It's an unfortunate fact that many seniors struggle financially in retirement, whether due to inadequate savings or higher-than-anticipated expenses, like healthcare. If you're looking for a few surefire ways to give your retirement income a much-needed boost, here are some options to explore.
1. Work a few extra years, and max out your retirement plan contributions
One of the easiest ways to boost your retirement income is to work longer and use your extra earnings to build up your IRA or 401(k). Currently, workers 50 and over can contribute up to $6,500 a year to an IRA and $24,000 a year to a 401(k). If you're not offered the latter, maxing out the former option for three years will add about $20,000 to your nest egg, even if your investments during that period deliver a conservative 3% return. Just as importantly, working a few more years will allow you to hold off on tapping your savings, thus making them last even longer.
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2. Delay Social Security as long as possible
Your Social Security benefits are based on what you earned during your working years, but you have the power to lower or raise those benefits depending on when you first claim them. If you file for Social Security at full retirement age, which, for today's older workers, is 66, 67, or somewhere in between, you'll collect your benefits in full. You can take benefits as early as age 62, but doing so will reduce them for life. On the other hand, if you delay benefits past your full retirement age, you'll get an 8% boost for each year you hold off up until age 70. This means that someone with a full monthly benefit of $1,500 and a full retirement age of 67 can increase those payments to $1,860 -- for life -- just by waiting a few extra years.
3. Collect bond interest
Seniors are often advised to shift some of their investments into bonds, since they're considerably less volatile than stocks. But there's another benefit to holding bonds in your portfolio, and it's that they typically make interest payments twice a year, which means you'll have a fairly reliable income stream when you need it the most. Better yet, if you buy municipal bonds (those issued by government entities, as opposed to public companies), the interest you collect will always be exempt from federal taxes, and if you buy bonds issued by your home state, you'll avoid state and local taxes as well.
4. Hold dividend stocks
Though stocks aren't quite as safe as bonds, you should still hold some in your retirement portfolio -- especially if those stocks happen to pay dividends. Like bonds, dividend stocks offer a fairly predictable income stream in the form of quarterly payments. You can then reinvest those dividends to boost your income even further, or take your money and spend it as needed.
5. Start a business
Working in retirement is a guaranteed way of generating more income, but if you don't want to answer to a boss at this stage of life, there's an easy remedy: Become your own boss. Starting a business is a great way to not only occupy some of your newfound free time in retirement, but spend your working hours doing something you love. Interestingly enough, the U.S. Bureau of Labor Statistics reports that seniors 65 and older are more likely to be self-employed than any other age group. And if you're not ready to embark on a totally new business venture, you can always try consulting in your former field or teaching the skills you know to others.
6. Find some tenants
If you're sitting on a large home with a number of empty rooms, renting them out could be a good way to bring in a steady stream of cash. This option is particularly feasible if you live in or near a city or college town, where housing is typically in demand. Even if you aren't willing to take on a full-time tenant, you can look into renting out your home, or a portion thereof, on a short-term basis. In fact, if you rent out your property for 14 days or less within a given calendar year, you won't lose a portion of your rental income to taxes.
Finding ways to boost your income could make for a far less stressful retirement. Follow these tips, and if all goes well, you'll have some extra cash to enjoy at a time in your life when every dollar counts.
