If you are like millions of American seniors, you have been planning and waiting on your retirement. Perhaps you have a pension or you have put money aside in an IRA or 401K plan. You may also be counting on Social Security to help you with your expenses. Of course, you have thought about all of those retirement expenses you expect, such as your monthly utility bills. But what about those bills you didn’t expect? Here are some tips for handling those unexpected and expected retirement expenses when they happen after you retire from working.
Reverse Mortgage
One of the best ways to prepare for expenses–whether expected or unexpected–is to have a reverse mortgage. You most likely had a mortgage at one time when you bought your house. A mortgage acts like a contract between you and the lender. You make an agreement to pay for your home in monthly payments, plus interest. Your lender agrees to give you the money. In a reverse mortgage, you use the home that you bought and paid for. A company agrees to give you cash for your home, based on a reverse mortgage calculator such as reverse.mortgage/calculator. You can take the money all in one lump sum or as a monthly payment. Either way, you get cash for retirement expenses. You don’t have a mortgage payment. Instead, the company will sell your home after you die, or you move, and you won’t have to burden your heirs with the headache of a home sale.
A Rainy Day Fund
Many people have a savings account where they put money aside for unexpected expenses. It isn’t as large as your traditional savings account, but it is a great spot to park some cash, just in case you have a large, unexpected expense. Often, people throw money they have left over at the end of the month into this rainy day fund. If you are good at sticking to a budget, you should be able to put a little bit of money into a fund for emergencies.
Credit Cards
You may want to think about getting a credit card for emergencies. If you have a credit card that you don’t currently use, this would be perfect to have on hand when you have an unexpected expense. Credit cards allow you to pay off a large unexpected expense over time, which may make it easier to budget for in your monthly bills.
Part-Time Work or Side Hustle
If you have recently retired, you may be bored hanging around the house all day. While you might think this sounds crazy, it isn’t unusual. In fact, researchers found that around 20% of people who are retirement age work part-time. There are a lot of reasons why people choose to work part-time. One reason people work part-time is to earn extra money. Seniors may earn extra money to take a big vacation, or perhaps to save for something they have always wanted. The largest benefit to working part-time is that you generate extra money from working. Having extra money on hand is perfect for expenses–expected and unexpected–that you might not have budgeted for.
Part-time work doesn’t have to be traditional. In fact, many seniors do work in areas they previously enjoyed as a hobby, such as flower arranging, sewing, carpentry, or fixing cars. Your side hustle can not only bring you extra income but hours of enjoyment in retirement as well.
Applying for a Personal Loan
If you are truly unprepared for an expense, you could consider a personal loan. Personal loans can be for as little as a few thousand dollars to as much as $100,000. There are many lenders who will lend you money for unexpected expenses. The better your credit rating is, the better you’ll be able to get a loan for a lower interest rate. Understand however that personal loans will carry a higher interest rate than a mortgage, but your rate will most likely be lower than an interest rate on a credit card.
Preparing for the Unexpected
Worried about having unexpected expenses? You can pay for those expected and unexpected expenses by cutting back on your monthly expenses and using that money to pay for other costs. It is easy to conserve a little extra money by buying store brands rather than well-known company brands at the store, or by cutting back on eating out. You can also save money by buying furniture, clothing and kitchen items at garage sales or thrift stores. If you start saving now, you’ll be prepared when those little extra expenses hit your budget.
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