While placing money in a 401(k) or IRA dominate discussions on retirement planning, they are not your only options when preparing for your golden years. In fact, many financial experts recommend taking other retirement preparation approaches to maximize your savings opportunities.
Not only will it allow you to save more during your pre-retiree years, but it will also give you additional income sources in case of emergencies.
Unusual Ways to Earn Money for Retirement
Ideally, your retirement years are a time to focus wholly on yourself— take that dream vacation, focus full-time on that side gig you’re working on, and immerse yourself in causes you advocate for that give you fulfillment.
Because there’s so much you can do during your retirement years, you can never have too much money to finance this time. Unfortunately, your earning power tends to diminish as fewer job opportunities become available to you. As you get older, you may also have to start dealing with higher medical bills.
Having a significant retirement fund will help you transition more smoothly from your working years to retirement. To reach your goal faster, it’s a good idea to diversify your source of funds.
Here are some great options below:
Earn from your hobby
Monetize what you do during your free time. Do you love baking cookies? Got an exceptional talent for landscaping, or do you have an incredible connection with pets? Perhaps you have a green thumb for flowers, vegetables, and plants.
There are so many ways to monetize your skills aside from going full-time with them. Start by spreading the word to your family and friends. Go online, create your own e-commerce site or blog to sell your products and services.
Sell off some assets
As you get closer to retirement, some of your belongings will slowly lose their use for you. This is the perfect time to evaluate your material possessions and start downsizing. Consider selling some of your stuff and turn them from clutter to cash!
Resell items online
E-commerce and reselling have become one of the most profitable industries today. Get in on the action with some capital and an internet connection. One way to do this is to shop for deeply discounted local items and sell them on Amazon or eBay. While this can take a lot of time and effort, the payoff is often worth it. If you have any rare or limited edition collectibles, you can also sell them online.
Want to get deeper into the industry? Look for in-demand items around your area, and import these to resell at a mark-up.
Take out a reverse mortgage
Reverse mortgages give homeowners who are 62 years old and older the chance to earn regularly from the equity of their home. The loan balance becomes due once the borrower leaves or passes away. If this is something you’re interested in, make sure you consult a financial expert first to learn the fine print on the contract.
Monetize your home’s exterior
If your home has an expansive façade and is located somewhere that a lot of people can see, consider renting out its side as a billboard or even renting out a yard sign. It’s one of the most unconventional ways to save up money for retirement. But if you have space for it in a high-traffic area, it can be your ticket to bigger savings.
Sure, setting up an advertisement will cost you, but you’ll get your money back quickly as soon as your business takes off. Just make sure to check with your insurance company and municipality before you get started. You don’t want to get in trouble with your project.
Rent out your extra space
Got a spare room or seldom-used vacation home? Monetize them by renting them out. It will surely add a significant sum to your monthly income, especially if you give the rental space a makeover to up its value. If you’re not comfortable with renting out your property to strangers, don’t. Ask your friends and relatives if they’re interested.
You can also list your property on third-party renting sites such as Airbnb or VRBO. Many other homeowners have seen great success with this set-up, whether it’s renting out your place for the weekend or doing an extended lease.
(See Related: Retirement Advice: How to Boost Your Retirement Savings)
Buy rental properties
Don’t have a spare room or property to rent out? Purchase some before you retire. Real estate investments are excellent retirement plan supplements because they are typically stable and predictable, but be careful. Make sure you land properties that are guaranteed to attract tenants to ensure a consistent income stream.
Downsize your place
Every dollar you don’t spend is a part of your income or retirement plan, so cut costs wherever you can. One way to do this is by downsizing your home. Move to a less expensive location or a smaller, low-maintenance place. This will help you save money on housing payments, utilities, property taxes, and other expenses.
Top Retirement Mistakes to Avoid
Once you’ve got all these income streams going, don’t jeopardize them by making these common retirement-savings mistakes:
Starting to save too late
Don’t underestimate the value of compound interest. Saving for retirement as early as you can will allow your money to earn interest and work for you.
(See Related: Why You Should Start Saving Money)
Here is a hypothetical example of compound interest at it’s best:
If you start with $1,000 and invest $200 every month at a compound annual interest rate of 10%, you would have almost $160,000 at the end of 20 years. However, if you start with that same $1,000, invest the same $200 every month, and earn the same 10% annual interest, you would have approximately $1,300,000 at the end of 40 years or approximately $3,600,000 at the end of 50 years. So in this case, the earlier you start, the better. Get your kids or grandkids to start saving today.
Not taking advantage of the employer match
If you’re a regular employee, the employer match for some retirement funds can add significantly to your savings.
Using a similar example as above, let’s say you are 27 years old and you make $60,000 annually. If you start with $1,000 in a 401(k) and you put 4% of your pre-tax income in that account and your employer does a company match of 4%, at the end of 40 years you would have approximately $2,200,000 in retirement savings.
Compared to only saving for 40 years without a company match, you get a significant boost in total retirement savings by taking advantage of employer contributions to your retirement account. If your employer gives you a company match on retirement savings, take advantage of it. Talk to your company retirement specialist or a licensed financial professional to find out more about this.
Taking on more debts before retirement
No one wants to spend their retirement paying off debt. To prevent that kind of future, start paying off your debts as early as you can. Create a budget so you can keep tabs of your spending. This will serve you well during retirement when you have to keep a closer watch on your finances.
Your Dream Retirement is Within Your Hands
Retiring is inevitable, and what you do today will have a significant impact on that future. If you’re lucky enough to start ASAP, make the most of that time to set aside as much as you can pre-retirement. Got started too late? Don’t worry, there are still many ways you can catch up so you can live the life you’ve dreamed of during your retirement years.
Tycoono, LLC and its affiliates do not provide financial, tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, financial, tax, legal or accounting advice. You should consult your own financial, tax, legal and accounting advisors before engaging in any transaction. Please refer to our disclaimer for more information.
