Many financial gurus recommend that future retirees should need 80 to 100% of their retirement income to live comfortably. Considering the unforeseen financial meltdown and family/medical emergencies, a 401(k) alone may not be enough to support your retirement lifestyle. One of the common options to supplement your retirement savings is the Individual Retirement Account (IRA), especially you have already contributed the maximum to your 401(k).  IRA has two different types of options.

1. Traditional IRA

• You must be under 70½ years of age.
• You can contribute up to $5,500 a year, or up to $6,500 a year if you are 50 years old or older, for 2015 – 2017. The IRA contribution limit does not apply to:
  • Rollover contributions
  • Qualified reservist repayments
• Eligible taxpayers can take a tax deduction on their IRA contributions, although its eligibility phases out above certain adjusted gross income limits.
• Retirement contributions can grow tax-deferred until withdrawn.
• Penalty-free withdrawals for first home purchase and certain college expenses.
• You must begin taking required minimum distributions (RMDs) at age 70½.
• No restrictions on contributions, but possibly on deductions.

    2. Roth IRA

• Taxes are paid up front. In other words,- contributions are made with already-taxed dollars and thus there is no deduction for contributions.
• Contributions (not earnings) can be withdrawn tax-free any time, without penalty at any age.
• Eligibility for contribution to Roth IRA phases out above certain adjusted gross income limits. Modified adjusted gross income limit (MAGI) for 2017 is $133,000 for single filers and $196,000 for married filing jointly.
• There is no age restriction.  You can still contribute to a Roth IRA and make rollover contributions to a Roth or traditional IRA regardless of your age (even after you reach 70½ and older). There is no required minimum distribution.
• Earnings can be withdrawn tax- and penalty-free at age 59½ if account has been active for at least five years.
• In 2010, income limits that traditionally kept high-earning individuals from converting to a Roth IRA were repealed. So, it gets easier to convert an existing traditional IRA to a Roth IRA.

For tax issues with IRA contributions and earning, please visit https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits.

A reverse mortgage or home equity conversion mortgage (HECM) is a type of home loan that requires no monthly mortgage payments for older homeowners who are at least 62 years old and owns home ($100K+ home value with 50%+ equity), although borrowers are still responsible for property taxes and homeowner’s insurance. Since it allows retirees with limited, fixed income can tap the equity in their home, but do not have to repay any of the loan for as long as they stay in the home, it has become an option for some retirees who are cash strapped.  Proceeds can be used to pay off debt or settle unexpected expenses. However, retirees should understand that it has some pitfalls. Those pitfalls include:

• If you live a long time, you may eventually use up all the funds available to you from the reverse mortgage. So, if you sell the house, chances are that all or most of the money will be owed to the reverse mortgage lender.
• Fees and other closing costs can be high. Not a good option, especially if you can’t maintain the costs associated with the home.
• It would be more difficult to keep the house property in the family (esp. your heir). If you die or the home isn’t the primary residence for more than 12 months, the loan comes due, which means either you or the estate has the option to repay the loan or put the home up for sale to settle it.

Some of the reverse mortgage lenders are: American Advisory Group (visit https://www.americanadvisorsgroup.com/ca.php?pid=488&utm_medium=affiliate&utm_source=consumersadvocate&utm_term=&utm_campaign=review-site); Lendingtree (https://offers.lendingtree.com/pages/reverse-mortgage-2/product.aspx?cchannel=bd&esourceid=6245236&csource=31&cproduct=reverse&cname=consumersadvocate&cterm=53235053&cmethod=reverse&800num=hide&siteid=reverse+mortgage); Homepoint Financial (http://www.homepointfinancial.com/page/reverse-mortgages) ; LiveWell Financial; and RMF.