All your life, you’ve worked hard to provide for yourself and for your family. It hasn’t been easy, but you’ve built a life that you love and you have many of the things that you’ve always wanted. Now you’re ready for retirement — but do you have enough to last you for life?
Unfortunately, many Americans are not saving enough for retirement. Studies show that even target savings amounts are not enough: Many Americans say they are trying to save between $100,000 and $250,000 for retirement. Those are large figures, but the reality is that they are not nearly large enough to cover all the expenses of most people’s retirement lives. On top of this, most Americans haven’t saved even close to this (already insufficient) amount.
The best way to save for retirement is to budget carefully, save cash, and put the money into investments, where it can grow more quickly thanks to the power of compound interest — yet only about half of all Americans own stocks, the most common type of investment.
In short, many seniors find themselves without enough cash — especially after sudden expenses like medical bills after an illness or injury. So what can you do when you need more cash than you have?
“Many seniors find themselves without
enough cash — especially after sudden expenses.
So what can you do when you need
more cash than you have?”
Here are a few options that you need to know about.
Viatical settlements
If you’ve been paying into a life insurance policy, then you’ve made a very beautiful and financially sound decision to make sure your loved ones are provided for after you’re gone. But if you’re dealing with a very serious illness, your medical expenses and debt could mount faster than you can afford. If you’re not careful, your family could be buried in debt by the time you’re gone, and that insurance payment comes in. In the powerful cycle of debt, even big windfalls can be absorbed without doing much to help your loved ones’ long-term financial goals.
The most effective cure for the cycle of debt is prevention: You need to keep your family afloat financially until you’re gone. But what can you do when you life insurance payment is, by definition, not something you’ll be around for?
You could consider a viatical settlement. Viatical settlements allow life insurance policyholders to swap their benefits for a cash payout. Simply put, a viatical settlement is more or less like selling your future insurance settlement for cash now. That influx of cash could be a godsend right now, and using it to avoid debt and the interest that it generates can make a viatical settlement a better long-term financial decision than trying to hold out for the insurance payout.
Reverse mortgages
If you own your home, you have a very valuable asset. But you want to live in your home, not sell it for cash. If only there were some way to get value out of the asset without having to move out.
There are ways to do just this, actually. You may be able to get a loan using your home as collateral, though this isn’t an option for everyone. Another more widely available (and arguably more powerful) option is the reverse mortgage.
A reverse mortgage is more or less exactly what it sounds like: Instead of making a payment every month, you’ll get one. When you pass away, the loan will be repaid out of your estate (this may mean selling your home, but it doesn’t have to — if your heirs find other ways to pay off the debt, they can still keep the home in the family). Reverse mortgages aren’t for everyone, but they can be wonderful ways to enjoy cash while keeping your home for as long as you can enjoy it.
The “side hustle”
A side hustle is work that you do on the side to make some extra cash. It’s something that folks with full-time jobs can do, but it’s also an option for you if your full-time job is to enjoy retired life. Simple money-making tasks that you can do in your free time can supply you with a bit of extra income when you need it most, and they’re a nice way to do a little work without having to actually re-enter the job market and work full-time.
What are your favorite late-in-life financial tips?
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