Many people look forward to retirement, as a time to focus on the things they truly enjoy and spend quality time with the ones they love, without the demands of work. However, for many people, retirement also comes with its own unique set of worries, particularly concerning finances and how to manage them in a way that allows you to enjoy your retirement.
Some people may even consider selling their home, as a way to finance their golden years. However, there are several other things you can consider before taking such a drastic step. Here are just some of the ways you may be able to afford to retire without selling your home.
Ways to Retire Without Selling Your Home
There’s no denying that retirement can put a strain on your finances, particularly if you have been working most of your adult life and are used to receiving a wage every month. Early planning is key to a comfortable retirement without financial stress.
Start setting a little money aside each month towards your retirement as soon as you possibly can. Having more savings will give you more options as you near retirement, and can provide a safety net if things don’t go to plan.
Understand Your Pension(s)
In the past, workers would typically work for the same company for a significant portion of their working lives, and as a consequence, only have one pension plan to their name. These days people have greater opportunities and will usually work for several different employers throughout a lifetime, accruing multiple pensions by the time they retire. This can make it difficult to understand exactly how much you have set aside in any one of your pensions or what it all might equate to when you finally decide to retire. Knowing what pensions you have and understanding what they amount to is vital for your retirement planning and can help you avoid pension scams.
Create a Budget
How much money you need for your retirement will depend on what your plans are. If you’re hoping to travel, for example, your expenses may actually increase after you give up work. Having a rough idea of what your incomings and outgoings will be, will help you to create a practicable budget for your retirement.
Many people decide to downsize to help fund their retirement. If you own your home outright and it’s bigger than you require, you may decide to sell your property and move into a smaller one. The money you make from the sale of your house can then be used for your retirement, plus your monthly outgoings are also likely to decrease due to lower energy bills, for example.
Though downsizing is a popular option for many retirees, it doesn’t suit everyone. Some people can’t bear the thought of leaving a much-loved family home and others may still need the extra space, perhaps because they care for grandchildren. You may also find it difficult to find a smaller property in an area you’d be happy in.
Equity release allows you to access some of the money that is tied up in your home, giving you a tax-free sum to help fund your retirement. The most common type is a lifetime mortgage, which is a loan secured against your home. You can use an equity release calculator to get an idea of how much you might be able to release from your home’s value.
You may also be able to avoid selling your home to fund your retirement by ensuring that you’re making the most of government assistance. You should find out at what age you will be eligible to receive a state pension and if you qualify for other benefits, such as pension credit or cost of living payments. As a retiree, you may also be entitled to help with your council tax, heating costs and transport costs.