When Planning for Retirement it's Never Too Early to Examine the Numbers

We heard an interesting statistic the other day. In a recent survey of age 'fifty plus' individuals, 68% responded that they felt they had enough resources to live comfortably in retirement. That sounded viable until the second part of the survey was disclosed. Fifty percent of the surveyed individuals revealed that they had less than $25,000.00 in savings excluding the equity in their homes. We sense some denial going on here! If you are one of those individuals with a million dollar stock portfolio, you can stop reading. But if you are like the rest of us who are concerned about living on a fixed income in retirement - read on.

Based on the number of retired individuals we see on a regular basis we would like to offer the following advice.

Project Your Retirement Income

Whether it is a meeting with your financial planner, or accessing one of the many web sites that can help calculate your retirement income, develop a realistic assessment of your finances once you retire. Look at pension income, social security - yes it will still be there for some of you, income from investments, and potential income from part time work if you need to or don't want to stop working entirely. Then take the dollar figure you have derived and match that against what you expect your monthly expenses to be. Once you have those two numbers we suggest that you examine the following options.

To Relocate or Not To Relocate?

Last year we covered an event that takes place every year at UNCA. Sponsored by the University's Creative Retirement Center the Creative Retirement Exploration Weekend being held this year from May 26th-May 28th is a wonderful opportunity to explore the possibility of relocating in retirement. Participants come from all over the country to engage in workshops and group activities that help them define what their lives will look like post retirement. Remember it's not just about the money - it's about the quality of life! For more information on the weekend you can check out the Center's website at www.unca.edu/nccr/.

Consider Downsizing

Look at your current living environment and decide whether or not you will need the amount of space you currently have. Perhaps now that your children are grown a smaller house (a.k.a. smaller mortgage payment) should be one of your considerations. Factor in not only your monthly mortgage payment but also the following costs: indoor and outdoor maintenance; insurance premiums; utility bills; and other regularly incurred costs in the upkeep of your home. Many find that moving into a condominium is not only more cost effective but also a better life style choice.

Pay Outstanding Credit Card Debt

You want to go into retirement as debt free as possible. You don't want to be carrying balances that can increase whenever the Federal Reserve increases the prime rate. Your goal should be to eliminate as many variable expenses as possible. If you need to refinance your home in order to pay off the credit cards we encourage you to do so. At least you will have one fixed monthly mortgage payment. Yes, mortgage interest rates may be rising, but not as fast as credit card interest rates.

Pay Down Your Mortgage

If you own your home free and clear or have a very small mortgage, you can refinance into a 'reverse mortgage' whereby you can access the equity in your home as either a lump sum, receive a fixed monthly income from equity, or have an open line of credit. The good news is that you do not have to pay back this equity until you move out of your home, or your heirs inherit your home. Contrary to popular belief, the bank does not own your house at the end of the reverse mortgage. These loans are insured and guarantee that you will never have to pay back more than your home is worth at the time you take out the reverse mortgage. A reverse mortgage is a great option to provide you an additional source of income to fund your retirement.