A recent study conducted by the federal reserve concluded that 19% of Americans from age 55 to 64 do not have any money put back for their retirement. If a person still has a few years before reaching retirement age there a few ways they can generate some additional income. What are some of the ways of creating extra retirement income?
1. Wait To Take Social Security Benefits
This is likely one of the more obvious ways to increase benefits. When a retiree reaches age 62, they can opt to take Social Security benefits. However, if they wait until they are 70, they can receive 76% larger benefits than they would at age 62. The additional money can be quite substantial.
This can be beneficial for people who are in good health and can wait for the delayed benefits. The life expectancy is higher than it has been in many years so waiting can be a good move for some.
If extra money is needed to supplement retirement income another option is to take benefits at age 66 rather than 62. This can result in an increase of 32%. Another thing to consider is your spouse’s benefits. They can be reduced as well if taken before full retirement age.
On the other hand if the primary beneficiary is collecting their benefits, a spouse that is eligible can take their benefits. This will add income to the household. The situation is different for everyone so this will factor into the decision on whether to take early benefits or wait until full retirement age.
2. A Reverse Mortgage Is An Option
Retirees who are over age 62 and own their home can get a reverse mortgage for extra cash. How does this work? A lender makes payments to the homeowner for the equity in the home. The payments can be made as a line of credit, monthly, as one large payment, or a combination of all of these and the homeowner can still live in the home.
One benefit of this type of mortgage is that it is only paid back when the home is sold or the borrower dies. Another is the lender cannot collect any more money than the selling price of the home. They cannot collect from any other assets of the borrower’s for the loan.
3. Rental Income Can Be Beneficial
Many times retirees find that downsizing and moving to a smaller home or an apartment is advantageous. They do not have all the upkeep such as landscaping and repairs to worry about and energy savings can be another benefit.
Rather than selling the old home, renting it out can add extra income immediately. Property management companies can take care of finding tenants and maintenance for a monthly fee. Although being a landlord is not something everyone wants to do, it can generate quite a bit of extra money each month.
4. Work after retirement
A part-time job is yet another option many retirees are using to boost their retirement income. There are a host of opportunities such as seasonal retail help or teaching their trade to someone starting out in the business.
Driving part-time for companies or finding an online position a few hours a week can boost retirement income. Many retirees find this rewarding in addition to the money they earn. They enjoy the daily interaction with people and it has shown to be beneficial to their health as well.
5. Choose Where you Retire
Some states offer lower taxes than others. There are a few that charge no inheritance, estate, or state income tax. Many states do charge retirees as much as the rate of federal tax on Social Security benefits. Some states have only a 4% to 5% state tax which can save money.
Others have a lower cost of living and that is beneficial for retirees on a fixed income. Although there is no state that does not charge taxes, finding one with lower-than-average taxes is possible.
These are just a few of the ways that can be beneficial for boosting retirement income. While some require an earlier start than others, there are ways of generating that extra cash even after retirement.