Standard disclosure: we may earn money from the companies mentioned in this post. Visit my disclosure page for more info
Your finances are a big deal, whether you think about them regularly or not. Not only do you need to ensure you have enough money to get by today, but you also need to make sure that you are doing everything you can to save for your future.
The cost of everything is rising, and certain benefits like Social Security may not be around much longer, which means you need to do an even better job ensuring that you can retire at a decent age and still live comfortably. There are plenty of ways you can save money for retirement, and the following tips are there to help you make the decision that’s right for you.
One of the most popular ways that people save for retirement is through investment programs. Some people use their company’s 401 K program or opt for their own. Others place money into a Roth IRA. And some simply tackle the stock market on their own. No matter how you choose to invest, it’s a good way to save for retirement, but there are also plenty of risks involved too. If you’re new to the stock market and investment game, then you need to be sure you do some research to ensure you’re making smart investments. Alvexo’s YouTube Channel has a lot of great tips and tricks to ensure you’re making the right choice, or you can us investment apps or talk with a professional financial advisor. The more knowledgeable you are on the subject, the better your chances will be of earning a good amount of money for your later years.
If the stock market is too risky for you, you also have the option of just putting money into your savings account. Most banks offer some type of interest on the money in your savings, which means that you will be able to earn a little bit extra just for putting money away. There are different ways you can save your money. First, you should try to put a certain amount of every check into savings. A good rule of thumb is to put 10% away. If you have a hard time doing this yourself, you can see if your employer will do it for you, as many payroll processors will give you the option of putting your checks into multiple accounts. This way, you don’t even need to think about that money, and you’ll simply have it when you retire.
If you’re too financially strapped to do that, another way to save is to put all extra money directly into your savings account. For example, if you get a tax return every year, put that money into your savings account for your retirement. If you get an inheritance from a parent, put that money into a savings account. If you’re not used to having that money, and if you put it somewhere you can’t touch it, then you won’t be tempted to use it.
Sometimes in order to get extra money for retirement you need to earn it. There are plenty of ways that you can make some extra cash that you can put away for your retirement. For example, if you have an attic or garage filled with stuff, try selling it at a garage sale or even online. If you have a talent, such as sewing, take up a side business doing alterations for weddings or dances. Then, instead of putting this money into your checking account where you will likely just spend it, be sure to instead put it into savings account or investment so that it goes directly towards your future.
Now, I hear some of you saying, “I’m so close to retirement and simply don’t have the luxury of time to increase my investments & savings!”
It is not uncommon for people to find themselves near retirement age with little savings. In this instance, one obvious solution would be to just bite the bullet and work for another 5 to 10 years, tightening your belt and saving as much as you can along the way.
However, living frugally in their golden years can seem unpalatable. After all, you have slaved away for the 40 – 50 years. Surely you don’t want to spend your remaining 20 doing the same?
For others, the situation may be more dire: you might be dealing with health difficulties that might hinder your ability to work.
The good news in both cases is that there are options open to you.
Usually, people who have worked over such a long time would have built up a considerable amount of assets. Most commonly, many retiring couples would have built up significant equity in their house. In such cases, a reverse mortgage is a solid option to unlock the value of your home. In a reverse mortgage, a lender basically extends you a line of credit equal to a certain percentage of the equity you own in your home. You can then use the proceeds for living expenses, medical treatment etc.
One of the extremely attractive features of the reverse mortgage is that you can (and must) pay off your original mortgage. This means that if you have any outstanding mortgage repayments – all of that will disappear. You don’t have to make monthly repayments to the lender of the reverse mortgage.
Of course, interest accrues over time on the loaned amount. Sometimes, the total amount owed can outstrip the value of the home!
There are more nuances to the reverse mortgage that are beyond the scope of this article. As with all things however, make sure you do your homework beforehand.
Your biggest ally in retirement planning is time. Starting earlier means that you won’t feel the pinch as badly come retirement time. However, if you find that you’re in a situation that doesn’t allow you to increase your savings, investment, or earning power, then fallback solutions like the reverse mortgage can be a viable lifesaver.