There are many benefits of retirement, including extra free time, but retiring can also increase your financial burdens. If you have trouble paying your regular expenses or accumulate additional financial obligations, like medical bills, a reverse mortgage may be the solution for you. All you have to do is use a reverse mortgage calculator to figure out how much of your home equity is available to you. You can borrow that amount on a long-term basis from national banks that fund reverse mortgages with no immediate consequences. The only catch is you have to use the home as your primary residence for the duration of the loan. Failure to do so will result in the balance being owed back right away or the home being sold. If the latter occurs and money is left after the sale, it will be given to you or your relatives. If a balance still remains on the loan after the sale, the remaining balance owed will be forgiven.
You Might Not Have a Pension
If you’ve worked in the US, and paid tax from your salary, you should be entitled to a state pension upon retirement. As long as you’ve made enough of a contribution through tax. But, this is unlikely to be a large amount of money, certainly not enough to support the lifestyle you might be used to, and you might not be entitled to any company or private pension.
You Never Know What Might Happen
At the moment, it might feel as though you’ve got years and years to think about this. But, you don’t know what those years are going to bring. You might find yourself ill, injured or needing to care for someone else and unable to work. You working situation might change. We can also expect that the cost of living will rise before your retirement. You have no way of knowing how your life will change between now and your retirement. Nor do you know what might happen to the rest of the world. So, it’s always a good idea to be prepared financially for whatever might come.
You Need to Save More Than You Think
By the time you retire, you’ll have paid off your mortgage, you’ll own other property, and goods and you’ll have enough money behind you to live comfortably without a salary, right? Well, no, maybe not. Now the average age of the first time buyer is much later, and house prices are much higher, many retirees are still paying their mortgage off. Some are even renting. These are significant expenses coming out of your bank account every month, so it’s a good idea to start saving for retirement as soon as you can.
When it comes to how much you need to save, think about how much you earn. The average American over the age of 34 earns around $50000 a year. The average life expectancy is nearly 79 years, and the current retirement age is 66 years. That means that you’ll need $650000 to maintain your quality of life if you are completely average. Even without the average monthly mortgage payment of $1030, it’s still over $450000.
You’ll Have Options
Saving for retirement now means that you’ve got options. You might be able to retire earlier than you’d hope. You could use some of the money for other things in emergencies. Having savings always means you’ve got more options than if you hadn’t.
Saving Now Means You’ll Retire in Luxury
You might have enough money with your pension and from your home, that you can retire and live. But, without savings, could you live well? Saving now can be the difference between a retirement of being careful and one of luxury and fun.
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