As we grow into our later years, we will often hear the words “planning for retirement”. Planning for retirement is important as we lose our source of income when we enter retirement. This is to ensure that we will have enough funds to tide us through our later years. Retirement might seem like something that is far in the future, but nevertheless, it is never too early to start.

Thinking Outside the Box

Retirement planning might sound like a boring business. We might think that funding our retirement means to work hard at our jobs and earn as much money as we can. While this is the traditional method of saving for retirement, there are other ways to do so other than toiling away at your job which we might not have considered.

Firstly, you can rent out a part of your home. If you live in a relatively large property, you can make a profit by renting out a part of your home either to people looking for a place to stay temporarily or even the occasional tourists. This is quite a regular practice nowadays, as there are even websites such as Airbnb and HomeAway which enable homeowners to rent out their home, or part of it, to tourists. Of course, if you have multiple properties, it would be even better as you can rent out the one that is not in use and not worry too much about personal safety and privacy. However, if you are comfortable with sharing a home and meeting new people, renting out a part of your home allows you to constantly have an incoming flow of money.

Another option is to take out a reverse mortgage. A reverse mortgage is a loan available for homeowners 62 years and older. It allows them to borrow against the value of their home and receive funds as a lump sum, fixed monthly payment, or line credit. It does not require the homeowners to make loan payments. Rather, the loan becomes due and payable when the homeowner dies, moves away, or sells the home. This method can help you build up your wealth and keep your home, though it is important to carefully calculate the cost of reverse mortgage to ensure that you are making the choices that will best benefit you.

Finally, you can also learn how to invest in stocks. While this might not be an innovative method, investing in stocks might seem like a tedious and unappealing method to many as there is a steep learning curve involved. You must do your own research before investing and keep up with the news around the world so that you can predict the changes in the stock market. Monitoring the stock market is important to prevent yourself from losing money. However, even with the possible risks involved, investing in stocks can provide you with a source of income aside from your job. There are stocks out there that can even help your money grow over a period of time, allowing you to amass a sizable fund when you reach your retirement. That is, if you do your research first and make wise choices when investing.

The Early Bird Gets the Worm

What’s the deal with starting early, you might ask? Retirement planning is important since there are many things we must take into account to avoid running out of money in retirement.

There are many more things to consider when planning for our far future. Planning for retirement and doing research early can help us learn about the different options that are available to us when we are older, including the things that we might not have been aware of. We can learn about the important tax, savings, and investment information to plan around. Married couples can also check if they are eligible for social security benefits as a spouse. For some of us, these financial terms may already make our head spin. However, it is beneficial to gain some basic financial literacy education in order to build financial plans sooner and be able to be financially independent by the time we retire.

Having a retirement plan in place can help to ensure that we are making the right choices and the risks we can take. At certain points in our life, we may want to make big decisions, such as starting our own company or pursuing a late degree or professional path late in our career. These decisions cannot be made rashly as they will greatly influence our finances. However, knowing where we are in terms of our retirement planning can give us the confidence on whether we are capable of taking these large steps in our lives.

Lastly, anything to do with finances is often stressful. There has been a declining confidence among adults that they have enough money for their retirement. A survey conducted American Institute of Certified Public Accountants in 2017 found that less than half of non-retired Americans are confident that they will reach their financial goals by retirement. This number is likely to have increased in the pandemic as more people face difficulties such as unemployment. Worrying about finances can lead to stress and anxiety. And these are linked to health problems like diabetes, heart disease, migraines, and poor sleep. It would be undesirable to be faced with such stress and physical problems later in our years, especially when our body may have already been weakened due to age. We can prevent ourselves from experiencing high amounts of stress by planning early and handling our financial concerns bit by bit at different stages of our life.

There is no harm in planning early. In our later years, we might even thank ourselves as we enjoy the fruit of our hard work after many years of meticulously planning. The present is important, but we must also look towards the future and plan for it to ensure that we can enjoy your later years in comfort and have a fulfilling retirement life.