The sooner you start planning for retirement, the more money you’ll have to spend when it comes time to quit working full-time. While you are earning an income is the time to start a retirement savings account. It may begin small, but it will grow as your income increases and as you learn how to live more frugally.
Investments
One of the best investments for retirement is real estate. There are several advantages to owning rental property. You may have enough money to live well from your retirement fund and social security, but what if your money starts to run out when you still have 10 more good years? Rental property is a good solution for this because it will give you a cash flow that you can use without touching your capital investment. You can hire a good estate manager to take care of the property and still make money. When the rents go up, you get even more.
Rental property also offers tax benefits. You can deduct depreciation, maintenance and repairs and keep all of your rental income. If you need a large amount of money at some point, you may consider a reverse mortgage.
Reverse Mortgage
A reverse mortgage on your home or other real estate you own is another way to get money without a loan and making monthly payments. A reverse mortgage company will give the property owner who is over 62 years old cash payments based on the equity in the property. Repayment is deferred until the homeowner dies, sells the property or moves out of the home often to an assisted-living facility. If you purchased property when you were earning an income, it may have a large amount of built-up equity. You receive the cash payments based on this equity and not on any other qualification such as good credit. The lenders for a reverse mortgage need to know the condition of your property, the estimated value of your property and the current balance on your mortgage.
Reduce Debt
Another step in planning for retirement is to reduce your debt. If you have a lot of credit card debt, car payments and personal loans, the time to get them paid off is when you are earning. When you retire, you won’t want to spend a large portion of your money paying down debt because you’ll need all you have to maintain the lifestyle you desire.
As soon as you enter the workforce and have a regular income, you can start saving for your retirement.