It is no secret that we need money in retirement. For many, we are faced with dwindling income streams as we enter our 60’s. We may be fortunate enough to maintain the same income we earned in our 40’s and 50’s, or not.
If you are in your late 50’s/early 60’s and are contemplating retiring, here is the number one financial component to think about, your rainy day fund, cash you can access today. We are not talking about the money you have saved for retirement, your IRA, 401k or pension plan. We are talking about your accessible money – at the ready.
Do you have a rainy day/emergency fund? If you are approaching your 60’s, inevitably you have been caught by surprise with an unexpected expenditure at some point. A leaky roof, a broken down car, or an unexpected job loss or even a refrigerator on the blink. In retirement, these unexpected expenses take on a whole new meaning. With less income, these expenses seem to hit us harder.
If your Rainy Day/Emergency Fund is like most average Americans’, it totals less than $5,000. Most financial planners and financial “how to” books will suggest you have an emergency fund to cover up to 6 months’ worth of living expenses. I doubt $5,000 would cover 2 months’ worth of expenses let alone 6. Here are a few ways to bolster your fund quickly or slowly, your choice.
1. Save more money. Yes, you can. Make a few simple changes like bring your lunch to work daily. Yes, it still costs money to prepare your lunch, however on average, you will save $100/month, totaling $1,200 a year. If you or your spouse really don’t like to drive, you may be able to part with an extra vehicle. Potentially saving $4000 plus annually in car payments, insurance, registration and inspection fees. That figure does not include gas and repairs. These two simple steps will add over $5,200 to your fund in one year!
2. Take on a part time job. Doing something you are passionate about won’t seem like work. Enjoying your hobby/passion and getting paid for it, on average results in an additional $400/month. If you are an English teacher, consider tutoring. If you love sports, you can be a weekend referee for the youth of your community. Potential earnings, $4,800 annually. Again, add this income to your emergency fund.
3. Have you considered your biggest asset, your home? Chances are that you owe very little on your home, if you owe anything at all. Do you know that a Reverse Mortgage could provide you with all the safety net you’d ever need in the form of a Line of Credit, (LOC)? If you opt to not access your LOC, it will remain at the ready and earn interest until that unexpected expense comes knocking at your door.
Some of the top unexpected expenses incurred by retirees are; dental care, major home repairs, financially assisting a child or parent, becoming the victimize of a fraud or scam and needing medical care or prescriptions that are not covered by health insurance. We all know of someone who has dealt with one of these issues, many of us have dealt with more than one. Can you see how quickly your emergency fund could dwindle?
You have tools at your fingertips to be above average. Plan for your future. Make a few monthly adjustments, save a little/earn a little, investigate your Reverse Mortgage options so you are financially set for an emergency. Reach out to one of our certified reverse mortgage specialists at Senior Security Advisors to get your questions answered today.
Rainy Day/Emergency Funds are necessary. They provide peace of mind and secure our independence as we age. Make your retirement years more enjoyable and secure by ensuring you have an emergency fund.