Given up hope on the idea of a traditional retirement? You’re not alone. People across the country are realizing they’re going to have to work their way through the golden years (Not so “golden”, huh?). For most Americans, social security is better compared to pennies, when thinking of how those checks will cover expenses in the future. And let’s not even get into pensions. Do they even exist anymore? Millennials are noticing early on that a change must take place, but for many Baby Boomers, the “R” word is just a reminder of difficult years to come.
Let’s face it. If you haven’t saved anything by the time your 50, you’re probably not going to have the opportunity to drop everything and travel the world, or retire traditionally, for that matter. And without a retirement plan in place, there is simply no other alternative, but to work until your health permits. Yes, you’re probably going to have to work well into your sixties, seventies, and possibly even longer to support yourself later on in life, but there are lifestyle changes that you can make to positively impact your current savings and even reduce your time in the workforce.
The idea of how much life will cost you in your later years can be difficult to process, especially if the size of your retirement savings is more like that of a rainy day fund. Unfortunately, many Americans have found it very difficult, or nearly impossible to set aside money for retirement for numerous reasons. With the rising costs of healthcare and life itself, it can be discouraging to even think about what you’ll do when you hit that mark.
If you own your home, consider downsizing. By moving into a condo, or a smaller home, you can reduce your costs and still live a comfortable life. Many people think it’s best to stay in their homes throughout their elder years, which isn’t always a wise option. Properties require a lot of maintenance (albeit some more than others) and when you’re not in the best physical shape to tackle the everyday upkeep of your home, it’s only going to be more of an added cost and a headache to you.
Even moving to a more retirement-friendly state, such as Florida, can make all the difference when it comes to property taxes and market value. You may just get more bang for your buck. In some cases, selling your home and renting an apartment, can even be a better option — allowing you to have access to your funds. You can then seek lowisk investments that will help grow those savings even further.
Simply looking at your lifestyle to see what costs you can reduce, can really help you stash more money away for the future.
Consider a Reverse Mortgage
If you’re not looking to sell your home, but still need additional income to get you through retirement, a reverse mortgage may be an option. It allows you to convert part of your home equity into cash if you’re 62 years or older (given that you continue paying property taxes, homeowners insurance, and any other fees associated with your home). A very possible solution for those who may not be able to work during the later years of life, but still plan to stay in their homes.
If you’re eligible for the loan, the lender pays you either in monthly payments, or in one lump-sum. The amount you receive depends on factors such as age, your spouse’s age, the value of your home, and interest rates. As long as the balance, interest, and any fees are paid off before you leave your home, or die, you’re in the clear.
However, this type of a loan should not be taken lightly. It is still a form of debt and has significant risks, that should be evaluated thoroughly before borrowing. Some of the downsides of reverse mortgages include owing more than what you initially borrowed, foreclosure (if you default on the loan), and the automatic transfer of your loan debt to your heirs when you pass.
Beware of Risky Investments
One of the biggest mistakes you can make as you approach the retirement years, is to put your savings (or, any funds) in highisk investments such as stocks, IPOs (initial public offerings), penny stocks, and emerging markets (to name a few) with hopes of quickly earning significant returns. You may think it’s one of the fastest ways to increase your wealth in a short period of time, but what you’re actually doing is gambling your money.
Because of the volatility of these markets, returns that seem promising, often come with the almost definite possibility of a potential loss — especially if you’re not an experienced investor. During your golden years, you want to stick to investments that will safeguard your principal capital, while increasing your investment. Jakob Pek Fund offers a lowisk, alternative investment in real estate that protects your money as it accrues interest over time. It’s all about preserving what you got. If this is money you will need to live off of in later years, you definitely don’t want to lose it all in one, bad investment move.