The Impact of a Loss of Home Equity on Senior Citizens

If it's not bad enough that senior portfolios were plundered in the 2008 financial market downturn, home equity has been decimated as well. Homes, long the source of most people's largest investment, are no longer the reliable investment seniors could count on to make a comfortable retirement within their reach.

Unique Situation

The result of this unfortunate timing on seniors is that they have little, if any, time to make up for their losses. While pouring billions of dollars into various programs to rescue the economy since 2008, as of 2010, the federal government has not instituted any programs for seniors.

Repercussions

With fading returns on their investments, and not able to rely on the equity in their homes, many seniors, especially those who were close to retirement, have had to raid their 401K retirement accounts, collect Social Security earlier or plan to work longer.

Significance

Many seniors are waiting longer to retire, thereby, making it more difficult for young people to find jobs in an already difficult job market. This, in turn, creates a deflationary economy because older workers tend to save more than they spend.

What Next?

The AARP suggests that seniors employ the same sound strategies for saving and investing as if they were starting all over again. Be vigilant with your investments, have adequate insurance and find a trusted financial adviser.

References

• Equity Rich, Cash Poor, Need Handyman
• Retirement: Are you Ready?
• Money Advice for Senior Citizens: An Economic Survival Guide