When you were working, you might have saved for retirement through a 401(k) with your employer, in an IRA, or both. But now that you’ve reached retirement, you may be concerned that your savings aren’t enough to keep you comfortable in your golden years.
For the most part, the average amount of money that retirees save for retirement isn’t enough. The standard recommendation is to have between 70 to 85% of your pre-retirement income saved for each year of retirement. Based on this recommendation, if you expect to live for 25 years after retiring and spend an average of $50,000 per year before you retire, you’ll need at least $1 million in retirement savings.
So how do your savings compare with others like you who are entering retirement? Those between the ages of 65 and 74 have saved an average of $164,000 – much less than the $1 million recommendation, if your savings are in line with this average, there are options when it comes to supplementing your income.
What do you like to do in your spare time? You could turn your favorite hobby into a source of income. Some ways to profit from your hobbies include:
Just as you can monetize activities you do in your spare time, you can also use your professional background to find new opportunities. For example, if you work as a staff accountant for a company, you can freelance, too, preparing tax returns during the busy tax season. If you teach full time, you can start a tutoring business to supplement your income.
That said, your business doesn’t need to have anything to do with your day job. If you love animals, for example, you can start a pet-sitting or dog-walking business, even if you worked for most of your life as a marketing manager. Now is a great time to pursue your passion.
Before you decide to start a business, you might want to talk to a qualified financial, tax, legal, or other professional first to make sure you have all the licenses and tax documents required by your city and state to move forward.
Downsizing your home can help you boost your retirement savings in a few ways. If you buy or rent a smaller home, your monthly mortgage or rent payment is likely to shrink, meaning you’ll have more to save each month. Smaller homes usually have smaller utility bills, too.
Selling your home can also mean you get to pocket some money if the sale price is much more than you paid for it initially. If you buy a house that has a lower market value than your previous home, your real estate tax bill is likely to shrink as well.
You can also earn some cash by selling furniture and other belongings you no longer need before moving from one house to the next.
Another way to supplement your retirement savings is to find a part-time job. You could work at your favorite retailer, at a local cafe, or as a delivery driver.
In addition to giving you some extra cash in retirement, a part-time job lets you explore your other interests. Maybe you’ve always wanted to work in a retail store or a restaurant, or maybe you’ve wanted to develop a new skill. A part-time job lets you do so.
After decades of saving, you finally get to retirement age and find yourself facing a difficult decision. Should you put work aside or get a part-time job? Money may be your primary motivator, but work offers more benefits than a steady stream of income.
With a job, your days will have some structure, and you’ll be less likely to wonder what to do with your time. You’ll also get to meet new people and socialize with your co-workers. Depending on how much you work, your job might offer you benefits such as paid-time-off and health insurance.
Regardless of what next step you choose, PSECU can help you increase your savings so you can retire comfortably. For more tips on money management, visit our WalletWorks page.