How To Save For Mortgage And Retirement At The Same Time
Most of us don’t have the kind of cash necessary to buy or fix up a home available at our disposal. That’s where a mortgage comes into play. Whether you’re buying your first home, making improvements to one, or looking to invest in a rental or vacation spot, your next mortgage can help make your goals a reality.
While mortgages do pay as a prominent expense in one’s life, retirement planning and saving is also necessary. Early retirement can be an ambitious financial goal, but with the right plan in place, you can reach it. In recent years, employers have been walking away from the idea of offering traditional pensions to their employees, which in the past allowed them to supplement their guaranteed income and potentially retire early. If you have a pension with your employer, then you are in a lucky minority, but it may not cover all of your expenses if you plan to live big during your retirement. With or without a traditional pension, it’s important to have a plan in place and figure out how to save enough money for your retirement plan and mortgage deed.
Get the appropriate mortgage
Mortgages have either fixed interest rates or adjustable rates. Fixed-rate mortgages lock you into a consistent interest rate that you’ll pay over the lifespan of the loan. The part of your mortgage payment that goes toward the principal plus interest remains constant throughout the loan term, however, insurance, property taxes, and other costs may fluctuate.
The interest rate on an adjustable-rate mortgage can change over time. An ARM usually begins with an introductory period of 10, seven, five or three years (or even one year), during which your interest rate holds steady. After that, the rate may change periodically.
Set up different sources of income
Retirement can mean different things to many people, whether it’s moving to paradise, spending more time with your family, or being able to do something you truly love, such as volunteer work or traveling. Whatever it is to you, the more you plan now, the better position you will be in the future to set yourself up for retirement and maybe, if you’re lucky, even fulfill your dream of early retirement.
For this, you could take part-time jobs and put that extra cash towards investing. You can also generate assets through rental properties or small businesses–alternative income streams help to cover your cost of living so you can save more towards your ultimate goal.
Pay off debts
Debt is like quicksand when it comes to retirement. It’ll keep you from enjoying the latter years of your life and you definitely won’t be able to put away as much for retirement as long as you’re giving money to the mortgage company every month. Each long-term loan that you take on jeopardizes assets that could be used for retirement purposes. In addition, you’re increasing your costs by having to pay interest, a completely unnecessary and avoidable expense.
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