It’s Time to Get to Work on Retirement

You might be asking yourself, “can I retire at 62?” Even if you are a late starter to retirement planning, you may be much closer than you think. You can create a realistic retirement plan even if you don’t have time to build savings by considering your current assets, factoring in retirement income streams, and adjusting your living expenses.

Consider Your Assets

The first step in creating a retirement plan is to evaluate the assets you currently have. Start with cash savings, pension funds, and 401(k) savings. Next assess your physical assets such as cars, antiques, collectables, land, your home, or anything else that could potentially be sold to generate retirement income.

Retirement Income Streams      

62 is the earliest age you can begin collecting social security benefits. The amount you can collect if you retire at 62 in 2019 may be higher than you expect. However, you’ll only get 100% of your Social Security benefit monthly payments if you wait until your full retirement age to start receiving benefits.

Social Security is set up to pay out the same amount in total lifetime benefits regardless of what age you claim your benefit. This means you’ll receive a smaller monthly benefit if you claim when you’re younger than full retirement age and a bigger benefit if you claim when you’re older than full retirement age. It’s important to factor this in when planning your mix of savings draw in the first couple years of retirement.

Medicare starts at 65 so if you retire at 62 be sure you have enough savings to cover adequate health care coverage. With the Affordable Care Act, you are guaranteed to get coverage even if you have pre-existing conditions, and you can’t be charged more than someone who is healthier. But health insurance pricing can vary by location and many upcoming retirees whose employers paid for their insurance get caught off guard by how expensive health insurance coverage can be.

Also, keep in mind, Medicare does not cover all health care costs, so many people purchase additional health coverage to supplement their Medicare benefits. Get quotes on your health insurance costs so you can build this expense into your retirement budget.

Adjust Living Expenses

If you are at retirement age and you don’t have adequate retirement savings then it’s important to adjust your living expenses. In addition to selling physical possessions, you should consider cost-saving techniques. For instance, you can take advantage of senior discounts, choose generic over name brands, swap your land-line telephone service for an inexpensive cell phone service, or volunteer are your favorite entertainment venues for free entry.

Housing accounts for the largest share of spending in retirement. You might consider downsizing your living situation to a smaller house or a cheaper neighborhood to free up some additional funding with cash from the home sale and reduced taxes and upkeep. However, if you are like most people, staying in the comfortable home where all your family’s memories were made is very important.

Aging in Place

Most people prefer to spend their retirement in the comfort of their own home and age in place. The biggest concern with aging in place is to maintain the quality of life that you are accustomed to. Ideally, you started a financial plan to accommodate your mortgage, taxes and upkeep to make this happen. It’s also important to take future health changes into account – in-home medical expenses and support can ruin your retirement budget if you’re not careful. Fortunately, you may be able to offset these expenses using your largest asset – your home. By leveraging the equity in your home, you may qualify for a reverse mortgage to supplement your retirement income. The reverse mortgage will also put an end to your mortgage payments which can greatly increase your retirement funding.

Just like your 401K, IRA, or annuities, home equity is a powerful financial tool that can greatly enhance your retirement funding plan.  Contact a Finance of America Reverse, LLC (FAR) representative today to learn more about the benefits of reverse mortgages and how they may help you secure long-term financial freedom.

Whatever your financial situation, you should consult with a financial advisor to review your retirement funding options. It’s time to get to work on retirement!

This article is intended for general informational and educational purposes only, and should not be construed as financial or tax advice. For more information about whether a reverse mortgage may be right for you, you should consult an independent financial advisor. For tax advice, please consult a tax professional.