You spend the first portion of your life learning and then go about working for several decades. Once you’re done with that, you reach a point in your life where you’ve done enough and want to retire and rest.
People’s lives don’t end there, meaning you have lots of time to enjoy life. This is one of the main reasons people spend most of their lives thinking about retirement savings. Some of them manage to do an excellent job, while others struggle.
Around 80% of people over 60 are homeowners, meaning there’s a way to improve their retirement situation. A home can be a powerful tool for people in that stage of their life, meaning they reward themselves with a comfortable retirement.
Downsize Your Home
If possible, one of the most common recommendations you’ll find anywhere is downsizing. Living in a large home is nice because you have lots of room, so you’ll enjoy a spacious living style. It sounds ideal, but there are some drawbacks to it.
Maintaining a large apartment or house can be a struggle. Keeping it clean is the first problem most people face. Honestly, the whole point of retirement is to relax and enjoy life, not spend most of your days cleaning and keeping your home tidy.
A larger home also means higher utility bills. Keeping a large home cold or warm consumes more electricity, which can be a burden on your monthly budget.
If you live in a large home, downsizing could be a good approach. You can sell it and look for a smaller place. If it’s just you and a partner, you don’t have to think big if you want something cozy and practical. This leaves you with the extra money you can spend or invest in increasing its value throughout your retirement.
The best part here is that you’re probably not in a hurry to sell your current home immediately. As a result, you can time your next purchase to ensure you’re getting a lot for property for your money.
Renting as Additional Income
Going back to the previous example of living in a large home offers another opportunity where you won’t have to sell it. Renting a part of your home is a good way to increase your income and, at the same time, have someone else care for that part.
For some people, taking in a stranger in their home is an invasion of their privacy, and they aren’t too fond of that. If this is something you want to avoid, you can open your doors to family members and close friends.
Even better, if you own a vacation home, you can always rent it and remain in your current one without too much hassle. Yes, you will have some increased expenses in that home, but it can be financially rewarding. Plus, if you often travel there, you can always save a few weeks for yourself if you rent it for short-term stays.
Taking this approach can be financially rewarding, but it also means you have some extra work involved. You can let a real estate agent do all the heavy lifting, but that still leaves you with some activities, especially if you rent a part of your home. Doing it for a second home is simpler, as you can let a professional take care of everything for a fee.
Reverse Mortgage
The previous two options were ones where you didn’t have to worry about a mortgage, but this last one is a bit different. Unlike most mortgages aimed at helping you get a new home, this one works to get you money on a home you already have.
Most people considering reverse mortgages have already paid off their mortgage on their existing home or have at least 50% equity in the property. Unlike other mortgages, this one is a bit more specific, so you may need to talk to a professional. It’s the best way to determine who can get a reverse mortgage loan and if you’re eligible.
For the most part, the rules are relatively simple. You need to be over 62 years old, the owner of the home, and it must be your primary residence. Putting your existing home under mortgage gives you access to money from the lender, which you can use to boost your retirement life.
Getting this kind of mortgage is pretty flexible because you’re getting money you can spend on whatever you want, mostly. You can invest it and get good ROI numbers, use it to renovate your home, travel the world, and almost anything you can think of. There are multiple conditions; the most important one is that you remain in your home and take care of insurance and taxes.