Many workers follow a very defined, traditional path to retirement. You advance your career over time, and your income increases along the way. Throughout your career, you contribute to your 401(k), IRA and other retirement accounts. You try to keep your debt balances low, live within your means and accumulate enough assets to fund a long and enjoyable retirement.
However, sometimes the traditional path doesn’t lead to the desired destination. Emergencies happen. You could face unexpected costs for things like health care issues or home repairs. Market volatility could threaten your savings efforts. You could experience a career disruption that limits your ability to save.
As you approach retirement, you may find that you haven’t saved as much as you’d hoped. In fact, your retirement plans could be in jeopardy. If you’re already saving as much as possible and still need additional funds for retirement, it may be time for some out-of-the-box thinking.
Below are four nontraditional ways to fund some of your retirement expenses. You could use these strategies to generate side income, boost your retirement savings or simply provide a little financial breathing room. Be creative and consider how you could implement strategies like these into your retirement plan.
Downsize your home.
What if you could boost your retirement savings and cut your expenses with one simple decision? That may be an option if you have a sizable home with a considerable amount of equity accumulated.
By selling your home and downsizing to a smaller house, you could substantially reduce your expenses. The costs for your mortgage, taxes, insurance, utilities and maintenance could all go down, which would reduce the amount of income you may need in retirement.
Also, if you have substantial equity in your home, you could use some of the proceeds from the sale to bolster your retirement savings. Those savings could help you continue to grow your assets or generate additional retirement income.
Tap into your life insurance cash value.
You probably own life insurance to protect your spouse, kids and other loved ones in the event of your death. Now that your kids are out of the house, however, you may not need as much insurance protection as you did in the past. If your insurance has cash value, you could use the policy to generate supplemental retirement income.
You can take your premiums out of the policy as tax-free withdrawals. You can also take any growth in the cash value as a tax-free loan distribution. Technically, the loan has to be repaid. If it isn’t repaid when you pass away, however, the balance is deducted from your death benefit.
Turn your passion into income.
Do you plan to use retirement to pursue a favorite passion or hobby? If so, perhaps you could turn that hobby into a source of side income. For example, you might be able to work part time for a business related to your hobby. If you love golf, you could work as a starter or an attendant at a local course. If you love gardening, you could work at an area nursery.
If you want a job with schedule flexibility, you could consider coaching, teaching or consulting others who may be interested in your hobby or passion. For instance, if you love music or art, you could offer lessons to children and adults in your neighborhood. You could also sell training or coaching online in your area of expertise.
Work in the sharing economy.
The internet has created a wide range of new ways to earn income. One of the ways in which many retirees can generate side income is through the renting or sharing of their assets. For instance, there are websites that let you rent out empty bedrooms in your home, for either the long term or a few days at a time. You could rent out tools and other types of property. You can even rent out your time by driving for a ride-hailing service or running errands for others. Look into ways to use these opportunities to generate income.
Ready to chart your nontraditional path to funding retirement? Let’s talk about it. Contact us at Focus Financial Group. We can help you identify both traditional and nontraditional funding strategies. Let’s connect soon and start the conversation.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
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John has devoted his working career to using his talents to serve others through financial services.