While retirement might seem like an extended period of leisure, for countless seniors, it's a financially trying time. Not only do many retirees struggle to pay the bills, but more than 25 million seniors are currently living at or below the poverty line. Throw in the fact that a large percentage of soon-to-be retirees are woefully behind on savings, and it's no wonder 60% of baby boomers are more worried about running out of money in retirement than actually dying.
But one thing many people don't realize about retirement is that it offers ample opportunities to make money. Whether you're approaching retirement with a skimpy nest egg or are a current retiree having trouble making ends meet, here are a few options for generating some much-needed income.
1. Choose investments that pay you more
Seniors are often advised to move away from stocks and to limit themselves to safe investments. But while it's a smart idea to shift some of your assets into low-risk alternatives, keeping stocks in your portfolio is a good way to bring in additional income. As long as you don't anticipate the need to liquidate your stock positions within five years, there's a good chance they'll grow in value over time, which means you'll eventually be able to sell them at a gain. But just as importantly, if you buy dividend stocks issued by established companies and keep them in retirement, you'll get what's essentially a quarterly paycheck.
2. Open a Roth IRA
While the traditional IRA is an important savings tool in its own right, if your goal is to have access to as much money as possible in retirement, you really can't beat a Roth IRA. Unlike traditional IRAs, Roth IRA withdrawals are taken tax-free, which means whatever amount you have sitting in your account is yours to use in full.
Furthermore, unlike traditional IRAs, Roth IRAs don't impose required minimum distributions starting at age 70 1/2. This means that if you can hold off on touching your IRA for a few extra years, you'll get to grow your savings tax-free for longer.
3. Start a business
Just because you're retired doesn't mean you aren't capable of working and earning extra money. If you have a talent or hobby you're passionate about, retirement is the perfect time to turn that skill into an actual business. In fact, according to the U.S. Bureau of Labor Statistics, seniors 65 and older are more likely to be self-employed than any other age group. When you start your own venture in retirement, you get the benefit of making your own hours, setting your own rules, and doing something you love -- all the while bringing in extra income.
4. Consult in your former field
Maybe you're not the creative type, or you're not looking to take on the risks associated with starting a business of your own. If that's the case, you still have the option to consult in your former field and earn a little money on the side. You might even start by contacting your previous employer and seeing if there's an opportunity there.
5. Become a landlord
If you have a larger property that lends itself to a rental situation, finding a tenant could improve your financial situation considerably. Even if you can't, or don't want to, accommodate a full-time tenant, if you live in a desirable area, you might consider renting out your home (or a portion thereof) on occasion to bring in additional income. This could be an option if you live in or a near a big city, ski area, or beach.
In fact, renting out your home on a short-term basis only has its benefits -- namely, the ability to take in rental income without paying taxes. As long as your rental period doesn't exceed 14 days within a calendar year, you won't have to share any of your income with IRS. All you need to do to qualify for this benefit is use your home yourself for more than 14 days during the year, or more than 10% of the total number of days you rent it out.
Though we all tend to use the words "fixed income" when talking about retirees, the truth is that you have more opportunities to earn money in retirement than you may have realized. If you fund a Roth IRA, hold the right investments, open up your home to paying guests, and put in a little work time, you'll be well on your way to boosting your income and enjoying a much less financially stressful retirement.