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Equity Release Mortgages and Lifetime Mortgages refer to the same mortgage, and are available to anyone who is age 55 or above. Lifetime Mortgages allow you to release capital from your home either as a one off lump sum or a combination of a lump sum and further drawdown’s. In some cases you may be able to release equity on a monthly basis. For those that are asset rich and cash poor, Lifetime Mortgages are fast becoming one of the main considerations in retirement planning.

Equity Release Schemes

Lifetime Mortgages are a serious decision and not necessarily the right course of action for everyone. Other considerations such as the use of existing savings and investments or downsizing to a smaller property could be more suitable, and because Lifetime Mortgages can affect eligibility to UK means tested benefits such as Council Tax Benefit, Pensions Credit and/or Pensions Savings Credit, it is always recommended that you seek advice form an independent adviser who specialises in Lifetime Mortgages. An independent Equity Release adviser will assess your exact requirements and if appropriate will help you select the most suitable scheme for your circumstances from the full range of providers.

Lifetime Mortgages are designed to run for the whole of your life with the equity released attracting interest that rolls up against the amount borrowed. Typically interest rates are fixed so that it is easy to calculate how the debt increases over time, but the movement in house prices both up and down is always a consideration that requires particular consideration, especially if leaving an inheritance to your beneficiaries is important to you. With the growing flexibility in Lifetime Mortgages it is now possible to protect and guarantee a specific value in your property for your beneficiaries.

The amount you can borrow with Lifetime Mortgages depends on how much your home is worth and on your age. The older you are, the greater the percentage of your home’s value you can borrow. Nothing is repaid until the last survivor dies, moves into long term care or the property is sold, but interest is added to the amount you have borrowed each year and is ‘rolled up’ over the life of the loan.

Lifetime Mortgage Considerations

Whilst there are a lot of positive reasons for releasing some of the money tied up in the value of your property through Lifetime Mortgages , there are also other aspects that require careful consideration such as -

Interest-only mortgages
If you can afford to meet a monthly payment an interest only mortgage could be considered. With interest only Lifetime Mortgages you borrow a lump sum secured against the value of your home. You pay interest on the loan each month, and the lump sum you originally borrowed is repaid when your home is eventually sold. You need to be able to afford the interest payments out of your pension or other income, but this option does mean that less interest is paid than would otherwise roll up against the loan.

Reversion Schemes
Also within the same marketplace as Lifetime Mortgages are Reversion Schemes. With a Reversion Scheme you sell your home, or a part of it, to a reversion company that allows you to continue to live there for the rest of your lives. After you die, (or move out for whatever reason) the proportion of your home that you sold becomes the property of the reversion company. Anything left over passes to your estate. When considering Equity Release Reversion Schemes and a drawdown of the maximum lump sum available to you, you will generally get a higher amount than through an other equity release options, but you loose any future increase in the property value should values rise.

Other Equity Release considerations

Would moving to a less expensive property be a better way of releasing money tied up in your home?

Have you got other nest eggs, such as premium bonds or savings, which you could use?

Have you considered your ability to move home in the future? The value of the loan outstanding reduces the amount you can spend on a new property, and could remove the ability to move home at all.

The value of your property can increase or decrease which will affect the amount of equity remaining in your property for you or your heirs after repayment of the lenders loan.

The equity stake that you currently have in your home could reduce to nothing due to the effect of rolled up interest and charges exceeding the future value of the property.

There are costs associated with taking out the loan such as a valuation fee and a lenders arrangement fee.

You will be committing to keeping the property in good condition and to keeping it insured.

You will not be able to use the property as security for any other borrowing.

If you are living with a partner and one partner dies, entitlement to means-tested benefits will alter. Any occupational pension entitlement derived from the partner can continue, stop altogether, or continue but at a reduced rate.

Debt Consolidation: - Taking out a lifetime mortgage to pay off other debts which are not secured on your home should only be undertaken after careful consideration, and probably as a last resort. As interest rolls up on a lifetime mortgage, the initial amount taken to consolidate the debt will grow and may become many times larger than the debt it paid off.

In addition, if you are having financial difficulties and are struggling to maintain payments on unsecured debts, you should speak to the Citizens Advice Bureau or National Debt line. It may be possible to come to an arrangement with your unsecured creditors which may include freezing the interest charged and making payments at a reduced level. If this is possible, it is likely to be a better and cheaper alternative in the long run to Lifetime Mortgages.

Equity Release Schemes

For more advice on Lifetime Mortgages simply follow one of the links in the article above.

To help with retirement preparations, the U.S. government has released an extremely helpful and easy-to-use retirement savings calculator to help you calculate and understand your IRA and other retirement finances. To learn more about it, why it works and where you can get it - keep reading.

Background

The calculator’s accompanying guide is titled “Taking the Mystery out of Retirement Planning.” It was produced by the Department of Labor’s Employee Benefit Security Administration branch. Essentially, the booklet provides a series of scenarios along with several easy-to-follow worksheets that help you calculate how much you need to set aside in long-term savings. The online worksheets are automated.

How to Locate It

Previously, you could only obtain a copy of the guide and worksheets by calling and requesting a printed copy. However, it’s now available online and can be viewed for free or printed off. The site includes a simple retirement savings calculator that even lets you store your information for up to one year.

If you prefer to order a free printed copy, you can do so by calling the Department of Labor at 1-866-444-3272. To access the website though, simply visit dol.gov/ebsa - the calculator and booklet can be found under Publications and Reports.

