4 Proven Ways To Earn Extra Money While Waiting For Retirement
Dear Rich Lifer,
Almost every retirement expert agrees: you should hardly ever file for your Social Security at age 62.
This is especially true if you’re single or have historically been the higher earner in your marriage. By collecting your retirement benefit at 62, your monthly payout will be 25% to 30% less than what you would get by waiting until your full retirement age.
In addition to receiving a smaller payout, if you take Social Security early and die before your spouse, his or her survivors benefit will be lower, too.
For most baby boomers, full retirement age is 66 or 67, depending on the year you were born. The better plan is to wait until at least your full retirement age, or if you can, until age 70.
Every year you delay taking benefits between your normal retirement age and 70, Social Security adds a guaranteed 8% to your eventual monthly payout.
Today, you’re lucky if you find a bank account that pays 2% annually. This is one of the best risk-free ways to grow your income late in retirement.
What If You Die Young?
According to the CDC’s most recent figures, the average American who makes it to age 65 can expect to live another 19 years.
If your Social Security benefit at 70 is more than 75 percent higher than your benefit at 62, you’re going to have a lot more money to take care of yourself as you get older.
By now, it should be clear that waiting to take your retirement benefit is a smart choice.
But, what if you can’t afford to wait until 70 – or even full retirement age?
How To Bridge The Gap
Experts may tell you to wait to take Social Security benefits, but they won’t offer any advice on how to bridge the income gap between the day you retire and your full retirement age.
But we’re not going to leave you hanging like that!
Today we cover 4 proven ways retirees can make some extra money on the side while waiting for full retirement age.
- Rent Your Property
If you have an unused parking space, whether you live in a house or apartment building, you can rent it out using a platform like Spacer.com and make extra money.
Airbnb is another great way to make money. You can rent out a single room in your house or the whole thing. Plus, if you have friends who are going on vacation, you might be able to house sit or pet sit and rent your house at the same time — potentially making money on both ends.
Another thing you can rent is your car. Maybe you don’t drive every day. Services like Getaround or Turo make it easy and safe to rent your car to others. If you have power tools or sports equipment lying around, platforms like Loanables or RentNotBuy are also great ways to earn some cash without much effort.
2. Get Paid For Doing Odd Jobs
Have you heard of the app TaskRabbit? It’s popular among millennials and broke college students, but anyone who wants to earn extra money can use it.
The “tasks” posted in the app range from building Ikea furniture, to hanging pictures, to picking up groceries and beyond. If you find yourself with a few hours to kill, open the TaskRabbit app and see what odd jobs are available near you.
Alternatively, you can make a name for yourself the old school way by dropping flyers advertising your skills. You might be surprised how many of your neighbors could use your help.
Which leads us to our next income strategy…
3. Become A Consultant
Don’t think you have to work 40 hour weeks if you don’t want to. The fact is, you probably have some marketable skills that others are willing to pay you for – even if it’s just part time.
Your golden years are the perfect time to pass on what you know to the next generation. Depending on your field of expertise, consultants usually can charge a pretty penny for their services.
And don’t limit yourself to consulting in the traditional sense.
Maybe you have a green thumb and you have some friends or neighbors willing to pay you for help with their garden.
Or maybe you worked as a mechanic or car salesman before retiring and can offer your knowledge and negotiating skills to students looking to buy their first used car.
The sky’s the limit in terms of building a consulting practice that suits your skills, schedule, and income goals.
4. Tap Your Home Equity
Any homeowner over the age of 62 who owns their home outright, or has significant equity in their home, can take advantage of a reverse mortgage.
Reverse mortgages can be a great way to bridge the gap until reaching your full retirement age, but they do come at a cost.
It’s important to know what you’re signing up for. For instance, reverse mortgages that pay you in monthly or annual installments come with fees.
Expect to pay an origination fee of around 2% of the home’s value, an upfront mortgage insurance premium, and traditional closing costs.
Plus, during the life of the loan, you’ll also pay an annual mortgage insurance premium and a monthly servicing charge.
It’s also worth mentioning that your reverse mortgage loan can come due for any of the following reasons:
- If you sell the house
- If you pass away
- If you can no longer consider the home a primary residence. If, for example, you have to spend more than 12 months in a nursing home, your house will no longer be considered your primary residence
- If you don’t pay your property taxes, don’t have adequate homeowners’ insurance, or if you don’t maintain your home properly
The bottom line is a reverse mortgage can be a great option for you if you’re struggling to close the gap until full retirement age, but it requires some serious forethought.
If there’s any chance you can’t keep up with maintenance of your house, or you might need long-term, off-site care, or your children will inherit the house when you pass away, this might not be the best option.
But if you can maintain your home for the next 10-15 years and you’re in good health, a reverse mortgage can significantly boost your income.
While it might seem tough at first to find ways to bridge the financial gap between full retirement age, a little research and creativity could land you a second part time career you enjoy even more than your first.
To a richer life,
The Rich Life Roadmap Team