Five Financing Options For Your Retirement

The following is a guest post from Caleb Shadle, Website owner, digital marketer and Blogger. 

Retirement and financial security are two words that typically are not mentioned in the same sentence. To have a retirement that is free from financial worries takes plenty of planning, and you must have a commitment to savings. More than half of Americans don’t have an accurate calculation of how much money they need to retire. It is believed that more than thirty percent of workers who have access to a 401k savings plan don’t even participate. With the average person spending twenty or more years in retirement, having enough money may be an issue. Savings matters and putting away money for your retirement is essential. Quite often the retirement years sneak up on you. Even if you haven’t done the savings you should, there are ways to finance your future.

The Reverse Mortgage

There are many misconceptions about a reverse mortgage. This type of “loan” is available to anyone who is sixty two years of age and older. If your home has any cash value, this may be an option to consider. Rather than making monthly payments to the bank, the bank makes payments to the borrower. This is where the term “reverse mortgage” comes from. The borrower is not required to make any monthly payments on the home, just as long as they are the ones living in it. In the event of a sale, they money paid out in the reverse mortgage must be paid back to the lender. It’s an honest way to get equity from a home that you have paid on for years.

A Home Equity Loan

Home equity loans are an option that can help you pay off debt. If your bank offers great interest rates with low monthly payments, it may be advantageous to use it. You can pay off all those small credit cards and little bills, and then just pay one monthly payment. Some homeowners have an open line of credit tied to their mortgage, which they can use anytime they want. This can provide some security if you need a lump sum of cash, and you can only afford to pay it back in small amounts.

Laddered Bonds

Bond ladders are generated through the buying of numerous bonds that mature at different intervals. This arrangement delivers consistent revenues, and there is little risk involved. Since the staggered maturities eradicate, the danger of all of the bonds being called at once is not a concern. Bonds usually make interest payments two times per year. So a six-bond assortment would produce a stable once-a-month cash flow. The interest rate is protected at the time of purchase. The sporadic interest payments are regular and fixed. When one of the bond seasons, an additional one is purchased. This makes the ladder extend and you are constantly buying bonds when one has matured. The types of bonds available in the market delivers considerable flexibility in generating a bond ladder. This investment method can be used to build a portfolio.

Sell Your Life Insurance Policy

There are two different types of life insurance policies: term and permanent. Term insurance doesn’t have a cash market value. With term insurance, once you stop paying on the premium, your coverage ends. But, permanent life insurance builds cash value. This is the type of policy that can help out when you are in your retirement years. When money is tight, it may seem like a good idea to stop paying on the policy. However, the worst thing you can do is let the policy lapse. You can turn that policy into money that can help you finance your retirement.

Even if you cannot make the payments anymore, the policy is still worth money. That money can be cashed out and used to help. Most people get these policies when they are younger and pay on them faithfully for years. The worst thing to do is let all that money be thrown away because you cannot pay one month’s payment. Each time you pay a payment, it’s like putting money into a bank account. A life insurance settlement may be the answer to your problems.

Sell Your Annuities

Annuities are structured monthly payments that are part of a settlement or other financial victory. Having the monthly payments are nice, but if you need money right away selling them may be an option. You can sell your annuity for a lump sum and have the money in hand fast. This is perfect if you need to move into an inexpensive dwelling, or you want to pay off bills before money gets too tight. You don’t have to be in retirement to sell your annuity. However, during this season of life having something like this to fall back on is nice.

Financial help can be found through sites like MoneyUpFront.net. When you want to sell your annuities or your life insurance policy, they are the ones to call. Retirement shouldn’t have to be a struggle, and there are ways to finance your future so you can live stress free and enjoy life.

Author Bio: After going to a wilderness bible school, Emergency Medical Technician Classes, and finally one semester of nursing school, Caleb finally ended up under the mentoring of Dave Conklin the mastermind behind MoneyUpFront.net.  Caleb has picked up a number of marketing skills such as writing, SEO, and web design while under that mentorship.  Caleb enjoys creating websites that fuel his adventures and passions.  He will be taking a break from his current career to bike out to Colorado and put his full focus on his sites such as PaWSAR.org his non-profit search and rescue site.

10 thoughts on “Five Financing Options For Your Retirement

  1. Yikes, is it just me, or does this list of options not seem to be good avenues for funding a retirement? I don’t mean to harp (this is your house after all), but I would probably want to hold onto a life insurance policy during retirement–particularly if there are no remaining premiums or the premiums I’m paying were termed at a much younger age. Also, a HELOC for retirement? Seems rather aggressive, given that your income would be limited to pay it back.

    A bond ladder or reverse mortgage may make sense, depending on your estate situation and what other assets you may have. However, if you’re considering any of the other options, you may just want to hang in the workforce a bit longer.

    Eric

    • Hi Retire29,
      I dont agree with selling the life insurance policy one bit. I think thats a terrible course of action to take. This article was a guest post and the thoughts shared are the author’s opinions.

      R2R

    • Hi Eric,

      Thanks for the feedback. First, there are plenty more ways to finance your retirement (my personal favorite simply being to build websites). Also as my website allows, I’m a fan of selling annuities.

      However, I like writing about things that push buttons and are more abnormal options. This then creates more information on the page that readers will find helpful.

      Thanks for the insight!
      Caleb

  2. Morrigan says:

    As an attorney, I hate reverse mortgages. I have represented several children of the owner’s who sought reverse mortgage face bankruptcies and foreclosures because of this. The issues become even more grave if the son/daughter lived there with the parent. What if the son/daughter moved in with the parent to take care of them, gave up their house and now are facing foreclosure (I have filed bankruptcies for clients several times because of this issue)? What if the parent had a child with special needs (I have seen this twice)? I even had one where one daughter moved in to take care of another sibling with special needs. I don’t think anyone really understood what they were signing.

    I now have a neighbor that has a reverse mortgage and now has the issue that she can’t rent out the property when all she wants to do is go live with her children for part of the year. They are in other states.

    Dealing with the estate is also a nightmare and may make the estate insolvent.

    In my 7 years as an attorney, I have never seen a happy reverse mortgage situation. For me, reverse mortgages are a horrible option. The only people that I recommend should get them are people that have no children, no heirs, no other assets, and no one will suffer when the property goes back to the bank.

    • Thanks for sharing your thoughts, Morrigan. Always good to hear the other side of the argument and how it affects ppl – esp from lawyers who have worked in the industry.

      R2R

    • Hi Morrigan,

      Thanks for your thoughts! Having those real life stories sheds a lot of new light on the matter. You have mentioned a few things that I would agree with and will go and look into. Thanks for your opinion!

      Caleb

      • Morrigan says:

        Thanks for the replies. If you have any other questions, I would gladly give more anecdotes or explanations. It is my personal opinion that reverse mortgages are mostly scams unless, you are extremely ill/old – can’t work and have no other recourse (still preying on the old, weak and ill); have no heirs (so, who cares what happens to your house when it is foreclosed – because it WILL be foreclosed on, that is how the bank will take it back) and if you don’t give a damn about your heirs.

  3. The article is a vety good starting point to explore ways to be flexible later on in life. The options are at least worth a discussion and reflection. It is good to have them on the long list in case you need cash or an increase of your monthly budget.
    Rather than a reverse mortgage, i think of selling the house and buy a smaller and cheaper to maintain place to life. It could also be used to pass a heritage in cash.

    • Amber,
      These are some options alright…I agree with you that the best option is probably yo actually sell the home and buy or rent smaller instead of a reverse mortgage. Sounds like reverse mortgages are a losing proposition.

      cheers
      R2R

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