great idea during the prime years of your career, it can become a burden if you lose your job, suffer a financial setback, or become too ill to use it any longer, which is a common problem for older owners.

Common Problems with Timeshares

Although most owners are very happy with their decision to own a timeshare, there are potential problems you need to consider before you make the purchase.

1.  If you are making payments on the purchase price, plus paying the annual maintenance fee, property taxes and other costs, your timeshare may be more expensive than you expected.  In addition, you have to consider other vacation related expenses you will have when you use it,  such as the cost of traveling to the location and spending money on restaurant meals and local attractions.

2.  Owning a timeshare could limit your choice in vacation destinations.  While many timeshare operators such as Marriott and Hilton have multiple locations, there may be times when you would like to take a vacation somewhere exotic, or stay someplace other than one of the resorts owned by your timeshare operator.  If your annual vacation time is limited, you may have to choose between letting your timeshare week go to waste, gifting it to a friend, or using it when you would rather have stayed somewhere else. 

3.  Timeshares can be very difficult to resell.  Once you own it, it is your property.  In addition, if you or your heirs are not able to resell it, your adult children might inherit it, depending on the terms of your contract, and it can become their responsibility to keep up with the annual maintenance fees and other costs.  If your children look forward to using the timeshare, this may not be a problem for them.  However, if they are not in a position to use it regularly and the mortgage payments and maintenance fees become unaffordable for them, they may consider it an expensive liability which they do not want.

4.  Sellers may try to resell their condo back to the company, but the resort owners may decline to repurchase it.  The owners can also try listing it on a site like, for a fee, but there is no guarantee it will sell.  If anything, by announcing that you want to sell your condo, you could put yourself out there for scammers to find.

5.  Scammers frequently target owners who want to get rid of their timeshare.  In the June/July 2017 AARP Magazine, they published an article called "Time-Share Bandits."  It described how people who advertise their timeshares for sale are often called by scammers who tell the sellers there is a buyer who is interested in their timeshare.  The seller just has to put up a few thousand dollars in advance to cover escrow and title services.  Financially strapped sellers often jump at the chance to get rid of their timeshare, only to be told after a few months that the buyers "backed out."  Often the same sellers have been targeted repeatedly, paying fake escrow fees over and over again.

6.  You may decide to keep your timeshare, and donate the use of it to a charity during those years when you are unable to use it yourself. has a list of charities which would like timeshare donations.  The downside of this choice is that you cannot get a tax deduction for your donation.  According to a U.S. News and World Report article titled, "Should You Invest in a Timeshare," the IRS ruled there is no value for the time used during a donated week.  As a result, you have to keep making your payments, even on the years when you cannot use the timeshare, and you cannot get a charitable deduction, even if you donate it.

For More Information About Timeshares

Despite the risks of timeshare ownership, you may still want to own one.  If you are interested in buying a timeshare, you can learn much more from ARDA, the American Resort Development Association.  With approximately 1,000 members, they represent vacation ownership and resort development companies, in both the U.S. and other countries.  They can help you find legitimate timeshare operators to help you.

American Resort Development Association
1201 15th Street N.W., Suite 400
Washington, D.C. 2005
(202) 371-6700

Get More Information from the Federal Trade Commission:

If you are interested in learning more about financial planning for retirement, travel, where to retire, common medical issues as we age, Social Security, Medicare and more, use the tabs or pull down menu at the top of the page to find links to hundreds of additional articles.

Watch for my book, Retirement Awareness:  10 Steps to a Comfortable Retirement, which will be published by Griffin Publishing early in 2018.

You are reading from the blog:

Photo credit: - Marriott Grande Vista

Wednesday, November 1, 2017

Home Safety Modifications for Senior Citizens

The vast majority of Americans plan to continue to live in their pre-retirement homes as long as possible.  In order to make that possible, many of them will need to make a few modifications to their homes so they are more accessible and safer.  Some of the modifications may be minor and can be done by the homeowner.  Others may require hiring a contractor.

Whether you do it yourself or hire someone to make the changes for you, the safer you can make your home the less likely you are to have an accident and be injured.  This is important because, according to the Centers for Disease Control, every year one out of three adults age 65 and older will experience a fall. Below is a list of common modifications and suggestions for hiring a reliable contractor so you will be able to safely stay in your home as long as possible.

