These days, people are living longer, healthier lives. That’s great news for the millions of people who have worked their whole lives and are looking forward to having plenty of time to enjoy their retirement. At the same time, however, economic pressures and rising costs are translating into millions of people that have been unable to save enough money to retire comfortably and that face the prospect of working well into their golden years just to survive. The good news is that people in that situation have some options available that can help them to stabilize their financial situation and fund their retirement. Here’s a look at three ways they can do it.
Turn To Insurance Policies
In many cases, people preparing to retire are in possession of one or more fully-vested life insurance policies that they purchased in their younger years to protect their families from the unexpected. More often than not, however, those policies may have outlived their original purpose and could provide a valuable source of funds for retirement. In the best circumstance, policyholders with cash-value policies can borrow against their value to access funds. That means they won’t have to forfeit the eventual payout on the policy, and the proceeds are typically tax-free. Policyholders that can’t borrow against the value of their policies can also opt for a life settlement, where they sell their policy to an investor for an agreed-upon sum. In that scenario, the investor will assume the policy (including any remaining premium payments) and will receive the payout when the original policyholder passes away.
Access Home Equity
Although there’s been plenty of conjecture over the relative merits of reverse mortgages, the fact remains that they are useful financial tools that allow many seniors to capitalize on their highest-value asset: their home. In effect, a reverse mortgage is a loan with no monthly repayment schedule, based on the value of your home. A reverse mortgage is an excellent option for seniors who aren’t worried about leaving an estate because the repayment of the loan can never exceed the value of the home itself and terminates when the homeowner either leaves the home or passes away. That means that even homeowners with heirs won’t have to worry about leaving a financial mess behind, and can use the value of their home to finance their retirement if necessary.
Build a High-Yield Dividend Portfolio
If you’re approaching retirement and don’t have enough money saved, it’s vital to pursue strategies to maximize the returns you’ll get for the money you do have. One of the best ways to do that is to build a stock portfolio that consists of shares that yield high dividends. If you’re careful, you can earn a tidy sum this way that is far in excess of comparable financial instruments, without sacrificing much (if any) of your principal investment. Another alternative is to invest in closed-end funds, which can offer dividend yields that beat conventional stocks by a wide margin. The downside is that they aren’t very liquid, making selling off shares challenging unless you’re willing to sell at a discount. Still, retirees who are more concerned with a monthly payout than they are with protecting their principal won’t find many higher-paying options.
Retire in Comfort
As you can see, even those individuals who are approaching retirement and aren’t in the greatest financial shape have plenty of decent options to fund their golden years without sacrificing everything they’ve worked so hard for. Of course, there’s no substitute for building up a retirement fund well in advance of when you’ll need it, but since so many people struggle to do so, it’s useful to know those options. If you’re facing retirement and aren’t quite ready to sustain yourself, the tactics discussed here should go a long way toward securing your future, allowing you to retire in comfort – which everyone deserves to be able to do.