Once you're retired, you'll likely have much more time on your hands than you've had in many years. You'll also probably have less income, though, than you're used to living on. With a little planning and action, you can improve your situation. Here are 10 ways to get more money in retirement.
Get out of debt
It doesn't make any sense to discuss how to bring in more money if you're continually losing money to interest payments. It can be OK to be still carrying a mortgage in retirement, but many try to have their homes paid off before retiring. Credit Card debt is a different matter, though, as it can be financially devastating. Aim to pay that off pronto, no matter whether you're in retirement or many years away from it. It's not unusual to be charged annual interest rates of 25% or more, and on $10,000 of debt, that can cost you around $2,500 each year!
Work longer, retire later
The idea of working a few more years and retiring a bit later might not be appealing at all, but it's very powerful. It will let you save and invest more for retirement, while putting off having to start drawing from your nest egg. Consider this example: If you sock away $8,000 per year for 20 years, and it grows by an annual average of 8%, you'll end up with about $395,000. If you can keep going for another three years, still averaging 8%, you'll end up with $526,000! That's more than $130,000 extra just for delaying for a few more years. If you're collecting matching funds in your 401(k) from your employer, you'll collect a few more years' worth of that free money, too -- and will remain in any employer-sponsored health insurance plan longer, too.
If your portfolio is full of stocks you no longer know much about and mutual funds that have let you down, and you have no idea what you've been paying in fees, you're probably enjoying less portfolio growth than you could. Aim to only hold stocks in which you have great knowledge and confidence, and not more of them than you can keep up with. Consider healthy and growing dividend payers, as they'll keep generating income no matter what the economy is doing. (A portfolio with $250,000 in dividend payers with an average yield of 4% will generate $10,000 per year!) If you don't have the time, interest, or skill to choose stocks and funds successfully, then you can do very well sticking with one or more inexpensive, broad-market index funds.
Consider an annuity
If you don't have a pension, you can sort of buy one for yourself via a fixed annuity. With a $200,000 investment, for example, a 70-year-old couple might be able to secure $1,000 per month for as long as at least one of them is alive. That can provide much peace of mind, removing stock market moves and the economy's current condition from your worries. A deferred annuity can also be smart. It's a fixed annuity that doesn't start paying immediately. Instead, it will start paying you at a future point, such as when you turn a certain age. A 70-year-old man, for example, might spend $50,000 for an annuity that will start paying him $1,600 per month for the rest of his life beginning at age 85.
Consider a reverse mortgage
Reverse mortgages have their pros and cons, but the upside is that you essentially borrow money based on your home equity and don't have to pay it back until you die or stop living in your home. It can deliver a welcome income stream -- and a tax-free one at that, generally -- but it can mean your heirs don't get to inherit your home. Learn more about reverse mortgages if you're interested. You have to qualify for one, you may not get as much income as you'd hoped, and you'll face closing costs, but it's a good solution for some people.
Get a part-time job
Another way to get more money in retirement is rather obvious: Get a job. You might deliver newspapers or work at a local store, of course, but you have many more options than that. You might do some freelance writing, editing, or graphic design work; you might tutor kids in subjects you know well; or you might do some consulting -- perhaps even for your former employer. You could offer language lessons or music lessons to adults or children, or perhaps you could babysit, walk dogs, or do some handy-person jobs.
Another obvious way to have more money in retirement is simply to spend less. There are gobs of ways you can do that, such as canceling cable and sticking with a streaming service or two, downsizing from two cars to one for your household, canceling any subscriptions you don't use (not only to periodicals but also to gyms). Spend less on gifts, travel, and eating out. You might even cancel your life insurance policy if no one is depending on you financially anymore.
Move to a less-expensive place
You may find you're spending less and that your dollars are going further if you downsize and move to a smaller home -- or if you move to a less expensive part of the country. You might even move to a less expensive region. The median home value in California, for example, was recently about $371,000, but it was only $154,000 in North Carolina.
Think outside the box a little, and you can come up with even more ways to get more money in retirement. For example, you might rent out a room now and then via Airbnb, or even take in a boarder for a year or two. If you're not already using cash-back or rewards credit cards, look into them. You might earn 3% back on supermarket and gas station spending, for example, which could amount to $250 or more per year. If you charge $1,000 per month and earn 2% on that, you're looking at $240 per year. If your basement, attic, or garage is full of things you no longer need or use, you might donate them for a tax deduction or sell them. You might even make things to sell, such as soaps, furniture, or jewelry.
Maximize Social Security
Don't just assume your Social Security benefits are fixed -- or that they'll be enough. The average Social Security retirement benefit was recently $1,347 per month, or about $16,000 per year, with the maximum benefit for those retiring at their full retirement age recently at $2,639 per month -- or about $32,000 annually. You can increase or decrease your benefits by starting to collect Social Security earlier or later than your "full" retirement age, which is 66 or 67 for most of us, and you can make some smart moves by coordinating with your spouse when you each start collecting. (Perhaps start collecting the lower-earner's benefits first while letting the higher-earner's benefits grow larger.)
Take some time to read up on ways to get more money in retirement and to think about which of them make the most sense for you, and you may end up enjoying a much more comfortable and richer retirement.
Longtime Fool specialist Selena Maranjian, whom you can follow on Twitter, owns no shares of any company mentioned in this article. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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