Alternatives to Social Security That Will Provide Retirement Income

0

Social Security has long been the foundation of the American retirement system, and many working Americans eagerly anticipate the day when they can collect a Social Security check. However, Social Security was never intended to cover one hundred percent of retirement expenses, and in the future it may cover a lot less.

 

Social Security (4)

 

The Social Security Trust Fund will be depleted by 2033, according to the most recent report from the Social Security Trustees, so a reduction in future benefits is likely unless lawmakers take preventative action. To enjoy a fully funded retirement, supplemental income sources are typically necessary.

Here are some of the best alternatives.

Your Private Reserves

The best way to supplement your Social Security income is by having your own retirement savings. If you have ever worked for a large company, you probably had access to a 401(k), 403(b), or 457 plan. If you were self-employed, you may have made contributions to an IRA or a solo 401(k). Regardless of the circumstances, it is typically possible to accumulate a nest egg over time that exceeds the amount of Social Security benefits you will receive. If you are still many years away from retirement, maximize your contributions to tax-advantaged plans so you won’t have to rely on Social Security.

 

Employer Pension

The majority of companies have abandoned traditional pension plans in favor of 401(k) and similar plans over the past few decades. However, if you started your career many years ago or if you work for an old-line company that still offers a pension, you may be eligible for lifetime payments after retirement. It is more likely that you will have access to a traditional pension if you work for a police department, fire department, or other public service organization, such as the government. These pensions can be quite lucrative at times. For instance, if you served in the military for 20 years, you may be eligible for a pension worth up to 2.5% of your highest 36 months of basic pay.

 

Rental Income

Rental income is one of the most popular passive income sources used to supplement Social Security payments. There are numerous opportunities for generating rental income. Perhaps the simplest option is to rent out a room in your home that you no longer use or need. Other alternatives include purchasing a short-term rental unit in a resort area or a long-term rental unit in a region with a worker housing shortage.

 

Side Gig

Side jobs are commonly viewed as a way for workers to supplement their incomes, but they can also serve as a supplement to Social Security for retirees. However, side jobs do not have to be arduous. When you retire, you can use the skills and abilities you acquired during your career to create a profitable endeavor. For example, teaching classes in-person or online is one way to earn money by discussing a subject you enjoy. As an artist, interior designer, or woodworker, you may also be able to turn your skills into something marketable. Find out what you’re most passionate about and determine if there’s a market for it. Many people are likely eager to learn what you have to teach.

 

Downsizing

However, it is possible to generate retirement income through downsizing. Imagine that you live alone in a 3,000-square-foot home. By selling this home and moving into a condo or smaller home of 800 square feet or less, you will likely pocket hundreds of thousands of dollars. With careful investment, this can provide a substantial boost to your monthly retirement income.

 

Annuity

An annuity is, by definition, a retirement income supplement. To “annuitize” an investment means to transform it from a pool of capital into a lifetime income stream. If you pass away prematurely, the insurance company will retain the remaining payments. However, if you outlive your expected lifespan, the insurance company will continue to pay you for the remainder of your life. Thus, you can never outlive your income, making an annuity a good option for those seeking to supplement Social Security with lifetime payments.

 

Relocating

Relocating will not generate additional income, but it can have a similar impact. By relocating to the ideal location, you can permanently reduce all of your expenses, including housing, utilities, food, entertainment, and transportation. The amount you save is effectively an additional source of income, as you now get to keep the money you would have otherwise spent every month. For some relocating retirees, this can amount to a monthly “raise” of thousands of dollars.

 

Social Security Benefits

 

Spousal Social Security

If you do not qualify for Social Security or if your benefit is low, you may be able to increase it by filing for spousal benefits. Upon marriage, you are entitled to a benefit equal to 50 percent of your spouse’s payout if it exceeds what you are eligible for on your own. If you were initially married for at least 10 years, this benefit applies even if you are now divorced.

 

Royalties

If you work in the entertainment or performing arts, among other fields, you may be able to set up a stream of royalties for your retirement. Royalties are recurring payments for the use of your property or body of work. For instance, if you act in a film, you may continue to receive compensation whenever that film is broadcast on television or streamed online. You may receive a royalty payment for every book sold if you publish a book. If you are in the arts and entertainment industry, royalties can be a useful supplement to your Social Security payments, though they are not always predictable.

ALSO READ:

Three Social Security Changes You Probably Didn’t Know

Beneficiaries of Social Security, SNAP, Medicaid, and WIC Could Receive $30 or More Off Internet Access

Update on the Stimulus Check: Residents of 43 U.S. States Are Eligible for Additional Funds.

Reverse Mortgage

Reverse mortgages aren’t for everyone, but for some retirees, they’re an excellent way to generate retirement income. In essence, a reverse mortgage is a way to access the equity in your home as a lump sum or a series of monthly payments. The money you borrow is secured by a mortgage on your home, which must be repaid in full with the remaining equity in your home after your death. Reverse mortgages have disadvantages, including their cost, but for some seniors over 62 — the minimum age to qualify — they can be a good supplement to Social Security.

Leave A Reply

Your email address will not be published.