The thought of retirement can be a daunting prospect for many of us. The truth is that saving for retirement is not an easy task, especially for those of us who are homeowners. With home expenses such as mortgage payments, upkeep, and maintenance costs, it can be difficult to determine how to best prioritize our saving with extra money allocated for retirement.
The good news is that there are ways to quickly boost your retirement savings, even if you’re a homeowner. From refinancing to taking advantage of a 401k, here are some tips to help you get a jump start on retirement savings.
Refinance Your Mortgage
By refinancing your mortgage, you can potentially lower your interest rate and reduce overall payments. This will free up more money to dedicate to your retirement fund. If you’re able to secure a lower interest rate, that difference can quickly add up to significant savings over the years.
Rent Out Space
If you have an extra room or an apartment for rent, consider offering it out as a rental space. A consistent stream of income from rental payments can be a great way to save up for retirement. Additionally, you can avoid paying capital gains taxes on your rental income if you fit certain criteria.
Make Some Home Improvements
Another great way to save for retirement is to make home improvements. Though the recent coronavirus pandemic has killed off the real estate market for the short-term, making upgrades to your home can still be an effective means of boosting your retirement savings.
For instance, remodeling an outdated kitchen or bathroom can increase the resale value of your home, and you can then charge higher rent to tenants. Even small touch-ups, such as fresh paint and new flooring, can have a vast impact when it comes time to sell.
Make Use Of Traditional Retirement Accounts
Finally, it’s important to make use of traditional retirement accounts. Traditional 401ks are one of the most reliable ways to quickly boost your retirement fund. Within a 401k, you can defer a portion of your pre-tax income to investments, such as stocks, bonds, and mutual funds, and reap the potential returns by the time you retire.
If you are self-employed, you could also consider a simplified employee pension (SEP) IRA and a solo 401k. Both of these retirement accounts also allow you to make pre-tax contributions and enjoy tax-deferred growth until retirement.
These are just a few of the ways to quickly boost your retirement fund if you are a homeowner. There are no guarantees, of course, but if you take the right steps now you can put yourself in a much better position for the future. Re-evaluate your savings plan often, and make sure your retirement fund is in good shape. With a little luck, you’ll be able to enjoy the retirement of your dreams.