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Should you borrow from home equity during retirement? What experts say

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Borrowing from your home’s equity during retirement could be a smart plan, but only in certain cases, experts say.

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Over the last few years, home equity levels have increased significantly, due, in large part, to a swift uptick in home prices that started during the pandemic. For example, home prices increased by about 33% from the first quarter of 2020 to the first quarter of 2024, climbing from an average of $383,000 in Q1 2020 to an average of $513,100 in Q1 2024. 

And, there’s a chance that home equity levels could increase even more this year, some experts say, as home prices could continue to rise in 2024. That’s because the supply of for-sale homes remains low right now but demand remains high. That, in turn, could push home values up further, leading to an uptick in home equity for many current homeowners. 

But even if home equity levels don’t increase much this year, the average homeowner still has almost $300,000 in home equity currently. And, the idea of tapping into that equity can be enticing, particularly for those who need access to funds during retirement. But should you borrow from home equity during retirement? 

Learn more about the home equity borrowing options available to you here.

Should you borrow from home equity during retirement? What experts say

Here’s what experts have to say about whether you should borrow from your home during retirement:

Consider downsizing before borrowing

If you have to borrow money, you may want to look into other options first. For example, Kirsten Nelms, CFA, CFP, Principal & Associate Portfolio Manager at Leith Wheeler Investment Counsel in Canada, says selling your home might be an option worth considering before tapping into your home’s equity.

“This option eliminates high maintenance costs, mortgage payments and property taxes,” Nelms says. “This solution is ideal for those looking to shed the responsibility of single family home ownership, those whose home is no longer suitable for them, or those who are wary of leverage.”

While selling a home and moving can be a big task, you can reap the financial rewards after selling your home.

“The proceeds of your home sale can be invested in a stock and bond portfolio and scheduled withdrawals can be sent to your bank account that emulate your pre-retirement paychecks,” Nelms says.

Compare the home equity loan rates you could qualify for online now.

Review your cash on hand 

More than 54% of families have some sort of retirement account as of 2022, according to the Fed. But not every retiree has as much saved for retirement as they should if they want to retire comfortably. 

“For retirees without much cash cushion, it can make sense to use debt to make sure their only emergency fund is not depleted,” Stephen Kates, CFP and principal financial analyst at Annuity.org, says. “In this scenario, it is important to have enough regular cash flow to cover the payments on the debt.”

But this route might be problematic if you don’t have the money to cover your other needs or debt.

“For someone with limited income or other debts, using home equity could be trouble if the debt load becomes unmanageable or it places them at risk of using their home as collateral,” Kates says. “In emergency situations and for modest amounts, non-collateralized loans such as credit cards or personal loans may be better since they do not place the home at risk.”

Keep in mind that APRs for credit cards and personal loans are typically much higher than home equity loans and home equity lines of credit (HELOCs), Kates says. So while credit cards and personal loans are unsecured, you could end up paying a lot more in interest than you would with a home equity product.

Which home equity borrowing option makes sense in retirement?

One retirement-friendly way to borrow money is through a reverse mortgage. This type of home equity borrowing product is only available to homeowners ages 62 years and older. With this option, you borrow money from a lender, but you don’t make monthly payments on the loan. What you borrowed gets repaid when you move out of the home or die. And, interest and fees get added to the balance every month, so the amount you owe grows over time. 

“A reverse mortgage is a great way to stay in your home while accessing the equity,” Rebecca Awram, a mortgage advisor at Seniors Lending Centre in Canada, says. “The best part is you do not have to make any monthly payments, and you will never owe the lender more than the value of your home.”

Keep in mind that going this route can impact the inheritance you leave behind. In turn, reverse mortgages might not work for some retirees.

“This could drain the equity of your home,” Lindsey Harn, a realtor at Christie’s International Real Estate, says. “So if you have family members you have promised an inheritance to, a reverse mortgage [means] the home will need to be sold or paid off in a short time frame after your debt.”

