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Planning For A Comfortable Retirement

Do you own a home? The good news is that a home is a source of untapped reserve cash, something that most of us do not realize. Americans are not good at leveraging the value of their homes as a financial tool to its full potential. One of the biggest reasons is the apprehension of losing the house. However, if one spends time in evaluating the various investment options, the returns on using the home for equity outweighs the risks involved. This could not have been truer than today where the interest rates are abysmally low. You can make money by utilizing the cash equity of your house and investing it in certain funds that can give you a return of 18% to 20%. A wise investment decision, even if you have to borrow money against your house.

Most of us do not comprehend most of the investment options, which include growth funds. We only know the option that has a sure bet of certificate of deposit. We fail to realize the enormous potentials that other investment options provide in making the money grow faster. One such other example is the 401k. A self-employed professional should utilize the SEP retirement option to reduce the tax liability. If not, then home equity should be used either as an investment option to add to your 401k or in creating a SEP that lets you invest in profitable and reasonably safe global growth funds.

Stock markets also offer exceptional opportunity, more so if you are some years away from retirement. There are segments of the market like the overseas market, energy market, and domestic real estate market that have the potential of sustained growth.

Reverse mortgage is another retirement option. It is not a means of putting together a corpus for retirement but helps you in utilizing the equity that you have built in your home. This can ensure that your monthly income in your retirement years is sufficient to meet your important needs like food, clothing, and medicine. This can be a saving grace if your retirement planning was not adequate. Under a reverse mortgage, a person can withdraw a monthly figure against the home equity. Since the interest payment is postponed until death, there is no need of either borrowing money to meet your expenses nor is there a financial burden of making monthly payments.

So if you are on the other side of 40 and you have not planned for your retirement, either yourself or with the help of a financial advisor, it is prudent that you initiate the process right now. You can hire a consultant who you can rely on and assess your retirement needs along with your capability of meeting those retirement requirements out of your current income. And don’t be surprised if you find that you are completely unprepared for your retirement. However, if you possess a home, it can be your saving grace!

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