While retirement gives you time to travel and pursue passion projects, it can also come with some financial stress. After all, you can’t predict how your health, bills, and budgetary needs will shift in your golden years. One massive repair bill for your home can gouge an otherwise healthy budget.
Thankfully, you can bring more stability to your financial picture by looking at your assets. You may have belongings, property, or accounts that are not being used to their fullest potential. Read on as we explore how seniors can turn underused assets into financial flexibility during retirement.
Move to a Smaller Home
While a larger home with multiple bedrooms may have been perfect for raising a family, you may not need the space in retirement. When your kids become adults, or you don’t want to deal with maintaining a larger property, downsizing can be the right choice.
When you sell your larger home and move to a smaller one, you can save money on utilities. You’ll also have amassed equity in your larger home that can offset costs when purchasing your new home.
Consider that you’ll need to pay for help with moving and the transactional fees associated with a home sale. In the long run, though, you may come out on top financially when you decide to downsize.
Generate Cash with a Rental
Do you have another home or apartment? Maybe you bought a vacation home years ago that you don’t use actively, and now it could become a rental. Even a small apartment in your basement or garage could be a potential source of income.
If you live in a tourist destination, finding short-term rental occupants can be easy and lucrative. But even if you’re not near the shoreline or mountains, convenience to local employment hubs can be appealing for newcomers to the area. You may be able to find long-term tenants, too, which can reduce the need to market your space and seek out new applicants.
Just be sure you understand the local rules regarding rentals. You’ll need to account for taxes and insurance, too. And, of course, plan on committing to regular home maintenance to ensure your rental is a safe and comfortable space for tenants.
Look at Your Collections
You may have antique clocks, watches, or furniture that’s valuable. Or perhaps you have autographed sports cards or artwork that’s grown in value. You may be able to convert these collectibles into cash.
Especially in retirement, you’ll want a cash buffer as your circumstances and budget needs change. Have potentially valuable items appraised so you know how much money they could command. You can look online, too, to see what similar items have sold for on antique or resale sites.
Review Your Retirement Accounts
When was the last time you reviewed your pension statements or brokerage accounts? While your investment mix might have made sense 30 years ago, you may want to make some changes now.
In retirement, you’ll want to ensure you’re making smart withdrawals and considering your tax situation carefully. It can be wise to consult with a tax professional to make sure you’re maximizing your money while reserving enough for future bills.
Consider Your Life Insurance Policies
When you were in the throes of parenthood or young adulthood, you may have invested in a life insurance policy to help protect your loved ones. But as your children grew up and your income increased, your needs may have changed.
While the easiest option may be to do nothing with an existing life insurance policy, that may not be the best financial choice. Many retirees own policies that no longer serve their original purpose after children become financially independent or financial priorities change. At the same time, rising healthcare costs, long-term care expenses, or unexpected bills can create a need for additional liquidity during retirement.
In these situations, a life settlement may allow policyholders to sell a qualifying life insurance policy in exchange for a lump-sum cash payment. However, not every policy is eligible, and factors such as age, policy type, policy value, and health circumstances can influence whether a policyholder qualifies and how much value they may receive.
Before making any decisions, it can be helpful to determine whether you qualify for a life settlement. Companies such as Abacus provide policy evaluations that help retirees assess their eligibility, understand the potential value of their policy, and explore whether converting an underused life insurance asset into cash could improve their retirement financial flexibility.
Build Financial Security and Flexibility
Retiring means it’s time to look carefully at your financial situation. You don’t always need to make dramatic changes to how you live, but it can be advantageous to consider selling property or collectibles you have for extra income. It’s also smart to review financial accounts and look into a life settlement.
When you’re careful with how you manage your finances, you can enjoy a comfortable retirement.
