There are a lot of retirement tips that you can use to help you plan for the inevitable. But if you are broke and do not have much saved up, you can look at your house and use it to complement whatever amount you saved up for retirement. This might seem to be a tricky prospect but it can be done and there are actually a good number of older consumers who are making use of their house to augment their retirement funds.
Gallup.com shares that the average retirement age for Americans is at about 65 years of age and if you are nearing this age, there is a big chance that you are already thinking about the next stage in your life. That time where you are no longer working and relying on the savings you have.
One of your biggest fears at this stage is shortage in retirement funds because if you do not have enough or worse, broke, then you would have a tough time going through retirement. There are those that choose to just simply work as long as their body will let them just to have a regular monthly income.
Some try out risky investments hoping to amass enough funds for retirement only to lose whatever small amount they have. This puts them deeper in retirement trouble and complicates their situation even further. Risk with investments is something that you need to seriously look into and weigh versus benefits especially when you get older.
How your house can be a retirement fund lifesaver
If you are already making plans for retirement and the biggest asset you own is your house, here are a few retirement tips to consider so you can make money off of it.
- Pay off the mortgage before retiring. This is one of the best ways your house can help your retirement fund, find a way to finish off paying for your mortgage loan before you set foot on retirement. Nerdwallet.com shares that the average mortgage amount per hosuehold is at $171,000. Once you retire, you are now reliant on whatever amount you have saved up to get you through your expenses. This can mean your living expenses, travel funds and even your budget to pursue a certain passion or specific hobby. But if you retire and your funds still has to cover a lot of debt obligations, you would have a hard time budgeting what is left for what you really need. That is why one of the best retirement tips you could ever follow is to pay off your mortgage loan before retiring.
- Sell and rent. When you retire, there is a big chance that you are already an empty-nester and all your children have moved on with their own life, have their own family and living in their own house. You could now be left with a big house and a lot of empty rooms. What you can do is to look into selling the house and putting the money in an investment that would yield you extra funds for retirement. You can then rent out a small space which could be an easier set up for you. This way, all the upkeep, taxes and even insurance on the house will be taken cared of by the landlord.
- Sell and downsize. Another retirement tip a lot of people are starting to take notice is the practice of selling their house and buying a smaller one to live in. This comes from the same idea where coming home to an empty nest seems to be a lot of work when you consider the size of the house you have to maintain. This tiny house movement requires precise timing from the moment you sell your existing house to buying a smaller one. The last thing you need is being caught in between where you sell early and do not have a place to stay or buy early and not have the funds to clear your check.
- Using it up for rent. One of the best things in being left with a house that is bigger than what you need close to retirement is you get to earn money off of it by having it rented. You can have a few rooms rented out or even the garage converted into a small room. The idea is to earn extra income from the house which you can add on to your retirement expenses.
- Reverse mortgage. This is a program lenders would offer to older consumers where instead of paying mortgage, they would be getting money from the lender. The house is then transferred to the lender once the owner moves out or dies. This is an option often looked at by older couples who has no intention of giving the house to their children as inheritance.
What not to do with your retirement money
Now that you have an idea on some retirement tips to consider with using your house, here are a few of the things you need to stay away from to maintain the integrity of your retirement fund.
- Put in risky investments. Risk will always be a part of any investment instrument but as you get older and eventually retire, you need to taper of risky investments. One of the main reasons for this is because when something bad happens and you lose a good chunk in your funds, you do not have the time to recoup back your losses. You are already retired and have no way of saving up that amount again. As Gallup.com shares that there are only about 52% of Americans who have investments in the stock market, there are a lot of people who sees stocks as a risky way to grow their money.
- Buying everything you want. As you hope to teach your children the concept of money, you need to remember your wants and needs and how it figures in your household budget. You might think that you have earned the right to splurge after working so hard for so many years. But the problem with this is you run the risk of losing all those that you saved up over the years when you decide to splurge. You have every right to pursue those wants but you need to make sure that you would have enough funds for your actual needs.
- Giving dole outs to family members. There is this notion held by some people that retirees has loads of cash and not much use for them. This is why some family relatives are quick to ask for dole outs or simply borrow money because they can. You need to be very careful when you are lending money to people around you because when you are not paid back, you would have a hard time saving up again. You need to make them understand that the money you have is meant to sustain your needs and lifestyle especially that you have no source of income already.
There retirement tips to look at especially when you consider yourself broke are helpful in getting you through your retirement needs. Your house becomes a very potent source of income when you are short on cash during your retirement years.
