Responsibly managing and saving your money is important and relevant at all ages, but it is especially essential when you are a senior. Those who are in or nearing retirement need to have sound strategies in place to ensure that they can continue to maintain their lifestyle when their sources of income change. The biggest change for many is going from depositing a paycheck every couple of weeks — one that reflects their tenure at their job — to living on a fixed income. When you do experience an income shift like this, it is crucial to make adjustments and explore the resources available to you to assist you in living your retirement freely and without financial worry. In today’s blog, Family Home Loan Texas provides helpful financial tips that can help seniors enjoy their golden years while living comfortably.
Plan For Retirement
If you are approaching retirement, it is important to put a plan into place. You need to think about what your income needs are going to be once you stop working, and adjust accordingly. Try to estimate how much you will have saved when you hit retirement and what your monthly income will likely be. The most common expenses to consider are housing, health care, taxes, groceries, insurance, utilities, travel, and any outstanding debt. By calculating an estimated budget before you retire, you will know if you are on track to hit your savings needs.
Assess Your Retirement Accounts
Many people who have spent their adult lives working have most of their net worth wrapped up in their retirement accounts. Before you retire, be sure to take advantage of any company matches for these accounts and max out your payments when possible. These accounts often have significant tax benefits that can help you save more money. The most common retirement accounts include a 401(k), traditional & Roth IRA, Pensions, and Thrift Saving Plans. Even if you have just a few years before retirement, do what you can to max out your contributions for your remaining years working.
Understanding Social Security
Close to 65 million Americans receive Social Security payments, so if you are eligible to do so, you should factor this into your budget. It can be a very helpful source of income, but for many, it is not enough to live on exclusively. With this in mind, you can plan it into your overall retirement strategy to assess where else you will receive money from. To learn how much you will get each month, you can check out free tools from the Social Security Administration or call their toll-free number at 800-772-1213.
In addition to having a grasp on how much you will receive, you should also understand different Social Security benefits. These include Social Security Spousal benefits, Divorced spouse Social Security benefits, Social Security survivors benefits, and Social Security Disability Insurance (SSDI) benefits. By knowing what you qualify for, you will have a better sense of what to expect from your monthly payments.
Take Advantage Of Tax Credits And Deductions
While taxes can be frustrating for many people, seniors do have some tax credits and deductions available to them. These are mainly to offset the increased medical costs that older Americans experience. For instance, if you itemize your healthcare deduction, you could see tax benefits for not only your own medical expenses but also your spouse’s and dependents’. Some of the more common credits include health care credits, homeowner credits, and education credits. Deductions include health care deductions, itemized deductions, and investment-related deductions. Ultimately, by understanding what you qualify for, you will be able to save more money as you move through your retirement.
Enjoy A Flexible Retirement With A Reverse Mortgage
By the time you hit 62, you probably have quite a lot of equity in your home. This is a great nest egg, but the money you’ve put into your house isn’t providing any returns. If you would like to have spendable cash while remaining in your home for as long as you’d like, a reverse mortgage is a fantastic option. This is a loan in which you leverage your home equity to receive money from a lender. As the name suggests, instead of making a monthly mortgage payment, you get paid. It is available for those 62 or older and can only be taken out on a primary residence.
Although you are tapping into your home equity to receive your money, you still retain the title to your house and you can live there for as long as you want. Best of all, you do not have to pay the money back — including interest — until you cease living in your home. This means that you can spend the rest of your life in the house you’ve created myriad memories in while still receiving money. It is also important to note that any funds you receive are considered non-taxable income, meaning that the money you get is truly yours.
A reverse mortgage allows you to have a significantly larger budget without draining other accounts like a 401(k) or your investment portfolio. This can significantly impact the financial freedom you have once you hit retirement age. When you choose to get a reverse mortgage, you can receive your money as a lump sum, monthly payments, or a line of credit. Again, this is a great way to remain flexible throughout your golden years.
While you can spend the money you receive on anything you would like, some of the more common ones are medical expenses, home repairs, and tuition for a loved one. While these all have larger costs, it is incredibly beneficial to take the money from your home equity rather than savings that are tied up in investment accounts. The stock market can be volatile, and you don’t want to lose out money due to it. Conversely, real estate is typically stable and appreciates, so you can rest assured knowing you are getting full value from your loan.
Contact Us For More Financial Tips For Seniors
We love assisting seniors and those nearing retirement, so we invite you to contact us today. Family Home Loan Texas was founded by loan originator and long-time mortgage professional Rob Bramer. Rob has helped clients secure the loans they need both locally and nationally and can help you get the loan you need to live life on your terms. Call 1-800-990-LEND (5363) to speak with Rob about a reverse mortgage loan and to receive a free, no-commitment consultation.