Throughout your investment life you go through two distinct phases. There’s your period of asset accumulation and growth, where you work hard and strategically plan to ensure you build your net worth and save enough for retirement. This involves constructing a thorough financial plan that takes into consideration your assets and liabilities and not only leverage growth potential but also manage current and future cash flows. Your home is an important piece of your financial plan and balance sheet. It’s an important asset in your financial life, both strategically and emotionally.
As you approach retirement, the traditional strategy is to pay down your liabilities (loans) so that in retirement, you have one less expense and the cash assets you’ve accumulated over the years can stretch further than they would under the burdens of mortgage debt. But what if your savings aren’t enough to provide the cash flow you need in retirement?
Assess the options to cover rising day-to-day expenses
As day-to-day expenses are ever increasing, sometimes your 401(k), social security, or other retirement savings simply fall short. One strategy is to rethink how you can turn your assets into income. In retirement you may, like many investors, have equity seemingly trapped in your home. It’s not weighing down your monthly cash flow, but it’s not working for you either. There are strategies beyond a traditional mortgage that you can use to your financial benefit, especially if you know you’ve found the home you want to stay in throughout retirement.
Your home doesn’t stop being a productive piece of your financial plan once you’ve entered the distribution phase of your financial life. There are programs that allow you to increase your cash flow without compromising your homestead. Your home equity can work with your other savings and retirement income to help you maintain the standard of living to which you’ve become accustomed. The window to enjoy your retirement is short and it goes by quickly.
Let’s start the conversation on how your real estate factors into your financial plan. Please reach out if you’re ready to plan your current or future cash needs.