Is A Pension Your Only Option For Funding Your Golden Years?
Pension And Other Ways To Be Financially Fit Through Your Golden Years!
You can’t have escaped all the advice on getting yourself a pension and planning ahead for your old age. As life expectancy increases and the birth rate in Western countries decreases, there are simply going to be far too many old people for the younger population to support. The State will not be able to provide for you so it is the time that you started making plans to look after yourself in your golden years.
The sooner you start the better but there is no such thing as leaving it too late. There are always steps that you can take to sort out your retirement finances. You don’t have to select one single option. Many people choose to fund their old age from a variety of sources and this can change over time as your family, financial and work situation changes. Here are some ideas on how you can manage your funding plans.
Social Security will give you some money
In the USA (and many other countries) there is a welfare system for old age. Social Security is the single most common source of retirement income. In fact, around 90 % of retired people receive a monthly social security payment and many of them regard this as their main source of income. People who have been out of work are most likely to rely on it and people who have workplace pensions and private funding are not so reliant on this income stream.
Using a special retirement account to fund your old age
At least 75% of workers are expecting to use a 401(k) or IRA to fund their retirement. They are a way of saving for your retirement whilst deferring taxes. Savers with a low income can even qualify for a further saver’s tax credit.
Many employers match the amount that you save but you may not be able to keep these contributions if you switch employers. You need to wait until you are at least over 55 to retire to get the full benefits so they may not be suitable for you if you plan on retiring early.
Employment pension
These used to be the most popular way of saving for your retirement but the financial landscape has shifted. Now, a little over a third of retired people rely on a traditional employment pension as their main source of retirement income. Fewer and fewer companies are now providing pension plans to current and new employees so this looks like a funding source that will eventually be consigned to history.
Getting a part time job and taking late retirement
If people are fitter, healthier and more mobile in later life it makes sense that they may wish to take on a part-time job or continue working later. It makes financial sense and can be very good for them both physically and emotionally. If you are holding down a part-time job you will be exercising both your body and your brain and moving around. This is good for your fitness levels and prevents loneliness.
Of course, this is not an option for everyone. There are some very physical occupations that you simply cannot continue with as you get older. Also, some people have age-associated health conditions that prevent them from working in later life.
Infinite banking and whole life insurance
Infinite banking and whole life insurance offer a very useful and practical option for investing your money and giving you an income when you retire. Wealth Tree Financial provides a comprehensive explanation of the system so that you can work out if it is right for you.
This will depend on your own personal financial and family situation, how you feel about risk and your eventual financial goals. If you want to grow your money safely and competitively at the same time as lowering your taxes and maintaining complete access to your money then this could be the option for you.
Using the equity in your home
Homeowners will have built up a certain amount of equity in their homes and you may have paid off all of your mortgages by the time that you are enjoying those magical golden years. If you decide to downsize to a cheaper property and sell your family home, you could release a sizable sum of money and you can use this to support you in your retirement.
You may also be left a house or a sum of money by an elderly relative in their golden years when they pass away. This income cannot be depended upon because you do not know when you are going to get it and if it will even be bequeathed to you at all.
Living off the rent from property
You also have the option of investing in property that you let out to other people in your golden years. You can use the rent to support yourself when you retire. You have the choice of buying commercial property (shops and offices) or domestic properties such as houses and flats. You will need to get a special mortgage for landlords unless you have enough money to buy the property outright. You will also need to pay for insurance, maintenance and any licenses and taxes that apply in your State.
You may find that it is a nuisance to manage the property yourself as you could get called out at all hours of the day or night if your tenants lock themselves out or the toilet gets blocked. It may be easier for you to use a property management agency who will handle all of this for you. However, they will take a proportion of the rent every month as their fee.
A property is a popular investment but it is not risk-free. House prices can go down as well as up and the housing market can be very volatile at times.
Whatever method you use to save for your golden years, it is best to look at all the options and get some sound advice so that you can choose the option that is most suitable for you.
