9 Ways to Supplement Your Retirement Income

Retirement is a time that many people look forward to for years. It’s a time to relax, enjoy life, and pursue hobbies and interests that may have taken a backseat during working years. However, one aspect of retirement that can catch many people off guard is the cost. Retirement can be more expensive than expected, and it’s important to plan ahead to ensure financial stability during this phase of life.

According to Ashley Terrell, a registered investment advisor at Burns Estate Planning & Wealth Advisors, many retirees find that they end up spending more in retirement than they did while working. This is due to factors such as joining clubs, working out, boating, traveling to see grandchildren, and other activities that can add up quickly. Social Security benefits only replace about 39% of past earnings for retirees who claim payments at age 65, leaving a significant gap that needs to be filled with retirement savings, pensions (if available), and additional income streams.

To make up for this shortfall, retirees can explore various ways to earn income during retirement. One key strategy is to create a budget before retiring to get a realistic sense of expenses and income needs. Diversifying income sources is also crucial, as it can help mitigate risk and provide stability. Working with a fiduciary financial advisor can help retirees understand complex retirement income options, such as annuities.

There are numerous ways to earn income in retirement, ranging from short-term bank savings accounts to real estate rental income. Short-term bank savings accounts, money markets, and CDs offer low-risk options for earning interest on savings. Annuities provide a guaranteed income stream for life, while dividend stocks, bond funds, and REITs offer opportunities for passive income through investments. Real estate rental income and part-time jobs or side businesses are additional options for earning extra money in retirement.

It’s important to note that the biggest retirement expense can vary depending on individual circumstances, with healthcare, housing, travel, and recreation being common expenses. The average monthly income for retirees in 2022 was $4,065, with Social Security and retirement plans accounting for the majority of pre-tax income. The average retirement savings and 401(k) balances also vary, highlighting the importance of additional income streams in retirement planning.

In conclusion, while retirement can be an exciting time, it’s essential to plan for the financial aspects to ensure a comfortable and enjoyable retirement. By exploring various income opportunities, creating a budget, and working with a financial advisor, retirees can better prepare for the costs of retirement and enjoy a fulfilling post-work life.