finicity

Should I Plan for Retirement? Part 1

“Go to the ant, you sluggard; consider its ways and be wise! It has no commander, no overseer or ruler, yet it stores its provisions in summer and gathers its food at harvest” (Proverbs 6:6-8).

Retirement, as we know it today, is a modern day marvel. There is no mention of retirement in the Bible. However, the Scripture is full of wise counsel about preparing for different seasons of life and about saving for the future.

Unless health is an issue, there is no reason for anyone to stop working. Research actually shows that those who continue working past their retirement age live longer! But there is also no guarantee that your health will remain intact or that you will be able to remain as marketable in the future as you are today. Seasons of life happen. The unexpected happens, and God’s word encourages us to financially prepare for those occurrences.

So here are a few steps you can start doing today to help you financially prepare for your retirement age.

Become DEBT-FREE, including your mortgage 

Eliminate all of your consumer debt, as well as your mortgage. This will make it much easier for you to retire, even if your retirement years aren’t fully funded.  

Here are a few quick “to do’s” to help you ditch your consumer debt:

  • Stop using plastic until you learn responsible use of credit. Anyone using credit cards should aim at paying each monthly balance in full so no interest accrues. There are free cash management tools available to help you do this; following an envelope budgeting system is a great way to help make sure you always have enough cash to pay the bill in full.
  • Eliminate your car debt. Once you pay the car loan off, keep driving the car while making those car payments to yourself. This way, when it’s time to replace your vehicle you’ll have enough cash set aside to purchase one outright. Owning your car outright will also bring your insurance premium down – which is a small additional monthly bonus!
  • Use the “debt snowball” approach to eliminating your consumer debt. Once you pay one card off, roll that money over to the next debt, which will greatly accelerate your payoff. Keep doing this until all of your debts are eliminated.

Now that we’ve dealt with your consumer debt, let’s help you pay that mortgage off!

  • Did you know that adding $25 or $50 to your mortgage payment (make sure the extra funds are assigned to the PRINCIPAL) can shave off 2-4 years and save thousands of dollars worth of interest? Even if you can’t pay hundreds of dollars extra each month, every little bit will help in getting you closer to owning your home outright.
  • Are you an empty nester or single? Consider renting out rooms, or a basement if you have one, to generate extra income. Apply that income to your mortgage payments and watch your loan melt away!

Are you thinking of a reverse mortgage? If so, keep these few things in mind:

  • It should be considered only out of necessity and not as a way to increase your standard of living.
  • The younger you are, the higher relative cost you’ll pay for a reverse mortgage. Avoid taking out a reverse mortgage in your 60’s.
  • Finally, beware of scams that charge thousands of dollars for information you can get free from the Department of Housing and Urban Development (HUD).

Today's tip brought to you by Mvelopes and Monday4Life Coaching.