The goal of retirement is to have enough money to live out the rest of your days comfortably. However, what happens if your spending outpaces your retirement income? Statistics are showing that having enough money to rely on for the entirety of retirement can be a challenging feat. According to the Social Security Administration, about one in every four 65-year-olds alive today will live past age 90, and one out of ten will live past 65.
This data means that the average individual will have to have enough money to last for a maximum of thirty-five years potentially. This scenario combined with rising living costs can rapidly drain an individual’s retirement income. However, there are some measures you can take to ensure this doesn’t happen to you. Here are five strategies to help you avoid running out of money during retirement.
Take a Look at Your Current Expenses
Before you create a strategy to preserve your remaining retirement funds, it makes sense to assess your current expenses. It helps to have an idea of the amount of money going out each month, and how it is being used. This method allows you to cut back where you can. For example, do you have a monthly magazine subscription or membership to a gym that you no longer use? Has more money started to go toward eating out or entertainment? Take stock of your expenses so you can cut where you can.
Consider Downsizing your Home
While it may be challenging to consider selling a family home, it may be a good option for adding more money to your retirement. Your home is a valuable asset, and selling it could give you the funds you need to fill out your retirement. Also, the costs of maintaining a larger home can add up. If you are finding that it is hard to handle home repairs and that it has more space than you need, check into downsizing to a smaller house, a condo, or an apartment. Smaller properties can bring about less stress and costs.
Take on a Part-Time Job
The goal of retirement is to step away from the sometimes stressful world of full-time work, but a part-time job can provide a less intense option to bring in some income. Take a look at local part-time jobs that allow you to make some extra money. If you prefer not to leave home, there are tons of work-from-home options that enable you to earn a living remotely. Make sure you find a job that is stress-free, and one that appeals to your skills or hobbies so you can enjoy what you are doing.
Invest for the Purpose of Income
It is true that you should be conservative in your investments during retirement. However, it can help to see if there are properties or innovative business ideas that you can invest in with a high probability for a return. Meet with a personal financial advisor to see which investments can yield a profit over time. The strategy should be to invest for income, so your investments provide you with additional money to live on for years to come.
Create Opportunities for Passive Income
Passive income is an excellent way to supplement your retirement income. Passive income streams usually require less ongoing work than managing a business or working a job. Typically, much of the work occurs on the front-end. For example, if you have specialized knowledge on a topic, consider writing and selling a book. You can live off of the revenue from the sales for as long as individuals buy it. This could also look like creating a money-generating blog, renting out your car, or offering up a spare bedroom in your home. There are a variety of ways to create passive income that lasts for the long-term. While many of these projects may not require much work in the long-term, it is important to remember that passive income streams do require some upkeep.
Understanding that your retirement income is running out faster than expected can be upsetting. You may feel that you did something wrong, but many times this isn’t the case. You may have faced an unexpected financial situation or have experienced a rise in living costs. Fortunately, there are steps you can take to supplement your retirement income. With a combination of strategic thinking, meetings with a financial advisor, and some sacrifice you can avoid running out of your retirement nest egg.