Reverse mortgages can provide you with some liquidity during your retirement years without incurring the risks that are associated with typical refinancing options. To a large extent the name says it all: with a reverse mortgage the bank pays you, you don’t pay the bank.

The lender owns most of the equity when you buy a house, and each month when you pay your mortgage you buy some of that equity. If you get to the point where the table is turned and you own all or most of the equity, you can choose to take out a reverse mortgage and in essence sell some it back a lender.

The Federal Housing Administration backs reverse mortgages that that are formally called Home Equity Conversion Mortgages or HECMs, but you can also obtain reverse mortgages through private lenders. When you refinance your home to obtain liquidity you have to make payments so you must qualify in terms of income and credit scores, and you can be foreclosed upon if you default. With a reverse mortgage you make no payments so no such qualifications are necessary. You simply have to be at least 62 years old and have sufficient equity in your home.

You can receive reverse mortgage payments either in a lump sum, incrementally, or on as an-needed basis in the same manner that you would use a home equity line of credit. Though you can’t default as it were, the loan can be called in if you fail to pay property taxes and/or insurance or if you do not keep the property in adequate condition. When you leave the home either through moving or after your death, the reverse mortgage becomes due. In most cases borrowers or their heirs will choose to sell the house at that point, pay of the reverse mortgage with part of the proceeds, and keep the rest.

Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.

Though it is true that young adults should have a basic estate plan in place, it would be disingenuous to suggest that estate planning is equally relevant to people of all ages. The eventualities of aging become more applicable to you as the years pass, and it is your personal experience that underscores the importance of intelligent planning more poignantly than anything you may read or hear about. As you enter different stages of life you see some of the things that your older family members go through and you recognize the importance of making plans for the future.

Making pragmatic preparations for all contingencies is the prudent course of action, but there are some tricky psychological waters to navigate. As you do the math and scour through the statistics as your retirement approaches you may start to lose sight of the potential that lies in the present. By all means, make proper plans and let your wishes be known. But once you are prepared for death make plans for life, and by all means, think big.

Consider the story of Costa Mesa resident Bill Burke. In 2007 he decided to climb Mount Everest when he was 65-years-old. He made it to within in 100 yards of the summit when he had to turn back due to the feeling that he simply did not have the stamina to make that final push and then return safely back down the mountain. Not to be deterred, he tried it again the next year and had to be airlifted to safety after a bout with pulmonary edema. By this point you would think that he would finally get the message and recognize the fact that he was too old to achieve his objective. Fortunately, Bill Burke didn’t think that way. In 2009 he reached the summit of Mount Everest at 67 years of age, becoming the oldest American to scale the highest mountain in the world.

You may not be a mountaineer, but each and every one of us has a personal Mount Everest to climb, and in many cases there is nothing standing in the way unless you make the personal choice to embrace self-imposed limitations and make age the culprit.

Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.

Planning for the future is an imperfect science for just that reason, it’s the future, and none of us has a crystal ball. The earlier you get started the more time you have to accumulate assets that you can spread across your retirement years, and that’s a good reason to start thinking ahead as soon as you can. But at the same time the further you are trying to peek into the future the harder it is to make predictions with any degree of certainty.

There is however one thing that is just about as sure as death and taxes: health care and long-term care costs will rise. Just how much is hard to predict, but the charge for a year in an assisted living facility went up this year by 5.2% to a national average of over $39,500. These costs are expected to continually rise so what that number is going to look like in ten to twenty years is going to be another story entirely. And just to paint a more complete picture, nursing home costs were more than double assisted living charges in 2010 and these too are on an upward trajectory.

What can you do about it? The fact is that health care costs are incurred by people who are ailing. Residence in an assisted living community is something that is required when you need help taking care of your day-to-day needs. These expenses are not a given because you may not get seriously ill for long periods of time and you may be able to take care of yourself well into your twilight years.

There are cases when people are stricken by health problems that they could have done nothing to avoid, but they are the exception rather than the rule. If health care costs concern you the best course of action is to take fitness and nutrition very seriously–as seriously as you do your finances. The longer you stay healthy the less your health care costs are going to be, and diet, exercise, and the ability to make healthy lifestyle choices are totally within your control.

Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.

Some people start to take the subject of estate planning seriously after they have retired, and this is one way to address the matter. However, it is advisable to have a plan in place long before retirement for a number of different reasons, and many people choose to take a holistic approach. When you discuss the details of your legacy with an estate planning attorney while you are still working, retirement planning is going to be a relevant topic. For this reason there are those who plan their retirement and their estate simultaneously, and this is a very logical choice.

These days most estate planning or probate lawyers would consider themselves to be comprehensive specialists in the legal discipline of elder law. Since our senior population is rapidly growing and people are living longer lives, there are new issues to address and longer term retirement planning has become necessary. The fun side of retirement is clearly part of what you need to plan for from a financial perspective. However, when you consider the fact that more people are living beyond the age of 85 than ever before, you need to address the realities of encroaching age as well. Elder law attorneys provide Medicaid advice, disability planning, and strategies to address the financial impact of nursing home or assisted living facility expenses.

Retirement and estate planning are clearly interconnected, and it can be very comforting to have a solid plan in place that addresses every eventuality from the day you retire through the time of your passing. Because it can take significant time to accumulate the resources that you need, it is really never too soon to sit down with a retirement and estate planning lawyer to discuss your goals. To that end, please feel free to give us a call at 619-696-0778 to arrange for a free consultation.

Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.