Instead, you may want to consider a HELOC as an alternative. Home equity loans and HELOCs are similar in that both allow you to tap into the equity you own in your home. The difference is that rather than a lump-sum loan, HELOCs are a revolving line of credit with a variable interest rate

“An equity line could be a good way to obtain a credit line, you have access to on a rainy day, without draining the equity now,” Harn says.

The bottom line

Borrowing money from your home equity (or otherwise) means taking on additional debt during retirement, which might be burdensome for those on a limited or fixed income. But if you need the money, borrowing from your home equity during retirement might be beneficial. You should still consider other ways to fund your retirement before borrowing, though.

“Using debt of any kind in retirement should be done carefully and after considering all available options,” Kates says. “Speaking with a financial professional, debt counselor, or other trusted advisor” is a good idea.



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A young autistic man’s symphonic odyssey

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A young autistic man’s symphonic odyssey – CBS News


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Twenty-year-old Jacob Rock is a non-verbal young man with autism who quietly composed an entire six-movement symphony in his head. After struggling to communicate for much of his life, he learned how to share his ideas via an iPad app with musician Rob Laufer. The two created the symphony “Unforgettable Sunrise,” which was premiered last year by a 55-piece orchestra from the University of Southern California’s Thornton School of Music. Correspondent Lee Cowan talked with Rock and Laufer, and with Jacob’s father, Paul, about a remarkable musical odyssey.

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Election officials on threats to your right to vote

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With just a month to go before Election Day, Sabrina German sees herself as an essential worker for democracy. The director of voter registration in Chatham County, Ga., German has found herself in the spotlight as she works to comply with sweeping changes to state election rules in this critical battleground state.

“The first three words in the preamble, it says, ‘We, the people,’ meaning that we, as public servants, we are working for the people to make sure that they have a fair choice and a voice for the candidates that they’re choosing,” German said.

The overhaul in Georgia has many fronts, from the Republican majority on the state election board, to the Georgia legislature, which has made it possible for individuals to file a flurry of challenges to the voter rolls.

German said she had a thousand challenges to voter registrations in just one county. 

Attorney Colin McRae, who chairs the non-partisan County Registration Board (on which he has served for two decades), said, “It doesn’t take Sherlock Holmes to figure out the agenda behind some of the challenges,” he said. “In a recent set of names that were submitted to us, it included hundreds of college students. And it didn’t take a lot of research to figure out that all of the college students whose registrations were being challenged, all attended Savannah State University, [a] historically Black university.”

While these issues might seem local, they have a national political charge; and former President Trump has weighed in on the campaign trail, praising Republicans on Georgia’s election board. “They’re on fire,” he said. “They’re doing a great job. Three members. Three people are all pit bulls fighting for honesty, transparency and victory. They’re fighting.”

“Sunday Morning” reached out to the members of Georgia’s election board praised by Trump. They have long defended their work, and one member told us the controversy over their efforts is “manufactured to suit some other agenda.”

What’s happening in Georgia is just one example of how challenges to the vote are roiling the nation. And the question remains: Are recent changes to state election laws addressing real problems? Or, is it just politics?

David Becker, a CBS News contributor who directs the non-partisan Center for Election Innovation and Research in Washington, D.C., said, “I’ve been looking and researching the quality of our voter lists for about 25 years now, and there’s no question that, right now, our voter lists are as accurate as they’ve ever been.”

So, what is fueling suspicion of voter rolls? “We see a lot of their claims about the elections driven just by outcomes,” said Becker. “They’re not about the actual process.

“The voter lists are public. They could have challenged these things in 2023 or 2021 or 2019. They’re waiting until right before the election, which tells you that they’re not actually interested in cleaning up the lists. What they’re really trying to do is to set the stage for claims that an election was stolen after, presumably, their candidate loses.”

The 2020 election still casts a long shadow. State officials like Brad Raffensperger, Georgia’s Republican Secretary of State, are bracing themselves for another contsted election.

On January 2, 2021, Raffensperger got an infamous call from then-President Trump asking if he’d “find” votes so Trump could win. “All I want to do is this: I just want to find, uh, 11,780 votes, which is one more that we have, because we won the state,” Trump said in a recorded conversation.

