Retirement used to encompass around 10 years of your life. There wasn’t much saving needed to reach these years in comfort. However, today’s retiree can live well into the 80s and 90s. Retirement is now a generational length of about 20 to 30 years. Learn how to fund this time period without much stress. Careful saving in your younger years will pay off in the end.
The IRA and 401(k)
Take a look at your personal accounts. You’ve probably been placing money into them for years, but never paid much attention. When you’re retired and at the proper age, you can start taking withdrawals from your IRA and 401(k) accounts. Be aware of the rules that surround your accounts when it comes to the tax implications, however. Take the money out as the law allows. You don’t want to pay a lot of taxes on the money when income-tax time rolls around.
When you’re 62 years of age, the federal government can pay you in Social-Security wages. You’ve been paying into this program for your entire life if you’ve worked a steady job. The funds are yours to use as a way to supplement your income into retirement. Ideally, wait as long as possible to apply for Social Security. If you wait until age 70, your benefits will be much higher each month than if you started at age 65.
Your monthly income during retirement may be good enough for your needs. However, you want to take a dream vacation in the near future. Consider a home-equity loan from your mortgage. The equity in your home can be used as a credit line. Simply charge against it when you need the extra cash. These lines of credit must be paid back so be aware of your financial obligations. Don’t borrow so much money that you can’t pay it back.
The Reverse Mortgage
Many retirees are discovering the power of the reverse mortgage, such as the AAG Reverse. This program is similar to a home equity line of credit, but you don’t pay back any money. The equity in your home becomes a form of income. Take a certain amount out each month to pay for everyday items. Continue with this monthly payment into your checking account until the owner passes away. The borrowed funds and the home are paid off with a sale of the property at that point.
Elusive Pension Packages
Take a look at your retirement portfolio. Some new retirees may be fresh out of their employer’s financial programs. Look for any pension funds that were grandfathered in many years ago. You may have a pension that’s just been accumulating interest for several years. These pension can be thousands of dollars in value so don’t overlook them. Pensions are just as important as your 401(k) or IRA. You take out a small amount each month to cover your expenses. Many people have been surprised by these accounts as they reach retirement.
Regardless of your funding choices, work with a consultant who has experience with finances, such as the American Advisors Group. Living comfortably into retirement doesn’t have to be a struggle. Be a partner with your financial advisor so that your golden years are as rewarding as possible.