For new retirees who begin their non-working lives without the advantage of having savings, a new article from U.S. News and World Report offers up six potential steps people in that situation can take in order to enhance their financial standing in their retirement years. Among the included recommendations is the employment of the home as a financial asset, including the use of a reverse mortgage.
Those starting their retirement without any savings would do well to remember a few key pieces of information, according to U.S. News contributor Rachel Hartman.
“Working longer could lead to better finances later; Living expenses can be reduced in creative ways; Hobbies could be used to bring in income; Selling extra items may provide extra cash; Family members may be able to help; and Government programs could provide the assistance you need,” Hartman says.
Beyond those ideas, the six potential steps that a retiree with no savings can potentially take to bolster their financial security are as follows.
Delay Social Security benefits
Delaying Social Security benefit payments until an age beyond 65 could help to bolster future benefits, particularly for seniors who find themselves able to work beyond the typical retirement age, and benefits will increase each month a retiree delays taking payments until they reach age 70, Hartman says.
It’s also a step endorsed by some financial professionals.
“For most people, the delay from 67 to age 70 can be the same as if they saved $80,000 to $100,000 additional in those few years,” says Roger Gainer, a retirement income certified professional and president of Gainer Financial & Insurance Services in San Rafael, California.
Examine housing options
For those who primarily own their homes outright and no longer carry mortgage payment obligations, cash on hand can be bolstered by examining whether downsizing into either a smaller house or an apartment is a viable alternative to staying in a larger home than you may need. Downsizing also has the chance to reduce monthly expenses if mortgage payments or utility costs are reduced by moving into a smaller home.
In examining housing options, this is the step in which a reverse mortgage could also come into play.
“There are opportunities to use reverse mortgages to generate significant retirement income [if you want to stay in your home],” Gainer tells U.S. News. Receiving the loan’s proceeds as a lump sum, regular payment or line of credit can have an impact on how regular expenses can be dealt with.
Monetize a hobby
For those who have over the years nurtured certain kind of hobbies that can be transformed into goods or services, this creates another opportunity for income after someone has retired from their full-time job.
“A lot of Americans spend a lifetime specializing in a certain area, sharpening skills in a hobby or passion that they never have gotten paid for,” according to Andrew Piatek, a financial planner specializing in retirement income in Orchard Park, N.Y. With a number of new, online commerce outlets dedicated to serving as a digital forefront, like Etsy or eBay, there’s an opportunity to turn that hobby into money a retiree can use.
Sell extra assets
Whether noticing that items are around the house that a retiree doesn’t use anymore, or even vehicles that may not be as needed as they used to be now that someone isn’t working, selling little-used assets is always a viable option to bring some more money into the household.
When accounting for everything that you both do and do not use, opportunities for some additional cash influx might end up presenting themselves, according to Leslie Tayne, a financial attorney and founder of Tayne Law Group in New York.
“Take inventory of all of your assets, both monetary and physical, to see what they might be worth and how they can help you fund your retirement,” Tayne tells U.S. News.
Consult with family
Talking with trusted advisors, including family, has the potential to open up other solutions to financial problems from the people that know a retiree best. After these kinds of discussions, it’s possible that mutually beneficial arrangements between retirees and family members can be reached, with Hartman offering one hypothetical scenario: a family member might let a retiree stay in their home, “in exchange for helping care for children or assisting in housework.”
“Be realistic about what you can and cannot do, and say no when you know it will impact your finances,” Tayne says.
Read the full article at U.S. News and World Report.