Raffensperger resisted pressure to not certify the 2020 election in Georgia. Asked if he would resist pressure again, he said, “I’ll do my job. I’ll follow the law, and I’ll follow the Constitution.”

Raffensperger will once again oversee and certify Georgia’s elections. Asked whether he believes any of the changes put forth by the election board are necessary, Raffensperger replied, “No. Not one.”

Raffensperger says voting is safe and secure in Georgia. Asked why the election board members keeps making changes to the rules, he said, “I think that many of them are living in the past, and they can’t accept what happened in 2020.”

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Carol Anderson, an author and voting rights activist who teaches at Emory University, said, “One of the things about voter suppression is that it always looks innocuous, it always looks reasonable, except it’s not. What’s happening in Georgia with voting rights is that, you have a massive change of demography happening. So, you have a growing African-American population. You have a sizable Latino population. You have a sizable and engaged Asian-American population. 

“And so, it is a power clash between a vision of a new Georgia and … the vision of the old Georgia, our old ways,” she said. 

Chatham County’s Sabrina German said, because of the pressures on election workers, she thinks about leaving every day. German may be weary, but she and Colin McRae say their experience in 2020 has prepared them for whatever comes next.

McRae said he took it personally when Donald Trump asked the secretary of state to “find” 11,000 votes to put him over Joe Biden. “Of course, we took it personally; any criticism of the system is a criticism of the individuals who make up that system,” said McRae. “Again, the truth will come out. The truth will win out.”

     
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Story produced by Ed Forgotson. Editor: Carol Ross. 



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Tajikistan nationals with alleged ISIS ties removed in immigration proceedings, U.S. officials say

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When federal agents arrested eight Tajikistan nationals with alleged ties to the Islamic State terror group on immigration charges back in June, U.S. officials reasoned that coordinated raids in Los Angeles, New York and Philadelphia would prove the fastest way to disrupt a potential terrorist plot in its earliest stages. Four months later, after being detained in Immigration and Customs Enforcement (ICE) facilities, three of the men have already been returned to Tajikistan and Russia, U.S. officials tell CBS News, following removals by immigration court judges. 

Four more Tajik nationals – also held in ICE detention facilities – are awaiting removal flights to Central Asia, and U.S. officials anticipate they’ll be returned in the coming few weeks. Only one of the arrested men still awaits his legal proceeding, following a medical issue, though U.S. officials speaking on the condition of anonymity to discuss the sensitive proceedings indicated that he remains detained and is likely to face a similar outcome. 

The men face no additional charges – including terrorism-related offenses – with the decision to immediately arrest and remove them through deportation proceedings, rather than orchestrate a hard-fought terrorism trial in Article III courts, born out of a pressing short-term concern about public safety. 

Soon after the eight foreign nationals crossed into the United States, the FBI learned of the potential ties to the Islamic State, CBS News previously reported. The FBI identified early-stage terrorist plotting, triggering their immediate arrests, in part, through a wiretap after the individuals had already been vetted by U.S. Customs and Border Protection, law enforcement sources confirmed to CBS News in June. 

Several months later, their removals following immigration proceedings mark a departure from the post-9/11 intelligence-sharing architecture of the U.S. government. 

Now facing a more diverse migrant population at the U.S.-Mexico border, a new effort is underway by the Department of Homeland Security, Department of Justice and the Intelligence Community to normalize the direct sharing of classified information – including some marked top-secret – with U.S. immigration judges. 

The more routine intelligence sharing with immigration judges is aimed at allowing U.S. immigration courts to more regularly incorporate derogatory information into their decisions. The endeavor has led to the creation of more safes and sensitive compartmented information facilities – also known as SCIFs – to help facilitate the sharing of classified materials. Once considered a last resort for the department, Secretary Alejandro Mayorkas has sought to use immigration tools, in recent months, to mitigate and disrupt threat activity.

