What’s your biggest retirement fear? If it’s running out of income in retirement, you’re not alone. According to a recent study from Transamerica, the number one fear for Baby Boomers is outliving their assets and running out of income.1 Boomers aren’t alone. Generation X is also projected to be far behind on their retirement savings, with an average balance of only $64,000.2
These numbers may explain why 52% of workers expect to work beyond age 65. Among Boomers, that figure jumps to 68% who expect to or are already working past age 65.3
Continuing your career into your late 60s or even early 70s is one way to accumulate more savings and protect your retirement income. However, it’s not the only option. Depending on your goals and needs, you may just need slightly more income to reach your objectives.
Below are four creative ways to stabilize your income in retirement:
Participate in the sharing economy.
The sharing economy is based on individuals sharing their own goods and services with others. Uber is an example. Airbnb is another. There are a growing list of websites and apps that allow you to earn money simply by sharing your own goods, such as your car or extra space in your house.
Granted, you may not want to drive an Uber around town. However, that’s not the only option. If you’re an empty nester with extra space, you could rent bedrooms to guests. There are some services that let you rent out storage space. There are even services for renting out tools or other useful goods.
The best thing about the sharing economy is that you can participate as much or as little as you like. You set your terms, prices and schedule, so it doesn’t come with the commitment of actual employment. Be creative and research opportunities to generate extra income in a way that fits your lifestyle.
Be a coach or consultant.
After a career that spanned decades, your most valuable asset may be your experience and knowledge. Why not use that knowledge to generate income after you retire?
You could use your industry contacts to become a consultant. Or you could coach or mentor younger individuals in your industry who want your advice. There are plenty of websites that offer a platform to do this.
Another option is to talk to your former employer about consulting opportunities. They may want to retain your experience and knowledge and may be willing to do so in a flexible way. Don’t assume that retirement means completely walking away from your career, contacts and experience.
Tap into your life insurance.
Do you have life insurance that has a significant amount of cash value? Did you know you can tap into that cash value for supplemental retirement income?
You can take withdrawals from your life insurance policy. If you’re withdrawing your own premiums, the distributions are tax-free. If you withdraw earnings, the distributions are taxable.
You also may be able to take tax-free loans from the policy, assuming you have enough cash value after the loan to support the death benefit. You repay the loan over time. If you pass away with a remaining balance, that amount is deducted from the death benefit. A financial professional can help you determine if your life insurance makes a good source of supplemental income.
Guarantee your income.
Your concern may not be the amount of your income but rather the certainty of it. You may have to rely on withdrawals from your savings to provide retirement income. Market volatility could make those withdrawals unpredictable. There’s also the risk that you could run out of income if you have a long retirement.
One way to minimize those risks is to guarantee your income using a tool like an annuity. You can take up to a certain withdrawal amount every year. Assuming you stay within the policy’s withdrawal limits, your income is guaranteed for life, regardless of how long you live or how the market performs.
We can help you develop your retirement income strategy. It starts with an analysis of where you are today and where you want to go. Contact us today at Northern Plains Insurance & Financial. Let’s connect soon and start the conversation.
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