| Funding Your Retirement with Your Mortgage | ||||||||||||||||||||||||
| MOST AMERICAN'S ARE: | ||||||||||||||||||||||||
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*DEEP IN DEBT *WITHOUT A PENSION *WIHTOUT ADEQUATE SAVINGS *RELYING ON A FAILING SOCIAL SECURITY SYSTEM Most experts agree that to continue ones current lifestyle after retirement, one would have to accummulate a saveings of at least 20 times ones current income.Very few of us will achieve that level because we rely on out dated financial training to plan our lives. We were taught to pay off our house quickly, work for the same company all our lives so we could have a good pension, put a little money in the bank, and Uncle Sam would take care of us through the Social Security Administration. Unfortunately most of us move or refinance our homes every 5 years, more than likely we will still have a mortgage payment well after retirement. We change jobs every 3 to 4 years, and even if we stayed, there are few companies providing pensions. We are currently spending more than we earn, there is nothing left to save after the bills. In 1996 the Social Security Trustees reported that by 2012 taxes paid into the fund will no longer cover benefits being paid� Needs to be restructured. Meanwhile life expectancy continues to increase. | |||||||||||||||||||||||
| RETIREMENT? | ||||||||||||||||||||||||
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�Time Value of Money� The Smith Family: The Smith�s open a plan earning an annual average of 12%. In this plan they deposit $2000 per year for six years, then stop. The Jones Family: The Jones spend money on themselves for six years, then open the same plan earning an annual average of 12%. They then deposit $2000 per year for the next 37 years. Retirement Time At age 65 the Smith Family who only deposited $12,000 has accumulated ($1348440) nearly as much as the Jones Family ($1363780)who have deposited $74,000. The secret is to start as soon as possible and let time work for you. | |||||||||||||||||||||||
| WHERE CAN YOU GET THE MONEY? | ||||||||||||||||||||||||
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If you own your home, or are planning to purchase a home, you can build your retirement account now! A mortgage is usually the least expensive way to borrow money, plus the interest is usually tax deductible. Depending on your tax bracket, the deduction would further offset your interest expense. Several companies have loans designed to lower your monthly payments for the first several years of the loan. You can use those loans to fund your retirement and still pay off your loan early, usually in 23 1/2 years. | For example: The Jones are buying a home valued at $250,000. They take out a mortgage for $200,000 for 30 years at a low start rate. The difference in their payments figured against a standard 30 year fixed mortgage at 7.1% equals $17192. Given that money invested at a 10% return over 30 years, the Jones would retire with $341044 ($6180462 at 12%), and the house would be paid for in 231/2 years because they made their payments every two weeks. Play by the same rules as the banks, use money to your advantage!
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