SOURCE: Golden Gateway Financial

Golden Gateway Financial

November 18, 2009 08:06 ET

Older Americans Continue to Face "Cash Gap" in Retirement, According to Golden Gateway Financial

Recent Studies Point to Escalating Concern Over Ability to Maintain Retirement Lifestyles; New Products Geared Towards Seniors' Needs

OAKLAND, CA--(Marketwire - November 18, 2009) - A growing number of older Americans are in danger of falling through a "Cash Gap" in retirement. Recent studies and surveys continue to show that many seniors are finding themselves unprepared for the new financial realties brought on by the recent recession. Many of those on a fixed income watched both their investments and their house value evaporate, and are now scrambling to replace lost income or safety nets.

The recently updated National Retirement Risk Index from the College Center for Retirement Research at Boston College points to a growing number of older Americans who will face shortfalls in retirement(1). The index measures the percentage of households that are at risk of being unable to maintain their pre-retirement standard of living through retirement. The study found that this share of households has increased to 51 percent as a result of the recession. Perhaps most troubling is that the study estimates this problem will worsen as the population continues to age and traditional sources of income such as social security and fixed pensions continue to deteriorate.

Much of this "Cash Gap" can be attributed to the intersection of continued declines in home values and tightening credit standards. While many seniors have substantial equity in their homes, eroding values and higher lending criteria have prohibited them from extracting this as cash. As seniors self-report even steeper declines in home values, this trend will likely continue to grow worse.

"Older Americans cannot recover financially as quickly as other segments of the population," said Eric Bachman, founder and CEO of senior resource Golden Gateway Financial. "There is clearly a need for greater support and solutions aimed at seniors. Fortunately, there are a number of products emerging to fill this cash gap."

Both Reverse Mortgages and Life Settlement are well suited to the demands of this aging population because they leverage existing assets to supply cash without any income or credit requirements. This is an important consideration for those on a fixed income with rising expenses.

Reverse mortgages allow homeowners ages 62 and over to leverage the equity in their homes to earn a lump sum of cash and/or monthly cash payments. Over the past year, reverse mortgages have evolved to better serve seniors. Beginning in 2009, the reverse mortgage limit was increased to $625,500, fees on reverse mortgages are now universally capped, condos are eligible for a reverse mortgage, and for the first time borrowers can now use a reverse mortgage to purchase a new property.

Recent data compiled by Golden Gateway Financial showed that seniors who visited the company's award-winning online reverse mortgage calculator could expect an average of $136,711 available as an up-front reverse mortgage payment. Similarly, those same individuals were eligible for an average maximum monthly payment of as much as $993 per month over the term of their loan.

Life settlement is the practice of selling a life insurance policy for more than its cash surrender value. The owner of a policy might decide to sell because the beneficiary has changed or is no longer alive, or because their needs have changed and they would prefer immediate cash. This practice was originally reserved for the wealthy or those with financial planners, but it has grown in popularity and is now more widely available as a mainstream financial tool.

Policyholders choosing life settlement can expect to receive on average 300 percent of the cash surrender value of their policy(2). Over the last year, those policyholders that used Golden Gateway Financial's online life settlement calculator to determine their policy's worth were eligible for an average expected payout of $117,162.

To learn more about Golden Gateway Financial or to access the company's entire suite of retirement resources and tools, please visit

About Golden Gateway Financial

Golden Gateway Financial (, located in Oakland, California, is a comprehensive resource for senior citizens, baby boomers and soon-to-be retirees to assess their financial health at retirement. Through a unique set of online tools and clear and unbiased communication, the company helps individuals address "The Great American Retirement Dilemma." The tools enable users to better assess the security of their nest egg and to make intelligent choices to fully enjoy what should be the best years of their lives. The company also operates the industry's premier reverse mortgage and life settlement services with innovative new calculators and products for each, and a team of trained counselors to help seniors better understand the products and evaluate whether they are right for them.

(1) The National Retirement Risk Index: After the Crash, by Alicia H. Munnell, Anthony Webb, and Francesca Golub-Sass, October 2009, Number 9-22

(2) Data Collection Report 2006, Life Insurance Settlement Association (LISA)

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