Common Home Safety Modifications

Power stair lifts - If you own a two-story home and do not have a bedroom and full bathroom on the main floor, a power stair lift may make it easier for you to stay in your home even if you have surgery or find it difficult to climb stairs for other reasons.  Stair lifts can be expensive, so talk to several companies before making a decision.  Despite the cost, installing one will probably be cheaper than moving.

Grab bars in the shower or tub - If you add bars to the shower wall and an inexpensive shower chair, you can more easily continue to enjoy showers with less fear of slipping and falling.  A professional may be required to secure the bars to the wall, so it is done without cracking your tiles.

Walk-in tub - For those who prefer a bath to a shower, a walk-in tub is much safer than a traditional tub which requires you to step over the edge to climb in and out.  Contact several companies and try sitting in the tubs in the showroom before making your final selection.

Hand rails in hallways and stairs - If you have stairs around your home, make sure you have handrails to hold onto as you age.  Be especially aware of short outdoor stairs which often do not have rails alongside them.   A simple rail installed next to the stairs can make it much safer for you to use the steps.

Wheelchair / walker ramps - If the only way to currently enter your home is by using stairs, you may want to add a ramp so it will be easier to enter if you ever need to use a wheelchair or walker, even temporarily.  You do not want to wait until you need a ramp before you consider adding one.

Lower counters in kitchen and bathrooms - For the same reason you do not want to wait until you need them before you lower your kitchen and bathroom counters, you may want to investigate the idea of lowering yours before you find yourself using a wheelchair.

Changing door and cabinet knobs to levers - Levers are easier to use if you develop severe arthritis in your hands.  They are also attractive and easy to install years before you need them.  If you are handy, you may be able to handle this improvement yourself.

Widen doorways to accommodate a walker or wheelchair - There are narrow wheelchairs which can go through nearly any normal doorway.  However, if you are a very large person or have an unusually narrow door or tight space, you may want to see if you could widen the openings.  You may even consider making changes to your floorplan to open up the living area of your home.

Electrical Alterations - If you bring a contractor into your home to do other work, you may also consider asking them to raise your outlets and lower your light switches so both are easier to reach if you loose some of your mobility.

Make Simple Changes to Prevent Tripping - If your floors are covered with an assortment of rugs, you may consider removing them or using rubber mats under them to prevent their movement.  In addition, look for any other dangerous situations in your home, such as electrical wires and extension cords which you have to step over.  Change anything that could be dangerous in order to reduce your fall risk.  For example, instead of wearing normal socks in the house, it may be safer to wear indoor shoes or special socks with knobby, rubberized bottoms, which are not as slippery.  Take a long, hard look at your home and lifestyle, then do everything you can to reduce or eliminate dangerous situations.

How to Find a Reliable Contractor

For those home improvements which you are not able do yourself, you will need to hire a contractor.  However, you want to make sure you choose someone who is familiar with the Americans with Disabilities Act and is a Certified Aging in Place Specialist.  You can get a list of these contractors in your area from the National Association of Home Builders at  The person you hire should be able to evaluate the safety of your home and make a variety of suggestions in a range of prices.

In addition, call your State Contractor License Board to see if they have any additional information about the contractors in your areas.  Once you select a contractor, ask for their license number and verify its status with the board.  Do NOT use an unlicensed contractor.

Get at least three bids before making a final decision.  This could save you money.  At the same time, you do not necessarily want to use someone whose bid is dramatically lower than the other bids, unless you understand specifically why they are able to do the work so much more cheaply than their competitors.

Learn more about home modifications from the National Resource Center on Supportive Housing and Modifications at

If you are interested in learning more about how to safely retire in your own home, common medical problems, other places to retire, financial planning, Social Security, Medicare and more, use the tabs or pull-down menu at the top of the page to find links to hundreds of additional articles.

Watch for my book, Retirement Awareness: 10 Steps to a Comfortable Retirement, which is due to be released by Griffin Publishing early in 2018.

You are reading from:

Photo credit: