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TH E M R EP O RT | 53 LET NATIONAL TAX SEARCH THROW YOU A LIFE LINE 130 S Jefferson Street, Suite 300 Chicago, IL 60661 1.888.627.5494 Sales@NationalTaxSearch.com www.nationaltaxsearch.com National Tax Search consolidates Tax Reporting, Flood and HOA Management into one platform, and mitigates/minimizes your liabilities associated with these areas of real estate management: • 24/7 Secured Web-Based Service with optional API Functionality • Timely Reporting & Payment Processing • Assessment Details • Delinquent and Sold Tax Monitoring • Payment Processing • Tax & HOA Certification • Flood Zone Determination, including FEMA Map Overlays • Leader in Property Tax, HOA and Flood Determination THE LATEST How Far Will $1 Million Take You? It Depends … Your state of residence plays a pivotal role in how long your money will last—or, by turns, how quickly it will run out. I f you've ever heard the riddle, "what weighs more—a pound of feathers or a pound of rocks?" obviously, you know they're both a pound. However, when it comes to retirement, "what lasts longer—a million dollars in Mississippi or a million dollars in Hawaii?" unfortunately doesn't work quite the same. According to AARP, those planning for retirement should save approximately $1 million, considering the average American retirement age is 63 and life expectancy for retirees is 85. However, depending on where buyers live could change how much they should save. Research from GOBankingRates based on total expenditures for individuals aged 65 and older, including housing, utilities, transportation, and health care, found that in places like Hawaii, money will only last you about half of retirement. The cost of living in Hawaii averages about $5,626 a year, with groceries alone being the highest in the nation—it also comes in at No. 50 on this most economical places to retire list. Housing costs in Hawaii are approximately $46,478 a year, which is $16,000 more than the next most-expensive state. According to GOBankingRates, Hawaii all in all is nearly $23,000 more than the next-priciest state and will only get you 11 years and 11 months of retirement on a $1 million budget. In the middle of the road (25th) of places to retire is Illinois, which sports slightly lower than average housing, health care, and grocery costs but high transportation and utilities. Per year, retirees would have to pay about $43,369 to cover the cost of living. $1 million in Illinois would last 23 years and one month. The most economical state will last buyers 26 years and four months of retirement. Mississippi is not only the sole state that will allow for more than 26 years, but it's also the lowest when it comes to housing costs. To get through a whole year, retirees would need $37,964. From Hawaii to Mississippi, there is a 14- year, five-month gap in the length of time $1 million will last retirees. Seniors Overreaching When compared with Social Security, reverse mortgages might be a risky financial proposition, CFPB says. I n a recent brief, the Consumer Financial Protection Bureau (CFPB) examined the financial tradeoffs of entering into a reverse mortgage at the age of 62. The brief used an average, hypotheti - cal homeowner to determine the reverse mortgage cost compared to the full benefits of Social Security if the consumer lives to the average lifetime expectancy, which is cur - rently 85 years old. If the homeowner chooses to begin draw- ing Social Security at 67 (rather than 62), they will receive an additional cumulative benefit of $29,640. Reverse mortgage costs, on a seven-year average, will cost around $31,900, about $2,300 less than Social Security benefits, the CFPB calculates. The Bureau also warns that borrowers can be at risk of losing equity in their home as well, especially if they want to sell it. If the report's hypothetical home is worth $175,000, and homes are assumed to appreciate at a rate of 4 percent, the home will be worth about $431,325. If the reverse mortgage interest rate is 5.9 percent, the homeowner will have lost 46 percent of the equity in their home by the age of 67. By age 85, the borrower would only have 46 percent equity in their home. This is exaggerated if home appreciation is less. Using the previous example, a home of the same price that appreciates at a rate of 2 percent, they will have only 61 percent equity in their home by the age of 67. By 85, total equity will be as low as 16 percent. The brief notes that while this is always not the case, it is usually more beneficial to work past the age of 62 if they want to delay taking Social Security.