Financing for Your Retirement

665ebbc6d2db4cdfb2eb106dcc497ba8It is never too early – or too late – to begin planning for a more secure retirement. While the task of financing for your retirement may seem daunting, by considering your options in advance of time, you can make retirement planning simpler and more manageable. While your current employment income will provide you with the vast majority of the money you need during your retirement, you can actually boost your retirement income in a range of ways, including:

Eliminating unnecessary expenses

If your children have flown the nest and you and your spouse have accumulated significant assets, there will be less of a need for you to continue to pay for life insurance during your retirement. If you do not need life insurance, cancelling your policy when you reach retirement age will allow you to save some cash.

Investing inheritance

If you are expecting to receive an inheritance from your parents before you reach retirement age, this money could make the difference between a stress free retirement and a stretched one. However, you should only include inheritance in your retirement projections if you are sure that you will receive money in this way. You may be expecting to receive a large inheritance from your parents, but they may have other plans for their surplus money, such as leaving them to others or donating them to charity. Health and social care costs may also eat into your parents’ savings.

Downsizing your home

You may have spent your life climbing up the housing ladder and may have got a great sense of achievement from being able to afford a large house in a sought after location. However, if you are likely to find yourself in a position where you have more space than you need, buying a smaller home can release spare cash that you could use to fund your retirement.

Taking out a lifetime mortgage

A lifetime mortgage is a long-term loan that will allow you to release some of the money that is tied up in your home, providing you with a cash lump sum that you could then use to get more from your retirement. You would not have to make any repayments on your loan before the end of your plan. Your mortgage provider would simply recoup the money you owe them when you die or go into long-term care. While a lifetime mortgage would grant you the chance to draw on the value of your home, the costs could potentially be high. If you choose to fund some of your retirement in this way, you may end up draining almost all the value of your home, leaving little inheritance for your loved ones.

When creating a plan for financing your retirement, the key is to remain conservative in your estimates. That way, you will be able to live comfortably and protect yourself from any unexpected surprises until the end of your life.

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