Life doesn’t stop when you reach retirement. Bills don’t stop coming. Medicines won’t always come free. Expenses won’t just disappear like a bubble. Retirement income may mean the lifeline for many American seniors.
It would be nice to look forward to a future when you won’t have to worry about anything once you reach the age of retirement. By then, we dream of a life less stressful. We all want to just be able to sit on a chair and reminisce on a life well lived.
To achieve that goal, we all have to plan and work on it early on. The earlier we prepare and save up for our retirement, the more bountiful we will be when that time comes.
Retirement Income Sources
Most American retirees rely on their social security payments as a source of income. The steady stream of payments funds their day to day expenses.
On average, the retirement benefit is around $1,300 monthly. The maximum benefit at full retirement age is more than $2,600 a month. The actual payment that an individual received per month highly depends on how much he/she has earned in a lifetime and when you have started receiving social security benefits.
A social security benefit is a form of pension. Other forms of pension are those which are private. These plans can be offered by insurance companies, trade unions, and employers.
While there are a number of those who treat traditional pension as the major source of income once they retire, many are starting to think that they should not be relying so much on it as their sole income source. A pension plan can be a tax-free cash which you can draw money from. You can get as much or as little as you need, whenever you wish to.
Basically, these are accounts that allow you to save money for retirement. Many financial experts believe that an estimated 85 percent of your pre-retirement income would be needed when you retire. That sounds like a lot of money. With individual retirement accounts (IRA), you can save for retirement with tax-free growth or on a tax-deferred basis. This allows you to potentially grow, or compound your savings than a taxable account.
Many people today choose to still have a job even when they reach the age of retirement. In this “semi-retirement” phase, they work part time to help them save more money. Switching from a full-time job to a part-time work will still keep a steady stream of money into your accounts before you decide to fully retire.
When you purchase a house, you would initially think that it is an of investment. A home is a form of forced savings. The money you pay towards the mortgage each month translates to an increase in home equity.
The equity you have built over the years can be turned into cash once you retire. Seniors have a special mortgage loan program that makes tapping on equity and converting it into cash possible.
Reverse mortgage loan converts the home equity into cash. The good think about this loan is that it is the lender that pays you instead of you paying the lender each month. It does not become due as long as you keep living in the property.
One reverse mortgage program that is government-baled is the Home Equity Conversion Mortgage (HECM). It is guaranteed by the Federal Housing Administration and funded by private lenders.
The fund you get from the loan can be used in many ways. It can cover medical bills or it can be put in a savings account. It can also be invested to the money can grow.
Retirement requires careful planning. Exploring possible retirement income sources allows you to create a course of action that will sustain you once you retire. Remember that the earlier you prepare for retirement, the more time you have to save up for your future. It is never too late. Start today!