Retirement

If you are planning to retire as soon as possible, the time has arrived for some serious financial planning. Develop a budget and evaluate potential sources of income, including a reverse mortgage for homeowners, before setting a retirement date.

Four tips for your retirement budget

Financial planning is important at every stage of life, beginning with a small savings plan for even the youngest child. But when retirement is imminent, financial planning takes on even more significance. Retirees don't have the luxury of steady employment income, so they need to be more vigilant than anyone when it comes to their finances.

Four retirement planning tips:

  1. Become a saver. "Recession-chic" means that everyone is talking about how to save money on everything. If you own a home, start by make some small energy efficient improvements to reduce your utility bills. Consider renting out your basement for extra income. Sell some unneeded items around your house. There are thousands of ways to penny-pinch your way into a bigger retirement account.
  2. Consider a reverse mortgage. Homeowners age 62 and older can apply for a reverse mortgage to use the equity in their home to pay off their existing mortgage or for income. The amount you can borrow depends on your age and the equity in your home. Borrowers can opt for a lump sum or for monthly income from the reverse mortgage, which will be paid when the home is sold. A reverse mortgage can be used as an emergency line-of-credit or to ease your budget constraints.
  3. Develop a budget. Every household should have an accurate idea of their income and outgo, but for pre-retirees, a budget estimate of retirement income is crucial.
  4. Evaluate your savings. Your income in retirement will come from Social Security benefits, a pension if you have one and from your savings and investments. An annual review of your assets can give you a better idea of your future income. If you have a savings shortfall, a reverse mortgage could be an option for adding income or at least an emergency back-up fund for unforeseen expenses.

Whether a reverse mortgage loan should be part of your financial plan or not, ramping up on savings and budgeting are the most important elements to a solvent retirement.

Michele Lerner

Michele Lerner is a freelance writer with twenty years of experience writing articles and web content for newspapers and magazines on topics related to real estate, personal finance and business. Her clients include The Washington Times, Urban Land Magazine, NAREIT's Real Estate Portfolio, and numerous Realtor association publications. Michele's first book,

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