Planning for retirement requires you to consider multiple moving parts. Maybe you're thinking ahead to creating multiple streams of income in retirement. Or, maybe you're approaching retirement and are becoming more aware of how rising expenses and other unknowns can impact your ability to live on your savings.
Sometimes, adding more cash inflow to your retirement plan is the best way to pay monthly expenses, afford travel or other passions and boost your peace of mind. Here are four creative sources of retirement income.
1. Rent Out Your Space
If you have extra space in your home or plan to move out of it to downsize, you could rent out a room or your entire house as an extra stream of income. Many retirees use services such as Airbnb and Vrbo to earn rental income. There are also rental platforms designed specifically to serve seniors.
If you prefer to cohabitate with another senior, the National Shared Housing Resource Center offers a directory for shared housing programs for seniors. Check out the directory to look for a program in your state. Each local program helps those who have space to rent out match with those who are looking for affordable housing.
2. Try Gig Work
If you like the idea of continuing to work in retirement, taking on a part-time job or a gig could be a way to find enrichment while bringing in some cash. Sometimes called an encore career, this type of work allows retirees to do jobs they find interesting or socially fulfilling, be it working retail, nannying, doing reception work or any number of other roles.
When picking work to pursue in retirement, you could ask yourself what local opportunities are available, what you enjoy doing or what roles you've always been curious about but never got the chance to try. You could also look for a gig that not only brings in income but also has a social aspect that adds to your life. Caring for pets or children, substitute teaching, tutoring and driving for a ride-hailing service are all popular gigs to consider.
3. Invest in Dividend Stocks
Dividend stocks are a type of stock from companies that regularly pay shareholders with a share of the company's profits. Dividend stock payouts can come on a monthly, quarterly or annual basis, making them a stable stream of passive income. That's in addition to the regular benefits (and risks) or investing in stocks, which can appreciate and depreciate in value over time.
If you have a sum of money to invest and are interested in creating a strategy to add dividends to your retirement income, consider reaching out to a financial advisor. They can help you create a portfolio made up of dividend stocks with payout dates stacked to provide you with income throughout the year. They can also help you gauge your risk tolerance to pick assets that work for you, and to understand the tax implications of earning income through dividends.
4. Downsize Your Home
Downsizing your home may not technically be a source of new income, but it frees up cash to the same end. If you're currently shouldering mortgage payments and high property taxes, plus the utility costs and other expenses of keeping up with a single-family home, consider the benefits of downsizing to a smaller home or even living within a multi-family home community, such as in a condo.
If downsizing is right for you, it could help you free up funds and use your home equity to add income to your retirement budget. If you're considering this route, be sure to discuss how to make your money go furthest with a financial advisor. Lowering your housing costs can be a big win for your retirement budget, but it isn't for everyone, so consider whether you really want to relocate before you decide to list.
The Bottom Line
Apart from creating new streams of income through investment accounts and renting out your space, you might find that part-time or gig work can help you bring in more cash during retirement—while also providing you with an opportunity to explore something new and stay connected.
For personalized help charting your course through retirement, reach out to a financial advisor. They can help you assess where you stand with your retirement savings and strategies for adding streams of income into the mix.