Guest Post from Ravinder Sahu
Uncertainty is the last thing you want to have to deal with when you’re planning for retirement, but unfortunately, unexpected events are one of the few things we can reliably count on in life. Whether it’s disruptions to the global economy or a smaller scale financial crisis that strikes closer to home, years of careful saving and planning can be wiped out in a matter of days if you aren’t careful. Furthermore, we’ve all come to realize that things we were taught we could count on to be there for us, like pensions, social security, and government aid programs, aren’t always going to be solvent or predictable enough for us to rely upon. It’s not enough just to have a nest egg built up for your retirement years, you’ve got the guard it vigilantly and think strategically to protect it if you’re going to keep it intact to provide for you and your loved ones when you need it.
If you’re a homeowner, your house probably represents a significant chunk of your assets, and maintaining your nest-egg through home equity can be an effective way to weather the ups and downs of the financial markets where you’ve got your retirement money invested. Reverse mortgages are often considered a last resort for elderly people who have no other options left for generating monthly cash, but many investors are waking up to the fact that utilizing a credit line from a reverse mortgage can be a smart way to give yourself access to cash when other investments are being impacted by downturns in the market. With money from a reverse mortgage credit line to get you through these lean times, you can leave your investment portfolio untouched until the market recovers, preserving as much of your wealth as possible. In this scenario, it can be advantageous to get a reverse mortgage credit line as early as possible, because the credit line gets larger over time. To qualify for a reverse mortgage, you have to be at least 62 years old, own your home outright (or have a very small principal balance remaining to pay off), and attend a mandatory financial counseling session.
Another way that leveraging your home equity for cash flow can help you is by allowing you to delay collecting social security, in order to maximize the benefits you ultimately end up receiving. The maximum age at which benefits stop increasing is 70, which entitles you to collect 132% of the monthly benefit you qualify for.
If you take it as a given that your investment markets will go through downturns during your retirement years and plan accordingly, you should be able to get through them with your nest-egg relatively unscathed. Bad situations that affect you personally, however, can be harder to plan for. One thing you can expect is that medical costs will be something you’ll have to live with. People live longer than ever now, and the price of health care and elder care just keeps getting higher and higher. A Health Savings Account is a great place to put away money as you approach retirement: you’ll save on taxes, and you’ll almost certainly need to spend that money on medical care sooner or later anyway. You might also want to look into long-term care insurance if the time comes when you’re no longer able to live independently.
Another thing you’ll need to protect your nest-egg from is people who want to steal it outright. Scammers are more prevalent, more aggressive, and more inventive than ever, and even the savviest among us can fall victim to hackers and identity theft. Updating passwords, monitoring your credit, familiarizing yourself with your financial institutions’ fraud protection policies, and educating yourself on the latest sophisticated scams going around may not sound like the most entertaining way to spend an afternoon, but that’s nothing compared to the effort you’ll have to go through to recover your funds and accounts if you’re taken advantage of by digital thieves.
Of course, the best way to keep your nest egg-safe and secure is to make it strong to begin with. You want well-diversified investments planned out with a financial advisor you can trust to look out for your best interests. Nobody knows what the future holds, but the best way to ensure you enjoy a comfortable, financially secure retirement in your golden years is to stay agile, flexible, and creative when it comes to building your nest-egg and guarding it against the blows it can take from unpredictable events and unstable markets.
Thanks to Ravinder Sahu
Remember your “Golden Years.” They are golden for a reason. Base your nest egg around solid assets, such as gold and silver bullion, that have no counter-party risk.
The Deviant Investor