Many retirees are experiencing first-hand the difficulty of making ends meet during the current economic downturn. Living on a fixed income isn’t simple under the best of circumstances - and the current economic landscape is even less forgiving for those trying to get by on social security or personal savings. Many seniors still seek to earn income of some type to supplement their retirement so they may continue to travel or otherwise enhance their lifestyle. While there are many ways one could go about growing their income in retirement, there are a few methods that will likely produce healthier results.
One slightly tricky option would be a reverse mortgage. Basically, a reverse mortgage allows the bearer to tap in to their home equity - the amount available for borrowing will be dependent on many factors such as current market value of your home, current interest rates and your health or life expectancy. While there is a definite advantage for those over the age of 62 (the money does not need to be paid back as long as you live in the house), the reverse mortgage will mean that you are responsible for numerous fees associated with the loan, insurance, property taxes and overall maintenance costs. If for any reason you decide you want to move, the balance of the loan will be due at once. So, the reverse mortgage is definitely an attractive option but careful consideration needs to be taken and so does a defined look at your future plans in regards to re-location.
One common sense solution would be to simply reduce your expenses. Whether you want to purse this as a means to essentially increase your income (*money saved is money earned, after all), you should have a very clear understanding of exactly where your money goes from month to month. Keep a detailed record of your expenses, both minor and major. Once you’ve laid out everything it will become much easier to see areas where reductions can be made. Consider getting rid of your vehicles, or selling them off and only keeping the one which is the most economical to operate. Focus on and eliminate routine expenses of the unnecessary variety (daily paper and a cup of coffee at Starbucks, for example). Little things can help too - turning off lights, lowering your thermostat in winter, efficient light bulbs, unplugging your computer at night, etc. - every little bit helps, no matter how insignificant it may seem on its own.
Real estate income is another alternative. Investing in real estate is another great way to stay ahead of inflation. Purchasing a property with the express purpose of using it to generate revenue can be advantageous since rental properties offer some tax benefits to the owner in addition to being a source of ongoing revenue. While this may seem like a much less complicated method of supplementing your retirement finances, there are some major considerations you must factor in to your decision making process; rental properties must be well maintained and there are some legitimate expenses that go along with keeping your property in order. Also, owning a rental property means you’ll be a landlord and if you choose to relinquish those duties (taking care of repairs, any tenant related issues, etc.) to a third party that will be another cost incurred.
One very popular option is to invest in Annuities. An Annuity is a type of financial product that is available from an insurance company which guarantees the bearer to income for life. The amount of annual income paid out from an annuity will depend greatly on your life expectancy, attached interest rates and the price of the annuity itself. You can opt to receive payments for the rest of your life, or for a set number of years. How much you will receive depends on two things - whether you choose a guaranteed payout (known as a fixed annuity) or a payout stream determined by the performance of your annuity’s underlying investments (known as a variable annuity). Either way guarantees an income. Anyone who considers an annuity should first research it thoroughly before deciding whether it’s an appropriate investment. As part of a retirement strategy, an annuity is one of the only things that is guaranteed to provide income and the bonus of this scenario is that all of the factors are determined beforehand by the bearer and a financial planner.
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