Retirement can be a wonderful time as you get to step away from the drudgery of work and enjoy time with your family and friends. However, leisure time requires money – a lot of money. The challenge is exacerbated by the fact that people are living longer, which means they will need to have a solid plan in place to pay for their retirement. With that in mind, here are four ways in which seniors can get the money they need for retirement.
Before we jump into the list, there is one starting point which needs to be addressed. That is how much money you need for retirement. This includes mapping out the type of life you want to have and how much it will cost to live that life. Then you need to look at how much you have currently saved. In addition, you will need to factor in your current age, the age at which you expect to retire, and the cost of inflation over time. This can be a lot to calculate and I suggest using this retirement savings calculator to help you figure out where you stand.
- Organizing Your Investments
As mentioned looking at your current savings and other factors is just a starting point. The next step is acting. This mean looking at your various accounts and then creating a plan to help you get the funds you need for retirement. Not only will you need to look at the returns from these investments, but you will also need to take a look at the risk and the ‘all-in cost’. This includes looking at fees, advisory costs, and additional expenses.
While looking at your investments, also see what other assets you own. These could be baseball cards or gold coins. Granted, the plan might be to leave these to your grandchildren. But these ‘assets’ also have value and you want to factor them into the overall construction of your retirement plan – even if it is only as a Plan B.
- Home Sweet Home
Let’s face it, the most expensive asset most of us own is our homes. At the same time, our mortgages are probably the biggest single monthly expense we have. However, there is a simple tool which can help seniors essentially freeze their mortgage payments, or to cash out the equity to use for other purposes. For example, it includes a loan for grandpa to help pay for unexpected medical expenses or other emergencies.
These loans are called reverse mortgages and they can be a useful tool to help seniors get the money they need for retirement. A few things to know about reverse mortgages is that they are only for seniors aged 62-years or older, you must use a portion of the proceeds to pay off your existing mortgage, and you must reside in the home which is under the reverse mortgage.
- Social Security
It probably won’t be around forever. Heck, the Government expects the program to run out of money and none of the candidates in this year’s election discussed the issue. But it is still around for now and if you have been contributing to the fund then you might as well take advantage of it. Two options are to either delay collecting funds or to begin collecting and then bank the funds in an interest-bearing account. However, this approach is not for everyone. Especially, if they don’t have a plan to cover any potential shortfalls from the time they ‘retire’ until turning 70.
- Don’t Touch Your Retirement Fund
If you want to make sure you have enough money for retirement, don’t touch your retirement fund. Just let the interest accrue, and if possible redeposit the interest so that the fund will continue to grow. Now you might be asking why someone would choose this option. Well, the simple fact is that no matter how much money you have saved up, it is not going to last forever.
One tip to maximize your investment returns while managing risk is to look for investments which essentially guarantee returns. This might include looking at municipal bonds. But even if you decide these are not the right vehicle for you, then you want to pick investments which pay a regular return. This way you can create a virtuous cycle, which results in dramatic build up of cash in your account balance.
Article Submitted By Community Writer