Recently retired Baby Boomers are commonly faced with some eye-opening financial realities. Even if you were proactive with planning for your retirement, you may find that the cost of retired life is higher than anticipated. If this happens, you may be forced to change some of your plans. For example, you may not be able to take a trip you’ve been looking forward to, or you may need to put off making home improvements you were excited about. This can be disappointing. But you have an option… you can add to your income and hopefully be able do all the things you’ve planned.
Related: Passions That Pay: Turning Hobbies Into Money-Making Machines
6 Ways to Increase Your Income While Retired
Owning and renting out a property is a great way to increase your income in retirement. And, although being a landlord does require some work, it’s definitely manageable for most of us who are retired.
Many Boomers own more than one property by the time they retire, so it’s possible for them to rent out one of their homes while living in the other. Furthermore, if you have a large amount of savings or a sizable investment portfolio, you can always buy a property for the sole purpose of renting it out.
Be Smart About Social Security
Social Security is an important source of income in retirement – and when you start claiming this benefit can have a significant impact on how much you are paid every month.
For instance, it’s possible to start claiming Social Security once you turn 62, but as a result of this your monthly payments will be around 30 percent lower than what you would have received if you waited until you reached the full age of retirement.
Once you enter retirement, it’s advisable to at least consider changing your approach to investing. You should focus more on investments that will generate a consistent income for you – like bonds or stocks which frequently pay out a strong dividend – rather than investments that are more long-term growth-oriented.
However, if your finances are very strong as you enter retirement, it can be better, in the long run, to continue to focus on growth investing rather than income investing.
A reverse mortgage is another good way to increase your income once you enter retirement. This type of mortgage effectively allows you to tap into the value of your home and get a lump sum payment.
You can then invest this payment into an annuity, bonds or other financial assets to earn a monthly or quarterly return.
Another way to increase your income in retirement is to take on a part-time job. This could come in the form of you continuing to work your existing job on a part-time basis or by finding a new job.
If you have the right skills and experience, it can be quite easy to find a part-time job, especially in areas like business consultancy and freelancing.
Start a Side Hustle
Starting a side business once you retire can be very appealing, as it can be a good way to stay occupied once you retire while maintaining a good amount of flexibility in your hours. However, it’s easy to end up working much longer than you had planned and it can often be difficult to generate a meaningful income from a new side hustle.
There are countless different small businesses you can launch, including things like an online store, a blog, or a consultancy business or another type of agency.
It’s a good idea to try to increase your income in retirement, especially if you can do so by simply making sure you are utilizing all the benefits you are entitled to and by investing in property or stocks to generate a passive income.
Working part time or starting a side hustle are also good ways to boost your income once you retire, and they can also help you avoid getting bored in retirement.
A Quick Summary
- Many Americans struggle to make ends meet once they retire, but there are things you can do to increase your income.
- Waiting until you reach the full age of retirement will result in you getting paid more in Social Security than if you start claiming it as soon as you’re eligible to do so.
- Taking out a reverse mortgage and investing the lump sum payment into an annuity can be a great way to increase your income.
- Starting a side hustle, like an online store or a small consulting business, is another good way to increase your income while retired while also keeping yourself occupied.
- In some cases, you may decide it’s best to work part-time instead of retiring – and this can really improve your finances in the long run.