Ameriprise Financial Tips

Should You Consider Your Home a Retirement Asset?

By Edward Pontarelli Jr.

If you own a home, chances are your net worth has shot up in the last year. According to a new report, skyrocketing home prices caused by a pandemic-fueled real estate frenzy have led to a scenario where homeowners in the U.S. are sitting on a record $22.7 trillion worth of home equity.1 Seeing the estimated value of your home increase on real estate sites can be exciting, especially if you’re counting on that money to one day help fund your lifestyle in retirement. But it’s important to remember that real estate is a more complicated asset than cash. Keep these factors in mind as you consider how the value of your home may be used to bankroll your retirement.

1. You need somewhere to live.

Whether it is in your current house or somewhere else, you need a roof over your head, and that usually comes with a sizeable cost. Many people who downsize their homes underestimate how much they’ll end up spending on a smaller condo or to live in a retirement community. In fact, some come to realize that their new accommodations are on par with or even more expensive than their previous homes – especially considering that they may end up spending two or three decades there in retirement. Regardless of your situation, do the math so you know what you’re getting yourself into nancially and how it will factor into your plans for retiring.

2. Selling your home might not be as easy as you think.

Given the strong demand and short supply of houses on the market, you may be seeing homes sell at lightning speed in your local community – but it’s important to remember there are no guarantees. In some areas of the country, hot housing markets are beginning to cool. As a result, you might be disappointed in the price you are able to generate when you sell your property. Many people have been disappointed to discover that their home is not as valuable as they might have expected. It’s important to keep a pulse on the housing market in your area to help determine what you may be able to get for your home.

3. Determining a home’s value can be difficult.

Compared with a stock, bond or mutual fund that can readily be priced in the market and bought or sold daily, a home is a di erent kind of investment. e value can’t be precisely determined, and it is not considered to be as much of a liquid asset. If you’re serious about selling your home, it may be worthwhile to hire a professional appraiser to give you a realistic sense of how much you can expect to a buyer to pay you for it.

Keeping these factors in mind, it’s important to maintain a proper perspective about the value of your home in the context of your overall nancial picture. Be careful not to overestimate a home’s contribution to your retirement security based on its current valuation, because those numbers can change. Even as your home is appreciating in value, remain diligent about saving for retirement in other ways, such as through a workplace savings plan or an IRA.

Talk with a nancial advisor about your plans for retirement and your home’s potential value in your overall portfolio. A quali ed nancial advisor can recommend strategies for generating income in retirement and provide guidance on how to build equity regardless of your home’s value. en, any funds you generate from your home will be an added retirement bonus.

1 2021 Home Equity Report, Real Estate Equity Exchange, Inc.

Edward Pontarelli Jr, APMA®, CRPC® is a Financial Advisor and Managing Director with BeaconPoint Wealth Advisors a financial advisory practice of Ameriprise Financial Services, Inc. in Providence, RI. He specializes in fee based financial planning and asset management strategies and has been in practice for 20 years. Please contact him at https://www. ameripriseadvisors.com/team/beacon-point-wealth-advisors or (401)824-2532, 1 Citizens Plaza Ste 610 Providence, RI 02903.

Investment advisory products and services are made available through Ameriprise Financial Services, LLC, a registered investment adviser.

Ameriprise Financial Services, LLC. Member FINRA and SIPC.

How to Save for Education Without Taking your Eye Off of Retirement

By: Carrie McPherson

It’s no secret that many American parents want to support their kids by paying for their college education. According to recent research from Student Loan Hero, 92 percent of parents today have already paid for or plan to assist with these costs. Furthermore, 68 percent of parents say they would consider withdrawing from their retirement savings, potentially delaying retirement, to help their kids pay for college.

While the choice to delay retirement to pay tuition is understandable and even admirable, the reality is doing so may not be the wisest nancial decision. If you are considering how to balance saving for college and retirement, read on for some perspective. Prioritize college bills or retirement?

Although it may be hard to hear, saving for retirement should take priority over college tuition. To understand why, consider the following:

• You may not get to choose your retirement date.

Injury, caring for an aging parent, or a layo are among the factors that could ultimately make the decision for you. • You don’t want to run out of money in retirement.

If your savings come up short, you don’t have the ability to apply for scholarships, grants or nancial aid to help bridge the gap. (Your child has access to these options to help pay for college.) Instead, your options are likely to be working longer, nding other sources of income or spending less on travel and other retirement dreams.

While it’s imperative to focus on your own nancial security in retirement, funding higher education is still an important goal for many parents. e key is striking the right balance between saving for both goals. Consider the following tips as a starting point:

1. Paying for college doesn’t have to be all-or-nothing.

Many parents choose to pay a percentage of the total bill, cover certain expenses (e.g. tuition, technology fees or room and board), pay for a set number of years, or contribute as much as they are able to save by the rst day of school instead of funding the full cost. Revising your college savings goal in one of these ways could allow you to direct more money to retirement.

2. If your child has sights on graduate school, decide whether you will contribute to those bills too.

is decision is particularly important if your child needs a graduate degree before entering his or her eld of choice. If you intend to provide nancial support, calculate how much the total cost will be so you have a clear savings target in mind.

3. Discuss your intentions with your child.

No matter how much you contribute, talk to your child (if and when your child is old enough) about your nancial commitment so he or she knows what to expect. Discuss how your contribution will look like at their preferred colleges. For example, if you agree to pay a set amount, perhaps this money will fully cover community college, a substantial amount at a state school, and leave a larger portion of the bill outstanding at a private college. Breaking down the costs for your child can help him or her make an informed decision about how much student debt (or scholarships, grants, etc.) is needed to cover the bill.

No matter your nancial situation, know that it is possible to make meaningful progress toward both goals, particularly if you are intentional about how to allocate your savings. Consult a nancial advisor and tax professional if you want help setting speci c savings goals and understanding the various investing options available to you.

Carrie A. McPherson, CRPS®, CDFA®, ChSNC® is a Financial Advisor and Certified Divorce Financial Analyst with BeaconPoint Wealth Advisors, a financial advisory practice of Ameriprise Financial Services, Inc. in Providence, RI. She specializes in fee based financial planning and asset management strategies and has been in practice for 13 years. Please contact her at www.ameripriseadvisors.com/team/ beacon-point-wealth-advisors or (401) 824-2557, 1 Citizens Plaza Ste 610 Providence, RI 02903

Ameriprise Financial, Inc. and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation.

Investment advisory products and services are made available through Ameriprise Financial Services, LLC, a registered investment adviser.

Ameriprise Financial Services, LLC. Member FINRA and SIPC.