Planning for a financially secure retirement often requires a bit of creativity. The average American retiree aged 65 or older spends approximately $4,818 a month, and relying solely on traditional investments, like 401(k)s or pensions, might not be enough.
That’s why it’s important for many retirees to look beyond traditional investments and explore additional retirement income streams.
Review this list of 10 non-traditional retirement income streams and consider if any of them could help you achieve your financial goals.
1. Part-Time Work, Consulting or Freelancing
Retirement doesn’t always mean the end of work. Many retirees find it very rewarding—financially, socially and mentally—to continue working in some capacity. Whether it’s a part-time job or a side gig that allows you to monetize your skills and expertise, working is an excellent way to provide an extra source of retirement income.
Related: How Phased Retirement Works and Remote Work and Retirees
2. Rental Income
Do you have a spare bedroom or accessory dwelling unit that you could rent out to a tenant? If you find the right roommate, this scenario could not only supplement your retirement income, but it could also provide social connections and help reduce your housing costs. Another option is to consider short-term rental options like VRBO and AirBnb.
3. Annuities
Annuities are insurance products designed to help you accumulate money for retirement, protect what you’ve saved, or turn your retirement savings into an income stream. You agree to fund the annuity, either with a lump sum of money or through regular payments. These contributions generally earn a tax-deferred rate of return as they accumulate.
Related: Averse to Risk? Annuities May be the Answer
4. Reverse Mortgage
Are you at least 62 years old and hold significant equity in your home? A reverse mortgage could be an option for you. A reverse mortgage provides a way for you to live in your home and convert your equity into cash. When you take out a reverse mortgage loan, you receive a loan against your home, and a lender pays you in exchange for equity in it. As your loan balance increases, you receive more money, but your equity in your home decreases.
Related: 4 Ways to Leverage Home Equity in Retirement
5. Royalties
If you have intellectual property that can be purchased like patents, music or books, royalties from these intellectual assets could provide a source of income in retirement.
6. Life Insurance Policy Loans
If you have permanent life insurance, you may be able to borrow money against the cash value of your policy. This provides you with tax-free income that you can use during retirement, with the flexibility to repay the loan or let it be deducted from the death benefit.
7. Crowdfunding Investments
Crowdfunding platforms give you the opportunity to invest in projects or business ventures, which may provide payouts in the form of dividends on the shares you own or interest on the loan you provided.
8. Peer-to-Peer Lending
Also known as social lending or crowd lending, peer-to-peer lending allows individuals to lend money to other people or businesses via online platforms. As a lender, you could enjoy returns that are better than rates you might receive at a bank or credit union.
9. Social Media
A rapidly growing group of “granfluencers” are creating content on social media platforms and earning extra income in the process. If you have a passion for a specific niche, like style, travel, cooking, or gardening, you could turn that interest into engaging content and start sharing it online. Granfluencers earn money through brand partnerships, creator funds, affiliate marketing, or selling their own products or services online.
10. Social Security Benefits
Social Security is part of a government-run social welfare and insurance program. You can receive 100% of your Social Security benefits once you reach your full retirement age (FRA) of 67. However, if you delay your benefits, you’ll receive up to an 8% benefit increase for each year they delay until age 70. This could result in up to a 24% higher monthly benefit. Delaying Social Security benefits can be a smart strategy for retirees who can afford to wait and expect to live a long life, as it results in higher monthly payouts later on.
Related: Does Passive Income Affect Social Security Benefits?
Talk to a Financial Professional About Non-Traditional Income Streams
Are you ready to create a retirement income plan that considers both traditional and non-traditional financial streams? Through our wealth management solutions, our team can assess whether you’re on track to reach your goals and then help build a customized strategy to improve upon your financial security.
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Bankers Life is here to help customers with their financial and insurance needs so please visit us at BankersLife.com to learn more.
