Wednesday, April 9, 2008
Worried Pre-retirees
Dear Sue,
My husband and I are in our fifties and looking forward to a nice retirement. Our plan was to retire on the equity that we have built up for the last 25 years.
We have updated the entire house using our equity line. We remodeled the kitchen and replaced all of the major appliances. We did what we thought we needed to do in order to make our home more marketable. The market was not the same when we were finished!
The home prices in our area have really gone down. We really need the money from our home in order to retire. I know that you said in one of your columns that one should never rely solely on home equity for retirement and to never refinance for any reason other than to lower one’s interest rate.
We live from pay day to pay day. We don’t have 401 Ks or IRA’s. We just have a modest savings account and the equity in our home. (what’s left of it). PLEASE Help us understand what we have to do now.
Worried Pre retirees
Dear worried,
You are still young! Fifty is the new forty.
Many boomers are facing the same retirement worries as you are. They will need to be creative and design a new retirement model.
In your case continue to take care of your home because it will take care of you. The current real estate market is temporary. Home appreciation will return. It will happen before you know it.
In the mean time create a plan. Part of your plan may include working a little longer than you had anticipated. You can plan on living a longer healthier life than previous retirees.
You say that you live from payday to payday. I would suggest creating a budget that includes maximizing IRA contributions. If you don’t have an IRA account it’s never too late to start one. Get going!
If you have never lived on or created a budget before, get some books on the subject or seek the advice of a reputable financial advisor. The big question you will need to ask yourself is how do you want to live when you retire? What do you want your life to look like? Your answers will determine how much money you will need.
You indicated that you had a savings account. Is it enough to purchase an income property? Purchasing an income property can benefit you in several ways. First, you can protect some of your income through various write offs including depreciation. Secondly, you can enjoy cash-flow from rents. Tenants also help to pay the mortgage debt if any, taxes, insurance and other expenses associated with ownership. Finally, the property serves as a growing asset through appreciation.
Historically, California real estate doubles every ten years. An investment property or two can greatly enhance ones retirement plan.
If saving or buying, investment property isn’t possible, consider moving to an area that has a lower cost of living. Friends of mine have actually moved out of the country, in order to live out their retirement dreams.
In any case, start your plan now! It is a matter of good Home $$s and Sense.
My husband and I are in our fifties and looking forward to a nice retirement. Our plan was to retire on the equity that we have built up for the last 25 years.
We have updated the entire house using our equity line. We remodeled the kitchen and replaced all of the major appliances. We did what we thought we needed to do in order to make our home more marketable. The market was not the same when we were finished!
The home prices in our area have really gone down. We really need the money from our home in order to retire. I know that you said in one of your columns that one should never rely solely on home equity for retirement and to never refinance for any reason other than to lower one’s interest rate.
We live from pay day to pay day. We don’t have 401 Ks or IRA’s. We just have a modest savings account and the equity in our home. (what’s left of it). PLEASE Help us understand what we have to do now.
Worried Pre retirees
Dear worried,
You are still young! Fifty is the new forty.
Many boomers are facing the same retirement worries as you are. They will need to be creative and design a new retirement model.
In your case continue to take care of your home because it will take care of you. The current real estate market is temporary. Home appreciation will return. It will happen before you know it.
In the mean time create a plan. Part of your plan may include working a little longer than you had anticipated. You can plan on living a longer healthier life than previous retirees.
You say that you live from payday to payday. I would suggest creating a budget that includes maximizing IRA contributions. If you don’t have an IRA account it’s never too late to start one. Get going!
If you have never lived on or created a budget before, get some books on the subject or seek the advice of a reputable financial advisor. The big question you will need to ask yourself is how do you want to live when you retire? What do you want your life to look like? Your answers will determine how much money you will need.
You indicated that you had a savings account. Is it enough to purchase an income property? Purchasing an income property can benefit you in several ways. First, you can protect some of your income through various write offs including depreciation. Secondly, you can enjoy cash-flow from rents. Tenants also help to pay the mortgage debt if any, taxes, insurance and other expenses associated with ownership. Finally, the property serves as a growing asset through appreciation.
Historically, California real estate doubles every ten years. An investment property or two can greatly enhance ones retirement plan.
If saving or buying, investment property isn’t possible, consider moving to an area that has a lower cost of living. Friends of mine have actually moved out of the country, in order to live out their retirement dreams.
In any case, start your plan now! It is a matter of good Home $$s and Sense.
# posted by Sue Thompson @ 1:23 PM 
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