Herb Smith wrote:
- quote -

RE Reverse Mortgages. An elderly client, a retired Realtor,
took a reverse mortgage deal. The fees charged in
relationship to the cash returned were sinful. I hope the
broker burns in hell. Tell your clients to be cautious about
reverse mortgages and get a second and third opinion before
they sign anything.

--
Frederick E. Jorden http://Tax-Accounting-Payroll.com
7825 Midlothian Tpk - 207 Richmond, VA 23235-5247
EMAIL knowtax[at]bigfoot.com
(804) 320-6210 FAX (804) 320-6211

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"Harlan Lunsford" <hlunsford[at]bellsouth.net> wrote:
- quote -

In TX, the property tax is frozen at age 65 on the rate.
However, this doesn't extend to the valuation of the home
which is usually where most of the annual rate increase
comes in my area. They do get a sizable homestead exemption
also on all but school tax which is 80% of the tax.

Thanks to you others that offered constructive advice. To
the person suggesting I couldn't spell ACTUARY, I've only
worked in the life insurance field for 30 years. Maybe
someday I'll learn something. To the one suggesting the cost
to live drops as much as the social security drop, just how
does that compute when the big items are property tax, home
insurance, and car upkeep? They had the same thing before
Dad died.

mike

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Harlan Lunsford wrote:

- quote -

Hmmm again. On further reflection, that last statement
isnt' legally accurate. I would still be receiving 100% of
what I'm entitled to. And my wife would not be receiving
an enhanced amount.

Is this country great, or what?

ChEAr$,
Harlan Lunsford

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"Mike Lewis" <jmpj[at]cableone.net> wrote:

- quote -

With the value of the home that low, it may be not be as
attractive, but have you considered a reverse mortgage? Mom
should be able to draw about 60% of the value of the house,
or in this case about $36,000, from the house. If she
structured it as a line of credit and took $500 per month,
the money would last her about 6 years. This won't solve a
long term problem that is expected to last more than 6
years, but it is a consideration.

One of the things you need to be careful about in doing your
calculations for rent - and future expenses - is in building
in an appropriate escalation factor. $60K cash works out to
about $500 per month over a 10-year period, ignoring any
interest earned on the principal. As her annual rent
increases, the duration the money will last will shorten.
This will also be true if she reverse mortgages the house.
My example shows that she would get about $500 per month for
6 years, if she draws more, she will get it for less time.

A "quick" look at an immediate annuity shows that $60K will
easily buy her an immediate annuity paying $506 per month
with a minimum guaranteed period of 10 years - this would
ensure she gets all her money back, but it will take
10-years for that to happen. Frankly, while I am a big fan
of variable annuities, I like fixed annuities a LOT less.
I'm not sure I'd go this route, but it is an option.

Good luck,
Gene E. Utterback, EA

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"Mike Lewis" <jmpj[at]cableone.net> wrote:

- quote -

An item to think about is a reverse mortgage.

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"Mike Lewis" <jmpj[at]cableone.net> wrote:

- quote -

look into a reverse mortgage. Don't know if it will suit
your mom well, but something to consider.

- quote -

oh sure. Like my taxes aren't being wasted enough
subsidizing a ridiculous Ponzi scheme as it is. Can you
spell "ACTUARY"?

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Mike Lewis wrote:

- quote -

1200$ per year tax on her home? I'm sure you know it to be
true, but doesn't the local municipality/county have some
kind of exemption for homes owned by people over 65? Down
here, if one's over 65 and their 1040 taxable income is
less than 7500, then they're exempt from property tax. And
even for one over 65 but still working regularly, there's
exemption from paying school tax.

Hmmm, forgot to retain your question about social security,
however I think individuals should qualify and receive
social security benefits on their own merits. If this were
true, I would be receiving 150% of what I get now.

ChEAr$,
Harlan Lunsford, EA n LA
Sun, 9 Jan 2005

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Mike Lewis wrote:

- quote -

I might agree IF you can find a source of funding, and IF
you can do this in a way that doesn't discriminate against
single people.

Example: Married person (the only spouse who works) has
average annual earnings of $40,000. Single person has
average annual earnings of $40,000. Why should the married
couple receive TWICE the benefits?

The system is already "unfair" to the extent of the current
spousal benefit, for which no additional FICA is paid.

MTW

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Mike Lewis wrote:

- quote -

Have you looked into the possibility of getting a reverse
mortgage on the house? That might give her enough on a
monthly basis to allow her to remain in her own home as long
as she is fit.

- quote -

I don't quite know your problem, but isn't SS paid to a
couple (where only one spouse has a work history) already
paid on a "joint basis"? When one spouse dies, the income
from SS is reduced by 1/3, not 1/2. If the surviving spouse
is the non-worker, he or she then gets the decedent's
benefit. If the survivor is the worker, he or she only loses
the benefit from the other (which is only 1/2 of the primary
benefit).

If both spouses qualify because of separate work histories,
they each receive a benefit based on their work or the other
spouses work history, whichever is greater. If both spouses
had similar earnings, then they might be receiving benefits
on their own work histories. When one dies, the income of
the survivor may be reduced, but only to the benefit level
of the decedent.

One would expect that when one spouse dies, the living
expenses of the survivor would be reduced - possibly as much
as 1/3 to 1/2. After all SS is not designed to provide for
all expenses in retirement.

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My 82 year old Mom (in good health and still drives well)
lives on $900 mo. social security. Her house is paid for and
would bring about $60,000. In about 18 months she will
exhaust her savings because her expenses exceed income by
$500 per month. So far, I havn't had her stop paying the
$1,200 per year tax on the house but will be to that point
in 12 months. She would prefer to live in her home of 50
years but we are considering selling the house and
stretching the proceeds out over 10+/- years to rent an
apartment which would put her 20 miles closer to a larger
town (her town has 1200 pop) and eliminate the need for her
90 model car which is part of her extra expense.

Would any financial planning types out there tell me what
they would do that I haven't thought of?

As a side note, who agrees with me that social security
should be paid to couples on a joint basis so that the
survivor doesn't lose half their income when the first
spouse dies?

Mike Lewis, CPA

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