Can Your Home REALLY Help Fund Retirement???

January 22nd, 2015 | Articles,Latest News | No Comments »

Saving for Retirement Can Your Home REALLY Help Fund Retirement???

It is true that your home can be used to give your retirement savings a quick and  significant boost, but you have to consider whether the cash you get by selling  your home will be enough.

The typical strategy is to pay off your mortgage. Not having a mortgage payment  biggest monthly bills. While you will still have to pay taxes, insurance and  maintenance costs, you won’t have the mortgage payment, but you won’t have the  extra income from working either…hmmm.

Ok so you could downsize. Selling a presumably larger (and older) home may put $100K+ cash into your pocket, but what then? $100K or even $200K doesn’t go as far as it once did. Sure, you have less monthly expenses as you have cut your property taxes, insurance and upkeep, but you may have a condo or HOA fee you didn’t have before or medical expenses…just saying.

The other option is renting. Not a bad idea if you are OK with having a payment which doesn’t give you a return like the equity paydown used to (many people have a hard time with this). The biggest downsides of renting are the possibility of having your rent increased while on a fixed income or being asked to move out.

Some people choose the reverse mortgage which allows people who are over 62 to tap into their home equity. This works by either getting a lump sum up front or having access to a line of credit and then the amount gets paid back when the sale of the home occurs or the ‘buying of the farm’ as it were.

An astronomical amount of baby-boomers are heading into retirement with negligible savings, mortgage payments and no plan but to keep working. At the end of the day, based on escalating health costs, it is necessary to do the math yourself and consider what your monthly expenses will be vs. the fixed income you expect. It is worth having a plan now than being blindsided with news that you have to be on the Freedom 75 Plan.

#propertyprophs