Reaching retirement age can be an exciting time, for the freedom represented in leaving the workforce for good. But not many people are looking forward to retirement as fervently as they once were, as rising living costs promise tighter finances with respect to pensions and savings. Many retirees need cash to pay for essential home improvements, let alone holiday trips or gifts for family – but finding the cash can be difficult. How might you find cash after retirement?
Downsizing
One of the most effective, and least complicated, ways you can access some cash in your retirement is by selling your home. It is often the case that retirement-age workers retire into the same homes in which they brought up their family – that is to say, houses that are far bigger than their post-retirement needs.
Holding onto these homes makes sense from a financial perspective, and especially so for this eventuality. Moving to a smaller home more suited to the retirement lifestyle means you can pocket the difference in value when it comes time to sell – value which has beaten inflation the whole time you’ve stayed put. Not only do you get a major cash payout, but you also get a home better-placed to accommodate you.
Renting Out Spare Rooms
Of course, selling up and moving might not be an option for everyone. You might have designs on passing the family homestead to your family in your will, or your home might already be the perfect place to grow old. Either way, you needn’t sell in order to make spare space work for you.
Instead, you could rent out spare rooms in order to generate income. This could happen in a number of ways, too. You could take on tenants or lodgers for long-term income, or you could deck out a part of your home for short-term holiday lets on platforms like Airbnb. You could even rent your garage out as workshop space!
Equity Release
There are financial products you can use to access the equity locked up in your home, without you needing to forfeit ownership of the property at all. Equity release schemes effectively advance you part of the value in your home, as a long-term loan that is only required to be paid off on the sale of the house – which would happen either after you pass away or after you pass into long-term care.
Being a loan product of sorts, equity release does come with the caveat that is interest. In order to keep eventual repayment costs low, it is wise to pay the interest accrued monthly, thus limiting the impact of compound interest.
Tax Benefits
Lastly, there are key tax benefits associated with property ownership and your estate, You may not directly benefit from certain reliefs, but that does not make them any less useful. If you will a property to your spouse, when you pass away your spouse can receive ownership without owning Inheritance Tax on the house. Any remaining Inheritance Tax allowance from your estate will also pass on to them.
