As regular readers will know, my lovely Dad is currently living in a care home as he needs a little bit of extra help. It’s really opened my eyes to the care system though and what preparations I need to take with my own finances because I don’t want to be a burden on the kids if I’m lucky enough to reach the age that my Dad has.
I’ve started by increasing my pension contributions to my own personal pension but even then, I know that may not be enough for us to live a comfortable life when we retire so I’m very interested to read other options that could be available to me in 40 years time.
I do get that things will have changed massively then and what’s around now might not be when I hit retirement age but the last six months or so have really opened my eyes and I’m determined that by the time I retire that I am in a good enough position to enjoy my retirement. My Dad’s one of the lucky ones who was prepared but some people aren’t as lucky and I will not be one of the unlucky people who struggle through their retirement.
As well as increasing my pension contribution, I also plan to speak to my mortgage company about reducing the term of the mortgage on our house so that it’s paid off sooner than planned (find out more about overpaying here). That should give us plenty of equity in the house and enough time after paying it off to save towards our retirement fund.
If anything goes wrong with the savings plan, then something that could work for us would be to take a reverse mortgage which definitely sounds like it could suit some people’s needs for their retirement.
If you’ve never heard of a reverse mortgage, here’s a few of the benefits…
- Forget About Payments While Living in the Home
One of the most beneficial aspects that come with using this type of loan is that the senior will not have to pay for the equity they access as long as they live in the home. This can be very helpful and will allow the senior to avoid worrying about making high payments. The children of the elderly individual may want to get involved to ensure that everyone takes the time to ensure that the company offering this loan is both reputable and has a good track record. The more information that can be found out, the better equipped they will be to make the right decision.
- Use the Money For Anything
Another benefit that comes with using this type of home loan is that it will allow the senior to spend the money on whatever they see fit. Being able to cover the expenses brought on by additional senior care or even home repairs with this loan can make things much easier. Other types of equity loans will usually require the senior to spend the money on only home related things. Having the freedom to spend the money on whatever a senior wants is one of the biggest draws of this type of loan.
- Extend Your Retirement Savings
For most seniors, living on their retirement funds is something they are quite used to. Over time, these funds will start to get depleted. Instead of worrying about when the financial bottom is going to fall out, you will need to seek out other means of financing your retirement. With a reverse mortgage, you will be able to get more money in your pocket with ease. Usually, the same companies that handle Bad Credit Remortgages will also handle the reverse mortgages. Going in for a few consultations is a great way to figure out which lender is the right fit for your needs. Trying to rush through this process will usually result in a number of different mistakes being made. The time that you spend researching each lender will pay off when you are able to get the reverse mortgage you need.
A Non-Recourse Type of Loan
For most seniors, using this type of loan is a no brainer due to the restraints is puts on the lender. This type of loan is what is referred to as non-recourse, which means that if the senior was to default the home is the only thing that can be taken as payment. These restraints will help to ensure that the senior does not have to worry about getting their retirement or other possessions taken if problems occur. Make sure to read the particulars of the loan before signing off on it. The time put into researching the terms and the lender will more than pay for itself in the end.
The children of the elderly individual may need to lead them through this process to ensure everything is done the right way. In most cases, the children could also help their parent in regards to how the money is spent. Investing in things like additional senior care or home improvements can be quite beneficial.
It’s very daunting thinking about retirement and the financial implications that will bring to our lives but I do feel easier knowing that there are options out there.
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