Many of us think of retirement as a carefree period of life, but for many seniors, it's nothing but one extended source of financial stress. It's estimated that over 25 million Americans 60 and older are financially insecure, while more than 60% of senior households are burdened by debt.
If you're worried about staying afloat financially in retirement, the solution is simple: Take steps to boost your income. Here are a few solid ways to achieve that goal.
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1. Raise your Social Security benefits
Social Security serves as a major source of income for countless retired workers, and though your benefits themselves are calculated based on how much you earned during your career, the age at which you first file for them can cause that number to go up, go down, or stay the same. If you sign up for benefits at what's known as your full retirement age, you'll get the exact monthly benefit you're entitled to based on your earnings.
Full retirement age is based on year of birth, and here's what it looks like for today's workers and seniors:
That said, you don't have to file for Social Security exactly at full retirement age. You're actually allowed to start taking benefits as early as age 62, though doing so will cause them to decrease. On the other hand, if you hold off on benefits past full retirement age, you'll get an 8% boost for each year you wait up until age 70, at which point the incentive to delay runs out.
So let's assume your full retirement age is 67, at which point you'd collect $1,500 a month. If you were to wait until 70 to file for Social Security, you'd lock in a monthly payment of $1,860 -- for life.
2. Buy dividend stocks
Though seniors are often advised to shift their investments into bonds and other such relatively low-risk alternatives, it pays to keep some stocks in your portfolio -- especially those with a strong history of paying dividends. Even if those stock values drop, or the market on a whole underperforms, if you choose the right companies, you'll still get to collect dividends every quarter.
3. Save in a Roth retirement plan
These days, it's common to save for retirement in either an IRA or 401(k), both of which come in the traditional and Roth variety. Now the benefit of the former is that you get an up-front tax break for making contributions, but the downside is that withdrawals from these accounts are taxed in retirement. On the other hand, if you save in a Roth account, you'll lose the immediate tax break, but withdrawals will be yours free and clear of taxes when you're older, thus boosting the amount of income you have access to in retirement.
4. Monetize a hobby
Many seniors are advised to work part-time in retirement to generate extra income. But this often means taking a retail position or signing up for a desk job -- the sort of work many seniors aren't thrilled about. That's why if you're looking to boost your income later in life, it pays to explore your options for turning one of your favorite pastimes into a money-making opportunity. This could mean selling the plants you cultivate in your garden at local farmers' markets, or turning your cake-baking hobby into a part-time catering service. The options are virtually limitless.
5. Become a landlord
Many seniors choose to downsize in retirement to lower their housing costs and ease the burden of property maintenance. But if you're sitting on a larger home, renting out a portion of it is an easy way to generate a steady influx of cash. Renting out your home is particularly feasible if you have a finished basement or garage that lends to some privacy, and if you live in a college town or large city with ample jobs, your chances of finding a tenant are even greater.
Don't want someone living in your home full-time? There's also the option to rent out your space seasonally. For example, if you're located near a popular ski resort, you might try renting out a few rooms here and there during school breaks and holiday weekends. Best of all, if you rent out your property for 14 days or less within the same calendar year, you won't have to give up a portion of your rental income to taxes.
Having an adequate amount of income is essential for an anxiety-free retirement. If you're worried that your savings won't buy you the lifestyle you're hoping for, it pays to explore your options for boosting your retirement income. And the sooner you start thinking ahead, the better positioned you'll be when you decide to leave the workforce for good.
The $16,122 Social Security bonus most retirees completely overlook If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,122 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.
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