I have a confession. There are actually times when I secretly envy those who have retired or left the workforce completely. This is typical when I’ve hit burnout and would rather lie in bed all day.
I know, my day will come in the future. But when I think of all the freedoms that retires and seniors can enjoy on a daily basis, I want this day to arrive sooner rather than later.
Naturally, I realize that a comfortable life after retirement comes down to a good savings plan during the working years. For those of you in your 20s and 30s, retirement planning might be the furthest thing from your mind. You might feel that there’s plenty of time to set money aside, and you might delay getting a retirement plan off the ground.
But even if you have 30 or 40 years left in the workforce, the time will fly quickly. And if you don’t take the steps needed to build a retirement account early, you’ll have less money in your retirement years.
What does this mean exactly?
Although a modest retirement account doesn’t always prevent retiring, it might be hard to maintain a certain quality life.
Like many others, you probably strive to maintain a certain standard of living after you retire. For example, if you like to travel, shop and participate in other leisure activities, it’ll be nice to continue these activities once you have additional time on your hand.
By planning well, your retirement income can be comparable to what you earned while working. However, many seniors discover that they have less money after they leave the workforce. Their retirement income might be a 1/3 or 1/2 their regular earnings — a huge blow to their lifestyle.
Fortunately, there are ways to keep finances on track after leaving the workforce.
How is this possible?
The truth is, millions of seniors who own their homes have taken advantage of a government program that lets them tap the equity in their home without selling the property. This provision is called a reverse mortgage, and American Advisors Group recommends this type of loan to help retires over the age of 62 maintain their financial independence.
For seniors who own their home, keeping their property after they retire is undoubtedly a top priority. But unfortunately, unexpected expenses can arise in the retirement years. Although they might have enough to cover taxes, insurances and other regular expenses, there might not be enough to cover other costs, such as medical expenses or major home improvements.
Regrettably, when retirees cannot afford these costly expenses, selling their home might be the only viable option. They can move into a cheaper property, thus freeing up cash that can be used to pay monthly expenditures.
Although a common solution, seniors shouldn’t retire their homes so quickly. Of course, if a home is too large or too much to maintain, selling and downsizing makes good financial sense. But if a senior is comfortable in his home and he doesn’t want to leave all his memories behind, a reverse mortgage might be the answer to his prayers.
With this provision, seniors can take tax-free cash from their equity and use it for any purpose — vacations, bills, increased income, etc. — and the money doesn’t have to be repaid until they move or die. “When the time comes someday for the loan to be repaid, the value of the home when sold may be able to help repay the loan,” says AAG Reverse Mortgage.
This type of mortgage is literally the easiest and most hassle-free way for retirees over the age of 62 to acquire cash needed to meet their various expenses.
No one should be forced to move or sell their home before they’re ready. Retirees worked hard throughout their life, and if anything, they deserve to remain in their home for as long as they wish.