Retirement isn’t for everyone. Sometimes people have to continue working to make ends meet. However, if you are lucky enough to stop working and head into retirement, your financial dynamic has the potential to change entirely from where you live with it at this moment. Plan ahead for your retirement and make sure your finances are in order. You would hate to have to go back to work after just a few years of enjoying a work-free life. We have some tips that can help you get your finances straight before retirement.
Pay Off Debt ASAP
Debt can be crippling to your finances and lifestyle at any age. Whether you’re working on paying down student loans, credit card debt, or a car, you’re throwing money at debt each month that could be added to savings or provide essentials. Debt can make it harder to live a peaceful lifestyle during retirement because it can lead to unnecessary financial and personal stress. Head into retirement debt-free and enjoy your time without having to pay off years of loans or credit cards with a fixed income.
Start Budgeting Now
You’re going to be living off a fixed income every month during retirement. A budget is going to be crucial in order to make your retirement savings last as long as you would like them to. This doesn’t mean that you can’t have fun or splurge now and then on things you love. Of course, you can. However, it does mean that you need to account for those things in your budget. If you aren’t already putting together a budget for yourself each month, start now. Get in the habit of sticking to your budget and not deviating.
Find Additional Sources of Income
Just because you’re retired doesn’t mean that you can’t find ways to bring in extra money. If you feel up to it, take on a part-time job somewhere around town. You can help with office work somewhere or greet people at the local grocery store. These are jobs that can typically be done for 10 to 20 hours a week and provide a decent extra amount of money.
If you don’t want to work part-time, turn a hobby into money by selling crafts online or at a local farmer’s market. Handmade items are hot sellers in online marketplaces as well as seasonal local markets.
Get a Reverse Mortgage
While we previously established that you should be eliminating debt prior to retirement, a reverse mortgage works differently than a traditional mortgage in that you’re taking out a loan against the equity of your home and there’s no repayment until the loan fully matures. This only happens after you sell and move out of the home or your family sells it within 12 months after you’ve passed away. You are first eligible for a reverse mortgage at the age of 62.
However, it’s important to understand that a reverse mortgage isn’t for everyone. All Reverse Mortgage, Inc CEO Michael Branson says, “Because there are some closing costs setting up a reverse mortgage, these loans are not recommended for those who plan to move with a few years — such as people who might require imminent care in a nursing home or inpatient facility.” You can learn more about reverse mortgages and their interest rates by meeting with an expert for reverse mortgage counseling.
Consider Downsizing Your Home
If you haven’t paid off your home yet, it’s possible to shrink your mortgage payment. Once you sell your home, you can use the equity that you have established to either pay for your new home in cash or tuck it away for when rent is due. You can move to a smaller home or an apartment that comes with a lower monthly payment. This could save you hundreds of dollars each month on city utilities, mortgage or rent payments, as well as general maintenance costs.
Although it can be difficult to leave a home that you’ve grown to love over the years, sometimes it just makes good financial sense. This can work even more to your benefit you’ve completely paid off your mortgage.
Don’t Plan on Social Security
Social security was created to help with economic security for the elderly. However, social security checks are typically so small that they are barely enough to cover one or two monthly expenses. Don’t plan on social security saving you financially. Prepare as though you aren’t getting any, then consider it extra money that’s coming in each month.