While most of us look forward to the day we can retire, it does come with one significant drawback. That is, once you retire, you lose your main source of income. To continue living your accustomed lifestyle, you’ll need another source of income. Below are 5 potential sources of income you may be able to turn to during retirement.
#1 – Another Job
A common option for retirees is to get another job. Most prefer to get something that is part-time, maybe working a few hours during the day or on the weekends. Another job not only gives you a source of income to rely on, but it gives you something to do during the day. Just because you’re retiring may not mean that you’re ready to stop working altogether. Start thinking now about the types of jobs you would consider doing during retirement. This can give you a sense of what’s available, what you need to do to prepare for that job, and the type of income you can expect from it.
#2 – Pension
If your current employer offers a pension, this will be a significant source of income during your retirement. Pensions provide a monthly income to retirees that is somewhat similar to your previous income. To be eligible for a pension, you typically need to work for that employer for a set number of years. For example, teachers typically need to work for about 30 to 35 years for eligibility. Check with your employer to see what their pension requirements are and how much you can expect to receive when the time arrives.
#3- Reverse Mortgage
If you’re a homeowner, you may be able to use your home as an additional source of income when you retire. Through a reverse mortgage, you can withdraw some of the value from your home without having to sell it or move out. You’ll want to figure out how much you can bring in, which you can determine by this reverse mortgage calculator. Reverse mortgages are great for some retirees but not right for everyone. You’ll want to consider all the implications of getting a reverse mortgage before doing anything.
#4 – Social Security
Social security is a government-backed retirement fund. Everyone over the age of 62 is eligible for social security benefits, how if you wait longer you can receive a larger amount. Social security checks arrive every month but you likely won’t be able to continue your current lifestyle on social security benefits alone. However, they are a nice source of additional income that you can rely on as you enter into retirement age. To learn more about social security benefits, you can check out this guide.
#5 – Retirement Savings
Perhaps the biggest source of retirement funds is your own savings. If you can start saving well before retirement, you can have a nice income for yourself when the time arrives. Retirement savings can include separate savings accounts, 401ks, specific retirement investments, and more. Some employers even offer matching contributions to retirement funds, allowing you to save up twice as much. If you have a certain lifestyle in mind for your retirement, it’s a good idea to start saving up towards the amount you’ll need to live it as early as you can.
Bonus: Downsizing
Finally, while downsizing is not an additional source of income, it can have the same effect. If you can scale back your current lifestyle a little, you won’t have to spend as much money each month. For example, you could move into a smaller home now that your kids have moved out. Or, if you and your spouse are both retired, you can sell one of your cars since you are both no longer commuting each day. There are plenty of ways to downsize and each one can help give you some breathing room between your spending and your retirement income.
Try to Rely on Multiple Sources
Often, the best way to fund your retirement is through multiple sources. For example, many people rely on social security benefits, a pension, and their own savings, all at the same time. This reduces the burden on any single source and makes it easier to afford the type of lifestyle you want in retirement. You’ve worked hard all these years and you deserve a comfortable retirement.
Start investigating the income sources available to you and think about which ones you may be able to rely on when the time comes. By planning out your options now, you can make financial decisions that help you to maximize your income when retirement comes.
