Talking to Your Elderly Parents About Equity Release Schemes

When you grow up and start seeing success in your own life, you naturally want to reach out and give your parents the same things. However, where do you really begin? Well, if you love your elderly parents, then it’s natural that you’re going to want to start with them. You want to make sure that you do everything that you can do to make sure that you get things organized and proper for them.

Retirement is the goal for many people, and if you want to help your elderly parents plan for a better retirement, then it’s time to start talking to them about equity release schemes. They are one of the best things that you can discuss if you know that your parents actually own their own home. It’s a way to release the equity in their homes in a way that’s done tax-free. After all, it’s highly likely that your parents worked their whole life to be able to get the house. Why shouldn’t they reap the benefits of the equity?

One thing that you will need to do when it comes time to talk with them about the equity in their home is to think about the best scheme program that fits their needs. Of course, you don’t have to help them all on your own. Sometimes the best thing that we can do for our parents is to encourage them to seek out qualified expertise that can help them make better decisions. This isn’t a bad idea at all — it just takes time to create, and you shouldn’t feel like there’s no way to achieve the goal your parents ultimately want.

When it comes to equity schemes, you want to choose the one that’s going to give your parents the least amount of interruptions. This means that once they start the scheme, all they need to worry about is how they’re going to spend the money. Since the money is often paid through an annuity, they aren’t going to have to worry about how they’re going to get their money, or if it’ll arrive on time. Thankfully that’s one of the last issues to really take care of.

Once they have the money in hand after the equity release has taken place, you will need to make sure that your parents are spending the money wisely. Even though the equity will be delivered monthly in a scheduled way, that doesn’t mean that the money won’t dry up through mismanagement. You know your parents better than anyone — help them find out what goals they actually want to achieve, and then build their budget around that. If they can’t live from month to month with the extra money, then they won’t have a good retirement at all.

At the end of the day, you want to make sure that your elderly parents are going to be taken care of for the rest of their lives. Anything less than that just isn’t going to lead to a happy life, so it just makes sense that you’re stepping in to give your parents the care and support that they deserve!

Should You Take Out a Loan From Your 401K For Credit Cards?

If there’s one question that people have when it comes to retirement, it’s how to actually balance their retirement needs with the other goals that they have with their financial life. For example, if you have heavy credit card debt but a nice nest egg, should you rob Peter Nest Egg to pay Paul Credit Card Debt? It’s a tough question, but there are some things that you might want to consider before you actually go through with taking out a loan from your 401K account.

First and foremost, you need to understand that it really is a loan — you will have to pay the money back with interest. That interest does indeed go back into your retirement account in some cases, but either way — it’s still due, and you will need to make sure that you actually pay it. If you don’t pay the loan back, it does become a withdrawal and unless you happen to be 59 1/2, it’s going to cost you 10% penalty plus having to pay income taxes on the withdrawal. It’s a pretty big bite:

Let’s say that you borrow 5,000 dollars, at a nominal interest rate. If you don’t pay back the 5,000, you will not only have penalties from the loan company, but you will also have to immediately take a $500 penalty (10%), plus you will have to roll the $5,000 into your total income — which can add substantial taxes to your bill if you’re not careful — $5,000 can be enough to push you from one tax bracket to another.

One of the reasons why we put money into our retirement account in the first place is to be able to actually save for the future. If you take money out of the account then you will naturally not have that compound interest magic working on that money. over time, this means that you will have a smaller nest egg than other people that actually held tight to their guns and got all of the money that were set out to receive.

Getting a loan from your 401(k) isn’t something that you can just get for free, either — you will have to still pay a fee, called a loan origination fee. This can range, which is why you will need to get a quote from the loan company to figure out how much money you will have to pay in order to get the loan. Now, this money will often be deducted from the total amount that you’re borrowing, so keep that in mind.

From an organization point of view, you also need to make sure that you realize that the money for the monthly payments will be directly taken from your paycheck every month. So you will need to adjust your budget as well — especially if you have things that are automatically withdrawn after your paycheck is deposited.

Now we have to come back to the original problem — should you do it in the name of paying down your credit card debt? Well, it depends on a few things. First and foremost, it depends on the amount of credit card debt that you’re trying to get rid of. If you think that you’re going to try to pay back all of them and they are all high interest cards, then you should definitely do that. On the other hand, if the credit card debt is manageable, it can be smarter to leave the money in the account and find another way to pay the credit card debt off early — like your tax return. It’s much better than blowing your tax return on a vacation that only takes you further from your financial goals.

Overall, this is something that you should definitely keep in mind if you really want to take a loan from your 401(k) to pay back credit cards.

It’s Never Too Late to Save For Retirement!

One of the greatest misconceptions around saving for retirement is that there is a time and place to save for retirement. Some people make it seem like you will never be able to even save for retirement if you don’t start in your teenage years. While it’s true that the longer that you have to save for retirement, the easier it will be to have a very large nest egg with minimal effort. This is because the time value of money principle comes into play, along with compound interest.

However, there’s also something to be said about the power and wonder of being older. When you’re younger, you may not realize how important it really is to save for retirement. In addition, you most likely have a much better job now than when you were in your teenage years. This will allow you to set aside more money for your retirement, as well as to take advantages of the factors in your environment. For example, you may be married at the moment, which is something that was highly unlikely in your teens. Having someone else that can support you while you make contributions to your joint retirement account is definitely a good thing. Tapping the account is a bad idea, and having a second person there to remind you of this is definitely a good thing.

You should never think that it’s too late to save for retirement, especially in today’s digital culture. For example, there are now retirement accounts that allow you to actually take money out of your checking or savings account and put it right into a tax-deferred account. When you feel that you will be in a lower tax bracket during your retirement years, you are far better off pursuing tax-deferred options that allow you to really make the most out of today’s pre-tax dollars.

If you’re starting to save for retirement much later in life, you will also be allowed to contribute far more to your retirement fund than someone that isn’t close to retirement age. This will encourage you to pursue investments that have a higher rate of return, such as what you’ll find within mutual funds and bonds. Putting your money in a bank account is safe, but it won’t help your money to grow properly.

Good retirement-oriented investing is a matter of knowing how much risk you actually want to take on, as well as making sure that you can grow your portfolio with enough time before your retirement years.

Of course, keep in mind that your portfolio doesn’t just disappear once you hit retirement; you will still be able to grow it some more. There’s no need to feel like once you hit retirement, you will just have to deal with whatever money that you have. You need to make sure that you have a solid foundation, but your portfolio will continue to march on without you really having to do too much.

So, what’s the bottom line here? Well, if you pick up nothing else, know this — it really is never too late to save for retirement!