How to Make Extra Money in Retirement For many Americans, retirement seems like a world away.
The dreams of relaxing on the beach, spending more time with family, and the chance to reignite old passions . . . But what does it take to have a comfortable retirement? Do you have enough money saved? For some, the benefits of social security and retirement accounts are enough to make ends meet, but there are more ways to help cushion your retirement. Below are a few surprising ways to enhance your retirement lifestyles if you’ve already exhausted traditional retirement saving options.
Equity in your home
The largest stream of equity for most retirees comes from their home. While this is typically an asset worth hundreds of thousands of dollars, there is one great downfall. Unfortunately, your house is not liquid and available to pay for things. Through the development of reverse mortgages and financial products, homeowners can turn the equity in their home into cash while remaining in their home.
This may sound great at first glance, but there are many downfalls to reverse mortgages as well. Aside from the rising interest and fees, these types of mortgages also deplete your assets by turning equity into cash for consumption. Before deciding if a reverse mortgage could benefit you, consult your financial professional to understand the risks and benefits.
Many people are familiar with popular, publicly-traded, Real Estate Investment Trusts (REITs), but the lesser-known investment opportunity lies within private REITs. In the past, the need for large initial investments held smaller investors back from investing in private REITs; however, advances in technology and crowdsourcing have lowered the bar, making private REITs more affordable for individual investors. Many private REITs can yield excellent results, but not without a cost. High fees and additional expenses are justified through their high performance; however, private REITs are generally less liquid than their larger, publicly-traded counterparts. This means once you’re invested, it can take some time to get your money back.
Silent Partnership in a Small Business
Investing in a small business is an exciting new venture for many people. If the business is successful, the profits will eventually produce regular distributions on your investments. And if all goes according to plan, this can prove to be a very fruitful investment. However, not all small businesses are booming. More than 20% of small businesses close within their first year, and 50% more will have to close their doors by year 5. If the company manages to remain profitable, it can still take years before a return is seen on your investment. When investing in a small business, be sure to trust the company leaders, understand their business model, and only invest funds you can afford to risk.
While most Americans are entitled to social security, and these benefits vary based on multiple factors such as age and total contributions, the average social security payout is only $18,000 per year. And while many retirees have alternate retirement income streams such as pensions and individual retirement accounts, that still may not be enough. If you are looking for an additional stream of retirement income, contact one of our financial professionals and see if any of these alternate investment opportunities are in your best interest.