In today’s housing market, many seniors are finding themselves in a difficult situation.  The equity they had come to rely upon as a safety net for long-term care or inflation protection, has all but diminished.  Furthermore, selling their home to recoup what little equity is left forces them to settle for much less than the home was worth just a few years prior.  And refinancing has become ever more difficult, even for those of us with perfect credit, but whose neighbors have experienced foreclosure.

Hind sight is, of course, 20/20, but there are a few things people can do prior to retirement to protect themselves against a downturn in the housing market. 

One option is to purchase Long-Term Care insurance, and it is important to buy it while you are young and healthy, and at a level of coverage that matches your preferences for care, so that premiums remain affordable, considering you may never use the coverage.  If you have waited too long to obtain the coverage, and your age forces the premium to spike, you should consider a Longevity Annuity.  This type of Annuity allows you to tax-defer savings and choose when you will begin receiving monthly payments from the initial lump-sum.  The payments are guaranteed and you cannot outlive them, which may help you sleep better at night.  If you are worried about paying premiums for coverage you may never use, and are uncomfortable with the risk associated with playing the stock market, a Longevity Annuity, may be a perfect solution for you!  You will give up some liquidity for the benefits inherent to a Longevity Annuity, but that may be an excellent trade-off for your situation.

Author: Liz Garcia, DeHayes Consulting Group