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Paycheck Chronicles

15 December 2016 Military Pay

The last paycheck before Christmas is coming next week.  The 15 December 2016 military pay may be deposited into accounts on different days, depending on...

Using Your Home as a Retirement Nest-Egg? Think Again

Military homeowners, this is your wake up call: It's not wise to use your home to fund retirement. The rise, fall, and rise again of the housing market led most Americans to think that they can retire off of the profits from selling their home. However, contrary to popular belief, that's a risky way to fund your "golden years."

While most homeowners think that their home is their nest egg, many homeowners unknowingly reduce equity by borrowing against their homes for other expenses, reports Reuters.

"We all say people will sell their house and that's how they are going to live," says Bev Moore of Mainstay Investments, in the Reuters report. "But the bubble might be in the process of bursting."

Here are some factors to consider before pinning all of your retirement hopes on your house:

Can you afford to stay in your home? — Increases in property taxes and heating costs could make the most affordable home difficult to afford on a long-term basis.

Will your mortgage be paid off? — Moving into retirement with mortgage payments is a risky move. Re-evaluate your mortgage rates to determine when you can retire without financially stretching yourself too thin.

Here are some alternatives to selling your house to fund a retirement:

Invest in a Thrift Savings Plan (TSP) — A TSP is a tax deferred retirement savings and invest plan for federal employees and servicemembers. It offers the same type of savings and tax benefits that many private employers offer through their 401(k) plans, reports Reuters.

What's more, you can contribute up to 11 percent of your basic pay each period and can qualify for an Agency Matching Contribution.

Individual Retirement Account (IRA) or 401(k) — Make sure to feed a 401(k), IRA, or other investment account. And, put money into some assets — like stocks — that don't correlate too much with real estate, reports Reuters.

Hire a certified financial planner(CFP) — A CFP can help servicemembers find the best retirement savings accounts for them and other investments to help build wealth and long-term savings.

Selling your home is a great way to supplement your retirement income, but it should not be the majority of it.

For more information on VA Loans, home buying or retirement visit www. Military.com/finance.

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