The immigration raids, back in June, underscore the spate of terrorism concerns from the U.S. government this year, as national security agencies point to a system now blinking red in the aftermath of the Oct. 7 attacks by Hamas on Israel, with emerging terrorism hot spots in Central Asia. 

A joint intelligence bulletin released this month, and obtained by CBS News, warns that foreign terrorist organizations have exploited the attack nearly one year ago and its aftermath to try to recruit radicalized followers, creating media that compares the October 7 and 9/11 attacks and encouraging “lone attackers to use simple tactics like firearms, knives, Molotov cocktails, and vehicle ramming against Western targets in retaliation for deaths in Gaza.”

In May, ICE arrested an Uzbek man in Baltimore with alleged ISIS ties after he had been living inside the U.S. for more than two years, NBC News first reported. 

In the past year, Tajik nationals have engaged in foiled terrorism plots in Russia, Iran and Turkey, as well as Europe, with several Tajik men arrested following March’s deadly attack on Crocus City Hall in Moscow that left at least 133 people dead and hundreds more injured. 

The attack has been linked to ISIS-K, or the Islamic State Khorasan Province, an off-shoot of ISIS that emerged in 2015, founded by disillusioned members of Pakistani militant groups, including Taliban fighters. In August 2021, during the U.S. military withdrawal from Afghanistan, ISIS-K launched a suicide attack in Kabul, killing 13 U.S. service members and at least 170 Afghan civilians. 

In a recent change to ICE policy, the agency now recurrently vets foreign nationals arriving from Tajikistan, Uzbekistan and other Central Asian countries, detaining them while they await removal proceedings or immigration hearings.

Only 0.007% of migrant arrivals are flagged by the FBI’s watchlist, and an even smaller number of those asylum seekers are ultimately removed. But with migrants arriving at the Southwest border from conflict zones in the Eastern Hemisphere, posing potential links to extremist or terrorist groups, the White House is now exploring ways to expedite the removal of asylum seekers viewed as a possible threat to the American public. 

“Encounters with migrants from Eastern Hemisphere countries—such as China, India, Russia, and western African countries—in FY 2024 have decreased slightly from about 10 to 9 percent of overall encounters, but remain a higher proportion of encounters than before FY 2023,” according to the Homeland Threat Assessment, a public intelligence document released earlier this month. 

A senior homeland security official told reporters in a briefing Wednesday, that the U.S. is engaged in an “ongoing effort to try to make sure that we can use every bit of available information that the U.S. government has classified and unclassified, and make sure that the best possible picture about a person seeking to enter the United States is available to frontline personnel who are encountering that person.”

Approximately 139 individuals flagged by the FBI’s terror watchlist have been encountered at the U.S.‑Mexico border through July of fiscal year 2024. That number decreased from 216 during the same timeframe in 2023. CBP encountered 283 watchlisted individuals at the U.S.-Canada border through July of fiscal year 2024, down from 375 encountered during the same timeframe in 2023.

“I think one of the features of the surge in migration over recent years is that our border personnel are encountering a much more diverse and global population of individuals trying to enter the United States or seeking to enter the United States,” a senior DHS official said. “So, at some point in the past, it might have been primarily a Western Hemisphere phenomenon. Now, our border personnel encounter individuals from around the world, from all parts of the world, to include conflict zones and other areas where individuals may have links or can support ties to extremist or terrorist organizations that we have long-standing concerns about.”

In April, FBI Director Christopher Wray warned that human smuggling operations at the southern border were trafficking in people with possible connections to terror groups.

“Looking back over my career in law enforcement, I’d be hard-pressed to think of a time when so many different threats to our public safety and national security were so elevated all at once, but that is the case as I sit here today,” Wray, told Congress in June, just days before most of the Tajik men were arrested.

The expedited return of three Tajiks to Central Asia required tremendous diplomatic communication, facilitated by the State Department, U.S. officials said.  

Returns to Central Asia routinely encounter operational and diplomatic hurdles, though regular channels for removal do exist. According to agency data, in 2023, ICE deported only four migrants to Tajikistan.

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