These days, a lot of seniors are having a difficult time making ends meet due to rampant inflation. But even during more moderate periods of inflation, retirement can bring about financial challenges.
One issue is that many seniors assume they can largely get by on the income they receive from Social Security, only to realize those benefits fall short. Furthermore, some seniors assume they can manage a part-time job during retirement, only to find that health issues or other constraints get in their way, making that income source less feasible.
If you're having a difficult time paying your bills in retirement, and you don't have much of a nest egg to tap, you may be feeling increasingly stressed by the day. But if you own a home, you may have more options than you'd think.
When it's easy to sell at a profit
These days, the housing market is red hot, and inventory is so limited that buyers are clamoring for homes. That gives you a solid opportunity to sell your home at a profit -- and use your sale proceeds as a retirement income source.
Let's assume you're sitting on a paid-off home worth $600,000. You may have the option to downsize to a smaller living space that only costs you $300,000 to purchase. From there, you can treat your remaining $300,000 profit the same way you would an IRA or 401(k) plan. That means investing that sum and taking withdrawals from it to supplement your Social Security benefits, or whatever other income sources you have at your disposal.
In a recent ConsumerAffairs survey, one in four seniors that sold a home over the past two years did so for the express purpose of being able to afford retirement. And while it's never great to feel like you have to sell your home, the reality is that it could serve as a nice income source when you need it the most.
Furthermore, unloading a larger home in retirement might result in added savings, like lower property taxes and less expensive maintenance costs. Your utility bills might also shrink if you move from a larger living space to a smaller one. Over time, the savings there could add up.
Another option if you really don't want to move
It may be that you're attached to your home and want to keep a larger space so you have the option to house family and guests. If that's the case, you might see about converting part of your home to a rental. That may be feasible if there's a separate area of your home that offers privacy, like a finished basement.
You may also be tempted to borrow against the equity you have in your home and use that money to pay your living costs. But that may not serve as a great solution, because you could end up saddled with loan payments that are difficult to keep up with.
It's unfortunate that retirement often ends up being a more expensive prospect than seniors plan on. If your current income sources aren't cutting it, it may be time to consider unloading your home. With property values sitting at the levels they're at today, you could end up with a large profit on your hands.