Maybe you pulled the trigger on retirement before getting a chance to build enough savings. Or perhaps you encountered some unplanned expenses early on in retirement that caused your nest egg to quickly deplete. No matter the scenario, running out of money in retirement is no joke. In fact, more older Americans are worried about running out of cash in retirement than actually dying.
But before you panic, there are some things you can do to improve your financial picture. Here are some options to consider.
1. Find a job
There's no better way to guarantee an uptick in retirement income than to go out and find work. Though you may not have the capacity for a full-time gig, if you find a local part-time job, you'll have a steady stream of income to look forward to, just as you did during your working years.
Keep in mind that there are jobs for seniors other than bagging groceries or working a retail cash register. If you have a talent you're able to monetize, whether it's baking, gardening, or artwork, you can try turning it into an income source. Similarly, if you've been toying around with a business idea, turning it into reality could prove rather lucrative.
There's also the option to consult independently in your former field. For example, if you were an accountant, you could try building a client base and offering your services on a freelance basis. Or, if you were a former teacher, you could try your hand at tutoring. The U.S. Bureau of Labor Statistics reports that Americans 65 and older are more likely to be self-employed than any other age group, so if you need the money, don't hesitate to venture out on your own.
2. Rent out part of your home
Not everyone has enough living space to allow for a tenant, but if you're living in a larger home with a spare room or finished basement, becoming a landlord is another guaranteed way to bring in additional cash. This option is particularly viable if you live in or near a city, or reside in a college town where students are constantly looking for housing.
If you live near the beach or a ski area, you might also consider renting your home out seasonally, when tourists are likely to pay a premium. It might even make sense to let others use your home for a weekend, pay for a hotel yourself, and pocket the difference. For example, if you're able to command $2,000 for your property on a holiday weekend, and it costs you $600 to stay at a hotel during that time, you'll still come out way ahead.
Housing is a major expense for workers and retirees alike, so if you're sitting on a large property and no longer need as much space, moving to a smaller home might free up a considerable amount of cash each month. Even if your home is paid off in full, there's still property taxes and upkeep to contend with. And it stands to reason that a smaller home will come with lower taxes and cost less to maintain.
4. Consider a reverse mortgage
If you own a home in retirement and are running out of cash, you can also think about getting a reverse mortgage, which is a type of home equity loan specifically designed for seniors. Whereas a traditional mortgage requires you to make payments to your lender over the length of your loan, reverse mortgages work the opposite way -- your lender will make payments to you in exchange for equity in your home.
Though a reverse mortgage can be a good way to put cash in your pocket when you need it, it's not right for everyone. Not only might you incur hefty closing costs on your loan, but you'll still be required to maintain and pay property taxes on your home.
Furthermore, with a reverse mortgage, your loan isn't repaid until you die, sell your home, or vacate your property for more than a year. So say you're hoping to leave your home to your heirs but pass away while you're still living in it. Your property will then be sold to pay off your loan, which means it won't get handed down to your beneficiaries. For these reasons, you're often better off going with one of the above suggestions, and treating a reverse mortgage as a last resort of sorts.
Running out of money in retirement is a tough spot to be in. Follow these tips, and you'll be better positioned to generate income at a time when you need it the most.