Heading into retirement can be a scary time. The prospects of potentially living on no other income than a savings account for decades can be an intimidating feeling. Questions like, “Will my money last as long as I do?” or “Do I have money to leave my heirs?” are common when entering retirement. Fortunately, there are ways that you can continue to save money and bring in money during retirement. Keep reading to learn six ways that you can stretch your savings and even grow them.
1. Downsize
You probably don’t need much living space once you become an empty nester. If you live in a home that has more bedrooms than you need, you can sell that home and buy something smaller. The equity that you’ve established in your home can be used to put a large down payment on a new home, which will likely lead to a lower monthly house payment and utility bills. If you rent an apartment, you can reap the same benefits by renting a smaller apartment.
A lower mortgage payment or lease agreement is essentially like growing your savings account without putting any additional money in it. You’ll immediately see the effects of downsizing. A real estate agent can assist you in finding a home that will help meet your financial goals.
2. Generate Passive Income
Bringing in passive income is an easy way to grow your savings account by doing very little. Yes, there are some ways of bringing in passive income that take some or even a lot of work to get established. However, once you have your income set up, it will continue to roll even while you sleep.
If you’ve never thought about bringing in passive income, this might be a foreign idea to you. Some ideas include writing an e-book, selling photos, and renting out a room. An e-book will sell itself on platforms like Payhip, Blurb, and Amazon. It will take some time to write the book, but an idea can unfold itself much quicker than you would imagine.
If you have any sort of knack for photography, you can easily sell photos on websites like Photobucket or even print them into postcards and sell them to local boutiques.
Do you have a spare room, an open basement, or even mother-in-law quarters? You can rent these out to tenants and maintain a steady stream of income.
3. Make Good Investments
Good investing doesn’t have to be incredibly risky. You can make good investment choices by finding low-risk, low-reward opportunities that will grow your savings over time. While these investments likely won’t payout in the hundreds of thousands or millions, a good investment can help your savings account grow enough to make it stretch as long as you need.
If you’re not sure about investing, speak with an investment professional to find opportunities to get help.
4. Take Out a Reverse Mortgage
If you’re truly worried about your savings lasting and would like some additional funds to drop in your account, consider a reverse mortgage. A reverse mortgage allows you to borrow cash against the equity in your home. In contrast to a traditional mortgage, reverse mortgages don’t require a monthly payment or even a fixed payment plan. Rather, all reverse mortgages are to be paid back after the last living heir to the property owner sells the property or home. This means that you don’t have to pay back any of the loan until either you decide to sell your home or your children sell it after you pass.
In order to meet the requirements for a reverse mortgage, you must:
- Be at least 62 years old
- Live in your home as your primary residence (vacation/rental properties are not eligible)
- Have at least 50% equity in your home
- Borrowing against a manufactured home built after 1976, condominium, or townhouse
- Demonstrate a willingness to meet all obligations that come with your loan
Current reverse mortgage rates according to All Reverse Mortgage are as follows:
- 3.06% (4.06% APR) fixed rate, 2.11% (2.00 margin) adjustable rate, $822,375 lending limit
- 3.18% (4.18% APR) fixed rate, 2.36% (2.25 margin) adjustable rate, $822,375 lending limit
- 3.31% (4.31% APR) fixed rate, 2.61% (2.50 margin) adjustable rate, $822,375 lending limit
- 3.56% (4.56% APR) fixed rate, 2.86% (2.86 margin) adjustable rate, $822,375 lending limit
- 3.68% (4.68% APR) fixed rate, 3.11% (3.11 margin) adjustable rate, $822,375 lending limit
Speak with a mortgage broker to learn more about reverse mortgages and find if it’s a good option for you.
5. Get a Part-Time Job
Despite reaching retirement, not everybody is ready to completely stop working. You can still get a part-time job to bring in small amounts of income that can supplement your savings account. This can be anything from working a cash register at a grocery store to working the front desk at a corporate office. A part-time job is also a great way to help you get out of the house to stay active and socialize.
6. Live a Healthy Lifestyle
Regardless of whether or not you have Medicare, medical bills can add up quickly. Living a healthy lifestyle in retirement means that you can spend your money on the everyday items that are important rather than allowing medical bills to dry up your savings. Eat a healthy diet, get regular exercise, socialize, and stay safe to continue to live a long, happy life and keep from spending more money than you need on medical bills.