If you speak with people who are saving for retirement, whether they are going to work until they are absolutely unable to or are looking use resources like this FIRE calculator to see whether they could retire early, you might find that most of them use a 401(k) sponsored by their employer as their plan for retirement years.
Most would agree that anything to do with financial planning for the long term can be extremely intimidating. And while 401(k)s are quite common many of the rules and regulations can be a quite confusing.
Being happy in retirement takes a look at investing and what happens when you don’t do enough.
VA Loans
If you are a veteran and have good credit, you might be eligible for a VA loan. Whether you know it or not, these can be gotten for reasons other than buying a home. They can also be used to refinance or to take cash from a property you already own, or to lower the interest rate that you are currently paying.
There are actually a number of other things a VA loan can be used for. The main idea is you can use a VA loan to get you some of the funds that you will be able to use for a number of things when your retirement funds just aren’t sufficient. Here’s a look at some of the do’s and don’ts.
What Not to Do
One of the most common mistakes made in retirement planning is paying sales commission to sell or buy mutual funds. Buying funds in asset classes that have a high level of risk, such as technology or gold stocks, and commodities should also be avoided. Managed funds can also be quite risky and have the chance of losing money as opposed to earning it. Finally, and most importantly, sinking your money all into a single investment is greatly frowned upon. Your portfolio needs to be diversified so that in the event of an investment tanking, you have others to mitigate the risk of you losing all of your money.
What to Do
Saving the best for last here. You should always try to build a diverse portfolio of mutual funds. This tends to reduce your amount of risk and can actually increase the returns you get. Also, try to purchase funds that have the least expense. When choosing funds to invest in go for the indexed ones as opposed to those that are actively managed. Attempt to invest in the equity asset classes that have a long history of success. Finally, invest in the most tax efficient way that you can. This means maximizing your 401(k) and IRA accounts and using the taxable accounts before anything else.
Reverse Mortgages
There seems to be a growing number of Americans who have little to no retirement savings. This might be due to investments (or the lack thereof) or due to poor planning, or any number of reasons. For these people, having the ability to tap into the equity they have built up in their home might just be the most effective way for them to fund their retirement.
It is easy to find out your eligibility for a reverse mortgage, too. You need to be 62 or older and own your home. You also have to live in that home. The home must be well maintained, and you have to have the ability to continue making the insurance and tax payments on it. Also, the home has to be a single-family home. It can also be a 2-4 unit home as long as the person borrowing the money resides in one of those units.
The thing about reverse mortgages is that the lender pays the owner. The money can be received in the form of a lump sum, monthly payments, or as a line of credit. The money is to be paid back when the borrower either dies or moves out of the home.
This is a great way to get the money that you need for retirement when investments fall through or if they aren’t enough.
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