Life is often unpredictable, and, despite the best intentions, retirement can creep up quickly on even the most financially responsible. While you can’t necessarily predict how much you’ll need to live in the future down to the dollar, you can prepare by avoiding some big mistakes often made by people leading up to their retirement years.
Don’t let the “little” things add up to big ones. It can be difficult to know exactly what you’ll spend your money on in retirement. In addition to emergency expenses that may arise, there really is no way to account for fluctuations in the economy and how much things will cost down the line. To be safe, it is smart to plan for the worst if the economy were to take a dive. Save more than you think you’ll need for not only variable expenses that will likely come about, but also the smaller expenses that add up quickly like medical costs, auto maintenance and home repairs.
Fail to plan, plan to fail. Not having a solid plan in place is almost a guaranteed way to get under water; if you wing it with your finances, you will likely end up in a tight spot later and regret it. To put together a game plan, keep detailed reports that track your current household expenses and add categories for expenses that you may not have now, but may come up later, such as in-home care or caring for relatives.
Don’t miss an opportunity to invest in real estate. Long-term renting is becoming more commonplace, and that means many renters are missing out on a huge benefit later in life. HECM loans allow homeowners to tap into their home’s equity while still retaining the title. This money can be used toward anything, including travel, daily expenses and health care, and the loan doesn’t have to be repaid until the homeowner passes away or the home is sold. This type of loan may provide a much-needed financial cushion to those who need it most.
I’d love to discuss your future financial goals and how a HECM loan might support them. Please contact me with any and all questions you have.
*(1) at the conclusion of a reverse mortgage, the borrower must repay the loan and may have to sell the home or repay the loan from other proceeds; (2) charges will be assessed with the loan, including an origination fee, closing costs, mortgage insurance premiums and servicing fees; (3) the loan balance grows over time and interest is charged on the outstanding balance; (4) the borrower remains responsible for property taxes, hazard insurance and home maintenance, and failure to pay these amounts may result in the loss of the home; and (5) interest on a reverse mortgage is not tax-deductible until the borrower makes partial or full re-payment. This material is not from HUD or FHA and has not been approved by HUD or any government agency.