1. Consider downsizing
If you are approaching retirement and have considerable equity in your home but also have a gap in your retirement savings, then downsizing could be a sensible option. Often by the time we retire we no longer need the three or four bedrooms that are standard in family homes as the children have long since moved on. Downsizing means that you will have a home more appropriate to your needs and you’ll also be helping the supply of housing generally by freeing up a family home for those that really need it. What’s more, the financial benefits of downsizing are magnified if you buy your new home in a cheaper suburb.
2. Make it a family affair
Living with children or siblings may not be everyone’s cup of tea, but there’s no doubting that it can work to everyone’s advantage. It’s important though to set clear boundaries and expectations from the outset and to get everyone to sign up to them. There are plenty of granny flat, sleep out and minor dwelling arrangements and lots of families have made it work. In fact, many countries consider this kind of communal living to be the norm rather than the exception to the rule.
3. Use your home to generate income
If downsizing or communal arrangements aren’t your thing, then it is still possible to generate some cash using your spare bedroom. Online marketplaces such as Airbnb have made it easy to rent out an extra room or indeed your entire house while you’re away on holiday or staying with friends. Be sure though to check out any legal or tax implications in advance.
4. Pay off your mortgage early
Paying off your mortgage in advance of retirement is perhaps the most obvious strategy. And there’s no doubt that eliminating a mortgage repayment from your list of monthly expenses will have a significant impact on your income. Don’t forget though that you will still have to pay for insurance, local taxes, repairs and maintenance. However, there’s a lot to be said for starting off retirement completely mortgage free.
Maintaining financial independence in our twilight years is an important goal for all of us and may require a certain amount of creativity and flexibility in our approach. Use these ideas as a starting point for thinking about how you can maximise your retirement income so that you enjoy the kind of lifestyle that you really want.