Here's something that might surprise you: The average monthly Social Security retirement benefit was recently about $1,355, or $16,260 for the year, and the maximum monthly benefit for those retiring at their full retirement age was recently $2,639, or about $32,000 annually. If that seems skimpy to you, here are a bunch of ways to boost your retirement income.
Save more now -- to live off later
This suggestion won't surprise you, but you might be taken aback by just how much of a difference saving more can make. If you're socking away $1,000 per month for retirement, could you possibly sock away $1,200 instead? Even if you only have a decade left until retirement, it can make a big difference. Saving $12,000 per year for 10 years in an account that grows by 8% annually will yield about $188,000. If you can sock away $15,000 annually, you'll end up with far more -- close to $235,000. That's about $47,000 in additional savings. How, exactly, might you save more? Well, skipping a pricey fancy coffee drink each day isn't a new idea, but it's powerful -- saving you perhaps $3,000 annually. Cut the cable cord and just stream your video entertainment and you might save $50 per month or $600 per year. If you're not using the gym much but are paying $40 monthly for it, that's another $500 or so in annual savings. Make a few phone calls to car and home insurance companies and you may find better deals than you have now, netting hundreds of dollars in savings annually. Start selling things from your basement or attic that never get used and you might net hundreds of dollars -- or take an easier route and donate clothes and household items to charity, reaping tax deductions. If you smoke, you can probably save thousands annually by quitting.
Dividend-paying stocks deliver income
You can generate income in retirement by selling off shares of stock from your stock portfolio over time -- but with dividend-paying stocks, you can collect income without having to sell any shares! A $300,000 portfolio, for example, that sports an overall average yield of 4% will generate about $12,000 per year -- a solid $1,000 per month. Dividend income isn't guaranteed, but if you spread your money across a bunch of healthy and growing companies, you're likely to receive regular -- and growing -- payments. A dividend-focused exchange-traded fund (ETF) such as can be a fine option, too. The iShares Select Dividend ETF, for example, recently yielded about 3%. Preferred stock is another way to go. The iShares U.S. Preferred Stock ETF recently yielded close to 6%.
Get a job and reap multiple benefits
If you're willing and able to work a little while you're retired, at least in the first few years, you can generate some welcome income. Working just 12 hours per week at $10 per hour will generate about $500 per month. If you can work a few more hours or can earn a higher wage, you'll collect even more. But wait -- there's more! A part-time job can also give your days more structure and regular opportunities for socializing -- things that many people find they really miss when retired. So this can boost your income, and it can also offer benefits such as some structure to your suddenly free days and opportunities for socializing. Many retirees find themselves restless and a bit lonely in retirement, and a low-stress job on the side can be quite helpful.
Consider an annuity for reliable income
If you don't have a pension, you can, in a way, 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 about $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 helpful. It's a fixed annuity that starts paying you at a predetermined point in the future instead of immediately. A 70-year-old man, for example, might spend $50,000 for an annuity that will start paying him $800 per month for the rest of his life beginning at age 80. That can ease any worries that your money will run out before you die.
See whether a reverse mortgage makes sense for you
You might also consider a reverse mortgage, where a lender provides (often tax-free) income during your retirement with the loan not needing to be paid back until you no longer live in your home. It has some drawbacks, such as requiring your heirs to sell your home unless they can afford to pay off the loan, but if you're really pinched for funds and no one is counting on inheriting your home, it can be a solid solution. Learn a lot more about them before getting one.
Borrow against your life insurance policy
If you have a life insurance policy that no one is depending on -- such as if the children you meant to protect with it are now grown and independent -- you might consider borrowing against it. This can work if you've bought "permanent" insurance such as whole life or universal life, and not term life insurance, that generally only lasts as long as you're paying for it. You'll be reducing or wiping out the value of the policy with your withdrawal(s), but if no one really needs the ultimate payout, it can make sense. Plus, the income is typically tax-free.
Delay your retirement by a few years
This suggestion may make you wince, but it can be quite effective. If you can work two or three more years than you originally planned to, you'll be able to add two or three more years' worth of savings into your retirement accounts, and you won't be tapping them in those years, either. If your employer offers health insurance, you can enjoy the continuation of that coverage for several more years.
Maximize your Social Security -- by working longer
Finally, learn more about Social Security strategies you might employ in order to collect more from the program. For example, for every year beyond your full retirement age that you delay starting to collect benefits, they will grow by about 8%. Delay from age 67 to 70 and you'll boost your benefits by 24%. It's not quite as powerful as it seems, though, because while your checks will be bigger, you'll be collecting a lot fewer of them. When you start collecting won't actually make much difference if you live an average-length life, but if you stand a decent chance of living a long time, bigger checks can be quite welcome. Read up on spousal strategies, too, as coordinating when you and your other half start collecting can benefit you both.
Spend a little time thinking about how you spend money and how you might save or earn more and you'll likely come up with some additional ways to boost your future income. If you smoke, for example, you can probably save several thousand dollars annually by quitting. If you live in a pricey house or region, a strategic move could shrink your living expenses.