Supplementing Social Security Post Retirement | Financial Buzz

Supplementing Social Security Post Retirement

For an average retiree, income from Social Security could make up only 40 percent of the income needed for a fulfilling life. Retirees having only Social Security to fall back upon have two options- a reduction of living standards or create an extra income from multiple sources. Annuities can be regarded as another source of income. It, however, comes with a number of downsides, like higher fees. Larger amounts of money can also be had if one adopts other money generating sources.

Business and stocks

Many retirement specialists favor the maintenance of a better-allocated investment portfolio consisting of bonds and stocks. When it comes to investing in bonds, fundamental problems come to the fore. These are especially true of bonds which pay super low-interest rates on a historical basis. This is where the bond ladder concept comes in. Following this scheme helps in obtaining the income earned during employment. What's more, the retiree can actually increase his/her income with the rise in rates.

The retiree could also begin, purchase or simply invest in a business. This scheme is now the most popular. Many retirees are now buying a holiday home near the beach or a chalet in the mountainside and rents it out. People with a more hands-on approach also serves bed and breakfast to paying guests. Opting for this activity not only generates money, it also cures another source of pain post-retirement- boredom. Business operations keep a person engaged and active. It is to be kept in mind that operating an own business involves a large amount of risk. The retiree must also be physically capable.

Reverse mortgage

Reverse mortgages make an excellent income source post-retirement. It functions in the opposite manner of a traditional mortgage. The consumer, in such a case, does not require to make monthly payments to the bank. Rather, the bank sends payments to you in lieu of your equity. The reverse mortgage schemes can be availed by homeowners aged 62 or older. They must own sufficient equity to justify the loan. The lender, after the obtainment of a reverse mortgage, makes the payments. Interests start to accumulate on the outstanding balance. There is no requirement to repay reverse mortgage unless the home is sold. Reverse mortgages generally get paid off through a home sale, either during the lifetime of a borrower or after the borrower's death. A number of negatives are linked to reverse mortgages. It can be an excellent source of income sans touching the retirement nest egg.