To make sure you have enough money in retirement, be sure to consider all of the places your money could come from.
If you’re thinking ahead to how you’ll support yourself in retirement, chances are good Social Security benefits and investment income are on your radar. You’ll likely need money from the Social Security Administration as well as distributions from a 401(k), IRA, or other retirement accounts to cover the basics.
But there may also be other sources of funds as well. Here are three possible additional income sources you might not have considered yet, but you may want to rely on in your later years.
1. Money from a paycheck
Most people don’t picture themselves working in retirement. But if you want to keep your mind busy or you enjoy the stability and social connections a job provides, bringing in a paycheck as a senior may be a choice you want to make. Or if you simply do not have enough savings or Social Security to support yourself, working during retirement may not be a choice — it may be a necessity.
You can work as much as you want as a senior without Social Security benefits being affected once you have reached your designated full retirement age. If you haven’t hit FRA, working and earning too much could cause the temporary forfeiture of some or all of your retirement benefits. This may not be a bad thing, though, as your retirement check amount would be recalculated once you hit FRA, and would increase if you had some money withheld due to earning too much.
2. Life insurance policies
If you have permanent or whole life insurance, it can be a source of income as a retiree.
Depending on your policy, you should be able to borrow against it or cash it in for the surrender value (although there are often fees associated with that). Getting money from life insurance could make sense if you don’t have surviving dependents who will be relying on the death benefit to help them afford the necessities.
Be aware, though, that investing in whole life insurance isn’t always the best investment — far from it. If you are young and deciding between a term and whole life policy, opting for the cheaper term life coverage and investing the amount you save on premiums will usually leave you better off over the long term.
If you already have a whole life policy you’ve been paying on for years, though, this advice may have come too late — but the silver lining is that you have this policy as another potential income source in your later years.
3. Social Security income other than retirement benefits
Finally, you should consider whether you might be eligible for other kinds of Social Security benefits as a source of retirement income, beyond just the retirement benefits you’re probably expecting.
If you have limited financial resources and a pretty low income, for example, you may be eligible for Supplemental Security Income (SSI) if you are 65 or over, or you are disabled or blind. You may also be eligible for survivor benefits if your spouse passed away, or for spousal benefits that could be higher than your retirement benefits if your spouse earned more than you did.
By considering all of these income sources, hopefully you can find enough money to live a comfortable life as a retiree even once you’ve given up your standard job and the paycheck that comes along with it.
