For some people, retirement turns out to be a dream come true, but it can come as a nasty shock to those who are unprepared financially. Suddenly, that monthly salary that was more than enough to cover your living costs disappears, and it's not easy to learn how to manage money when you need to survive on a less valuable pension. You can't afford to take out a personal loan when you don't make enough to pay it back, and family members don't always have enough spare cash to help when times are tough.
Fortunately, there are many ways you can get extra money without plunging yourself into further debt, and a few of them can help eliminate the debt you already have. With a bit of extra money in your bank and less monthly costs to worry about, you can embark on a world adventure or take up a new exciting hobby to keep your mind sharp. Keep reading below to find out some of the best ways to get cash that many people neglect to consider.
Eliminate Debt and Obtain Extra Money
The idea of getting rid of all your debt while having extra money for yourself sounds almost mythical, but it is possible. Here's how you can make retirement much more comfortable in one go.
– Move to a Smaller Property
Homes cost a fraction of the price in the 70s, 80s and even 90s when compared to now, and though a small amount of money was more valuable in those decades, you could sell your home nowadays for a much higher price than for which you bought it. If you've already finished paying off your mortgage, or if you only have a short way to go, you'll be able to keep almost all the profit from the equity to yourself, giving you and your better half a sizeable nest egg to compliment your pension. However, you will have to adjust to life in a new property, pay numerous third-party fees and jump through hoops to sell your home
If you want to maximize the profit from your property's sale, you ought to consider moving to a less expensive area than the one you currently live in, or you could think about purchasing a luxury caravan to experience park home living. It all depends on what you want to do with your money. You can move to a slightly smaller home in a close but more affordable area to ensure you have something in the bank for tough financial times, or you can relocate to the cheapest home you can find to live out your retirement.
– Consider Getting a Reverse Mortgage
A reverse mortgage lets you sell some or all your property's equity in return for a loan, which arrives in monthly installments or a lump sum of cash. However, you should research both advantages and disadvantages of reverse mortgages before deciding to ahead with this type of loan. The main reason they're beneficial is that you won't need to pay any money back monthly for the rest of your life. The lender gets their money when you sell your home or pass away, and you'll never be forced to vacate your premises. The final major benefit is that the total repayable amount can never be higher than your home's value, meaning you won't pass on a debt burden to your loved ones.
However, you need to be aware of the drawbacks of reverse mortgages before entering one. First, you might not even be eligible for a reverse loan. All residents must be over 62 and meet a strict set of criteria, and you can only apply for a reverse loan on your primary residence. You'll still have to pay homeowner's insurance and maintenance fees to ensure your home retains its value to the best of your abilities, and because the lender will own all or part of its equity, you will have to sacrifice some of your children's inheritance. However, if you want to stay in the home you love and need extra money to make your pension go further, a reverse mortgage may be your best option.