Financial goals need to change for people as they are near retirement age. The amount of income an individual can earn is limited during this time. A few mishaps financially as an individual nears retirement can delay this retirement by months or even years. The truth is that younger people have more leeway when it comes to making financial mistakes. Finding a financial professional that can help is a worthwhile investment. Below will outline the options that a person nearing retirement should consider to protect themselves financially.
Move Investments Into Safer Options
Pouring all of your money into Bitcoin could be profitable or it could cripple a person financially. Younger investors can be a bit riskier with their money. As you age you should start to move your investments into dividend stocks, index funds, and bonds with a good ROI. A diversified portfolio is also of paramount importance. The last thing anyone wants is to have all of their money invested in oil or tech just to see that industry take a nosedive.
Working with a financial advisor can be very helpful especially for those without financial knowledge. There are trading platforms that can be used with automated help. Setting a goal is all that has to be done as the trades can be made for you. Pulling your money out of the stock market is something that people do frequently. This is not recommended as there are safe avenues where you can invest. The inflation rate is rising which means having this money is cash will diminish its value over time.
Leveraging Your Current Assets
Owning a home that has been paid off in full is an incredible asset. There are so many options that can be used to get cash if needed. A reverse mortgage is the perfect example of this. Getting cash monthly or a lump sum while still living in the home is possible. All Reverse Mortgage notes that borrowers must meet the following requirements:
- At least one homeowner must be at least 62 years of age.
- You must reside in the home as your primary residence.
- Your home must be either a single-family home, two to four-unit owner-occupied home, townhouse, approved condominium unit, or certain manufactured homes.
- You must attend an educational HUD-approved counseling session by phone or in person.
- You must pass financial assessment guidelines and continue to pay future property charges such as property taxes and homeowners insurance.
The current assets owned can be leveraged in so many ways. A home that has a large percentage of equity can be used for various reasons. Looking into ways to leverage assets can be very important when trying to find cash or take out a loan.
Downsizing Your Current Home
Individuals that have children that have moved out of the home might want to consider downsizing. The home values in some areas are incredible. The last year in states like Florida has seen the values of homes skyrocket. Remote work is also quite common so moving to an area with a low cost of living can be important. A person that moves while making the same amount of income could retire years in advance.
Renting out a home can be a way to earn truly passive income. The trick is finding a property management company. The company will have background checks of renters and confirm monthly income. The only thing that needs to be handled is certain repairs that need to be made to keep a property livable.
Drive Down Fixed Costs
Driving down fixed costs can be very important when on a limited income. Don’t underestimate how much this can impact how much that is saved annually. The cable bill is a perfect example as these bills can be high when compared to streaming costs. Phone bills can also decrease if you find a carrier that bundles costs. There are even cable companies that bundle mobile phone services and internet. Creating a list of these expenses will be very important as most people don’t examine these. A few hundred dollars per month can lead to thousands of dollars a year. Adding these expenses together then seeing where money can be saved is imperative.
Nearing retirement should be an exciting time rather than a stressful one for financially responsible people. The importance of doing accurate budgeting that includes inflation is essential. So many people are forced back into work due to not considering this factor.