Reaching the age of retirement is often seen as the point where one enters “the golden years.” It’s not your age that’s important, though — it’s how you spend the new time you now have. After working hard for many years, it’s time to reap some of the rewards you’ve earned. What if there are financial obstacles in your way, preventing you from achieving what you want? Having a low income is a frustratingly common situation for many senior citizens. However, it’s not a hopeless cause. There are several ways for seniors to access funds for enjoying the golden years, especially if you’re a homeowner. Consider these five ways you could finance your retirement.
Make smart investments and manage them wisely
Hopefully, you began planning for your retirement long before you finally stepped away from the workforce. Even if you don’t have many investments, now is a good time to explore how to create a good portfolio. Placing some of your savings into safe bets and those with reasonable levels of risk can help provide for your needs. While this is still a somewhat long-term strategy, it is workable for some. Be sure to explore all the tax implications surrounding investments fully. You don’t want to give away much of what you’ve accumulated to the government, after all.
Downsize to a smaller home
Do you really need all that space? If you’ve been living in a large home for a while, it might be time to reconsider. With your children living on their own, managing a larger space can be tough for many seniors. Downsizing to a smaller place creates a good financial opportunity. After selling your current home, you can bank much of the money saved by moving into a less expensive property. Now you have both a more comfortable living space and plenty of cash to explore your hobbies. You can also use income from sources like Social Security more effectively, rather than as a stop-gap.
Consider the potential of a reverse mortgage
What if you already own your home outright and you don’t plan ever to move again? A reverse mortgage could be an excellent source of income. Owners remain responsible for taxes, maintenance, and home insurance, while a lender provides a regular payment based on your home equity. You could also choose to take this loan as a lump sum. This money will let you pay bills, make improvements to your home, or — of course — go on a fantastic dream vacation. If you choose a monthly payment, it provides a good source of supplementary income. As with everything, there are two sides to this coin. As you learn about the advantages and disadvantages of a reverse mortgage, think about whether it’s the best choice for you.
Refinancing your home is an option for some
A reverse mortgage often requires that you no longer have a regular mortgage on the home. What if you still do, though? You can enjoy retirement anyway by looking to reduce the payments you make every month. This extra cash can let you begin enjoying the activities you miss or planning a future excursion. If you still have many years of payments left, refinancing to a better rate is a solid choice. There may even be special options available to you as a senior. Call your lender and ask whether you qualify for refinancing.
Take a straight home equity loan
If you aren’t concerned about cash flow over the long term, but you need to access more cash now, a consider a regular home equity loan. You do not even need to borrow up to the full amount of equity available. When you want to renovate your home, or make it more accessible, such as with a stair lift, a home equity loan is a viable choice. However, you will need to begin making repayment efforts on the loan in short order. Therefore, if you aren’t sure about your ability to repay the loan later, it’s a better idea to examine the other possibilities, like a home equity line of credit instead.
Carefully consider all your choices
Regardless of your personal goals for retirement, navigating the financial challenges is essential for everyone. Luckily, there are many ways out there for seniors to supplement their income. Whether it’s time to renovate your home or you want to finance an overseas dream vacation, there is a way to secure the cash you need. However, remember that not every possibility is a safe bet for everyone. Before you make any major financial decisions, think about both your goals and long-term financial plans. Speaking to a financial advisor can be helpful, too. In the end, make the choice that will deliver the stability you need to enjoy your golden years.