The average senior on Social Security collects $1,543 a month. Granted, that average benefit is likely to rise over time as cost-of-living adjustments come into play. Still, if you're an average earner, you'll likely find that Social Security alone doesn't keep up with your retirement expenses. That's why it's crucial to have a backup plan -- outside income sources you can tap in addition to your benefits. Here are a few you may want to look at.
1. Retirement savings
The more money you put into your IRA or 401(k) plan, the more financial flexibility you'll have during your senior years. If you start funding one of these accounts from an early age, you won't have to part with too much money on a monthly basis to amass a significant sum. Socking away $250 a month, for example, over 40 years will leave you with close to $600,000 if the investments in your retirement plan manage to generate an average 7% return, which is doable if you load up on stocks. Make it $300 a month, and you'll be looking at almost $720,000.
2. Dividend stocks
You'll often hear that stocks are risky investments for retirement. If you choose the right ones and diversify your portfolio with safer investments as well, they can actually be very dependable. This especially holds true with regard to dividend stocks, which will generally pay you money on a quarterly basis. You'll then have the option to reinvest your dividends to grow your wealth even more, or take that money and use it to cover your bills.
3. Rental income
Many seniors downsize during retirement, but if you'd rather not get rid of the home you know and love, renting out a portion of it may be a viable alternative -- especially if there's an area like a finished basement that can easily accommodate a tenant. Like dividend income, the money you collect in rent can be used to pay for some of your living costs -- including the cost of maintaining your home in the first place.
4. Earnings from a part-time job
Working during retirement boosts your income and keeps you busy at the same time. The good news is that you're absolutely allowed to work and collect Social Security at the same time. If you do so before reaching full retirement age, though, you could have some benefits withheld if your income exceeds the earnings test limit, which changes from year to year. But even then, those benefits won't be lost forever -- they'll simply be tacked onto your monthly payments once full retirement age kicks in.
Even if you're eligible to collect more money from Social Security than what the average senior receives today, you may still find that it's just not enough income to live comfortably. Rather than risk being cash-strapped during retirement, have a plan to supplement those benefits. You'll be thankful you did.