Why It Works

Probably the best feature of this retirement planning guide is how simple it is to use. The text is easy to read, the graphs are easy to understand and it’s actually interesting to read through - not a chore. Another great feature is how diverse and versatile this small publication and calculator really is. It talks about portfolio diversification, at-home children, split families and more.

The next feature that makes this online retirement calculator stand out from the competition is its ability to make very complex assumptions. An example of this is how it treats health care inflation. Other retirement calculators simply assume that all expenses will inflate at a rate of about 3.5%, however this calculator knows that healthcare typically rises at about 7%. That potentially major discrepancy is accounted for.

Problems With the Guide

The main drawback for the guide is that it appears to be written for people who are about 10 to 15 years from retirement. The online tools can help and assist recent retirees, but the main focus is on planning and saving in those last few, crucial years.

The other drawback is that there is little advice for people who suspect they may incur extra health care costs or the expense of dealing with potential dependents.

However, as a retirement savings calculator, it’s a great tool that’s extremely comprehensive and yet easy to use and understand. It understands government protocol, offers helpful suggestions and the best part about it - it’s completely free.

Among the many preparations needed for retirement and estate planning, retirement savings provide a fantastic tax shelter. However, you need to understand Roth IRA rules and other contribution requirements to maximize those tax savings.

Essentially, contributions to a retirement savings plan are made on a pretax basis - employers match employee contributions to a plan, but that “income” isn’t taxable until it’s received, once the employee has retired.

With a Roth IRA, the contributions you make aren’t tax deductible, however the withdrawals that you make in the future won’t be taxed - making it a great option for those who expect to have higher incomes in their retirement.

To learn more about Roth IRA and traditional IRA rules, read on for information that can help you amp up your savings and earnings.

The Roth IRA

The limit for Roth IRA contributions is $5000 if you’re under the age of 50 and $6000 if you’re over the age of 50. After 2008, those limitations are expected to increase in increments of $500, depending on the inflation rate.

Unfortunately, Roth IRA contributions are subject to eligibility limitations too. For example, a married couple that jointly earned between $150,000 and $160,000 or higher, or a single individual who earns $95,000 to $110,000 or higher can’t contribute to a Roth IRA. Instead, they must depend on a 401(k) Roth.

401 (k) Roth

Employees can now opt to make some of their elective retirement contributions Roth contributions. Historically, any deferred salary or 401(k) contributions were deducted from your taxable wages. However, any contributions considered Roth contributions to a 401(k) Roth are now included in a person’s taxable wages, though they may be free from federal income taxation.

Roth 401(k) plans are typically more advantageous for individuals with high incomes than a standard Roth IRA account. There are no AGI (amount of your income that’s taxable) limitations, and the contribution limit is significantly higher (currently sits just over $15,000 - and if you’re over 50, that increases to $20,000). The return on investment is also potentially significantly higher.

Switching from a Traditional to a Roth IRA

Unfortunately, you can only convert a traditional IRA to a Roth IRA if your Modified AGI income is less than $100,000 per year. Also, if you’re married, but file separately from your spouse then you are usually not allowed to convert your IRAs. However, your converted amount could be considered taxable income, though future growth is tax free. Finally, when you convert to a Roth IRA, you aren’t required to make withdrawals at age 70.5.

If you’re concerned about the Adjusted Gross Income restrictions currently in place for Roth IRA conversions, there is good news on the horizon. After 2010, new Roth IRA rules will eliminated the $100,000 income limit on conversions from traditional IRAs to Roth IRAs. Also, any taxes due on 2010 conversions can be paid in a two-year installment.

In today’s one-stop service world for retirement preparation, financial services professionals are expected to do everything - attend estate planning courses, understand taxation issues, be able to handle trusts, be familiar with Roth IRAs, understand insurance policy and on top of it all, manage investments.

However research shows that most financial advisors are ill-prepared and lacking in knowledge that is fundamental to these disciplines. However, Internet-based corporate training can quickly build those skills that are prerequisite to employees capturing the sales opportunities before them and get employees back on track.

At a time when the demands on trust, estate planning and other financial professionals are greater than ever, many institutions find themselves with a serious gap between staff expertise and baseline skills needed to deliver a consistent level of service quality. As a result, many employers are turning to in-house corporate estate planning courses. But, what goes into a good course?

What Constitutes a Sound Training Program?

Knowledge and expertise are your primary tools as a financial planner and financial services company. That means your employees need to be experts when they’re dealing with clients. A hesitant client will walk away from an investment opportunity if their potential consultant seems unsure or less than totally confident.

Financial services are more complex than most corporate systems because they are dynamic and must be designed to accommodate continual change. Effective training requires:

* A sound curriculum crafted to meet the specific needs of each organization;

* Confident experts delivering the information and providing practical expertise; and

* A well-defined process that consistently supports and reinforces core skills.

The Steps to a Great Estate Planning Training Program

Step one to an effective estate planning training program is to set out the basics. For any financial planner working in estate planning, that means outlining their basic job requirements. Instead of having your planners focused on reeling in new clients or upselling insurance add-ons, get them to focus on their job - effectively planning estates and retirement packages.

Secondly, you must quantitatively assess knowledge. This needs to be done on the front end to identify knowledge gaps because you cannot effectively train if you don’t know an individual’s current status. Without this, knowledge training is unfocused and inefficient. Only by assessing each individual can you match the training to the needs of the individual.

The third essential element of effective training is to certify retention. It is not enough to know someone went through a training program. You must measure and identify what they learned in their estate planning courses to be sure they learned specifically what was needed for their position.