No one likes to think about it, but it does happen, especially in our current economic climate.  People reach retirement age and don’t have quite enough saved.  As the Huffington Post points out,

The average person in the United States will spend 21 years in retirement, but will deplete their savings after just 14 years, leaving a shortfall of seven years, according to an HSBC report released today [2/20/2013].

Of course, most of us would like to live a long life, but finding financial support when your retirement is insufficient can be difficult.  If you are nearing retirement, here are some strategies you may want to consider.

Continue Working

If you are physically able, why not continue working?  The longer you work, the more you’re able to put aside for retirement and the fewer years you will need that retirement money to support you.  Plus, if you have a job with benefits, the health care benefits will likely also help you save money.  I, personally, think that the current idea of ‘retirement’ is actually a new phenomenon.

If you aren’t able or willing to continue at your current job, maybe there is a less demanding option.  Plenty of people now work from home doing jobs they find on the Internet.  You could freelance, especially if you have in demand skills such as accounting.  Likewise, you could consider tutoring.  One woman worked as a physical therapist and was able to work only one to two days a week.  These types of part-time jobs help you bring in cash while allowing you to enjoy a flexible schedule.

Evaluate Your Assets

Your Home During Retirement

If you have a paid off home, it may be one of your greatest assets.  You could sell your home  and use the money to help pad your retirement.   Move into a smaller place to save on utilities and taxes.

If you prefer to keep your home, you could look into a reverse mortgage to pump more money into your  retirement account.  Just make sure you understand all the ins and outs of such an arrangement before agreeing.

Finally, another option may be to rent a portion of your home out or to get a roommate.  Depending on where you live and the space you are renting, you could earn a couple hundred to as much as a thousand dollars a month while still being able to stay in your home.

Creating A Stream of Income with Your Retirement Account

Single Premium Immediate Annuities are becoming more and more popular (as they should be).  A SPIA without any riders is the easiest of all annuities to understand. You hand an insurance company a lump sum and they provide you with a stream of equal payments in return for the remainder of your life.  If you die early the insurance company wins, and if you live to the ripe age of 95 you’ve won. Most people don’t buy plain vanilla SPIAs, as you can add a pelethara of riders:

  • Death benefit on there for your heirs,
  • increase the payments by inflation,
  • A guaranteed payment for a certain amount of years so if you die your heirs get the rest of the payments
  • Etc.

This stream of income may take risk off the table for you while providing stability.  At the same time it could also detrimentally pull you out of the market inhibiting growth on your assets.

Evaluate Your Expenses

I am not a huge fan of frugality blogs but am pulled into sites like Mr. Money Mustache who, in my opinion, pulls away from frugality for frugality’s sake and turns it into financial independence.  Due to his low low expenses he has retired before he has turned 35! If he has figured out a way to live (quite happily it seems) for the next 60 or so years based on the low expenses, a 65 or 70 year old should be able to as well.  While a 65 year old’s and a 35 year old’s medical costs are different,  that should be partially offset in terms of the 30+ years of living expenses.

Retiring without enough money is a scary prospect.  How well you will be able to increase your retirement depends on your age and health as well as your willingness to continue working or leverage your home as additional retirement income.  I probably think about this topic more than people my age as I work in this world and have seen the ridiculousness of some people‘s expectations.