All our lives, we work hard and save money to ensure that we have a comfortable and happy retirement. But, often, life has other plans.
Sometimes, no amount of savings can prepare you for the expenses that you’ll face toward the end of your life. In other cases, you’ll find that you won’t be retiring after all — perhaps you’ll reach the end of your life earlier than you had hoped. Maybe you’ll be dealing with medical bills or other unexpected expenses. Maybe you’ll have expenses related to your loved ones that you could not have foreseen. But sometimes, you’ll need to find a lot of extra money in your final years. And that can be very, very tough.
But it’s not impossible. By making the most of your existing savings and your valuable assets, you can come up with the cash that you need to protect your finances and leave your loved ones and descendents in a financially secure position. Here are a few methods to consider.
Selling a life insurance policy
Depending on your age, you may have been paying into your life insurance policy for years or even decades. That’s a good thing: A life insurance policy can make a huge difference to your loved ones when you’re gone. Especially if you are one of the breadwinners (or the only breadwinner) in your family, your loved ones will need extra cash when you die. A life insurance policy is an elegant solution to that dilemma.
But there’s something out there called the time value of money, and it can be very important. Money is generally worth more right now, when you have it and can invest it or use it to pay down debts that could otherwise balloon out of control. For the very ill, in particular, a life insurance policy payout can be too little, too late — it can all too easily be far outweighed by the debts and interest that have piled up before the principal’s death.
If you need cash now, you may want to consider a viatical settlement or a similar option. With a viatical settlement, you’ll be able to convert your future life insurance payout into cash right here and now, which could help you make ends meet and protect your family from serious debt.
Taking out a reverse mortgage
If you’re short on cash late in life, you might not actually have too little — you might just be a little too illiquid. Take your house, for instance. If you’ve been paying off your mortgage, you have a lot of value stored in that real estate. But you’re not about to sell your house to pay your bills, so what can you do?
You can take out a reverse mortgage. A reverse mortgage is pretty much what it sounds like: Instead of your paying the bank to take ownership of your own home, the bank pays you. In the meantime, you can keep living in your home as usual. When the process is over, you (or your heirs) can choose to repay the money or simply walk away from the house. In this sense, a reverse mortgage is a bit like a loan that is secured by your home.
If you need cash now and own a home, a reverse mortgage can be a powerful tool for converting that equity into cash without disrupting your lifestyle. In many cases, you can live out the rest of your life without having to worry about the end of the reverse mortgage.
Sell off old valuables
Thanks to modern apps and technologies, it has never been easier to sell off your own things to others. Using eBay and other apps is a lot more cost-effective than heading to the pawn shop or other old-school options. Selling off old possessions can help you get some quick cash when you need it most.
And if you’re older, you may find that some of your old “junk” now qualifies as an antique. If so, you could really see some nice cash come in. Make sure that you do your research and price your things fairly.