Traditional ways of preparing for retirement include contributing to a 401(k) plan, relying on a pension from your employer, collecting social security and using your own retirement savings you’ve contributed to over the years.
While these ways can provide a financially secure, stable retirement, they’re not the only ways to be prepared. Oftentimes, people rely on more unique ways to fund their retirement accounts.
Here are 8 additional ways to save for retirement:
Downsize your home. Nowadays, many people are relying on selling their home as a way to prepare for retirement. This only will work if your mortgage is paid off or almost paid off, though. If you owe $200,000 on your home and your home is only worth $225,000, downsizing will not work for you. Hopefully, you live in a home that you’ve worked hard to pay off over the years. When retired, you can sell it and pay cash for a smaller home or move to an area with a lower cost of living.
Lower your bills now. Write down all of your monthly expenses and start trimming the fat where you can. This isn’t going to be fun, but living off less does two things that can benefit you in retirement. First, it allows you to put more money towards retirement now and second, it reduces the amount you need to live off of for the rest of your life. By cutting cable, for example, you’re saving up to $100 extra per month and also reducing the need for this $100 per month in the future.
Live off of income from rental properties. Rental properties are a great way to help fund your retirement. Your renter pays the mortgage and in the end, you own a piece of property. You can continue renting it out for a consistent monthly cash flow or sell the property and use the earnings to put towards retirement.
Keep working part-time. Maybe you don’t want to continue working at your current place of employment, but you could pick up a part-time job or side hustle in retirement. You can make money online by freelancing or doing consulting work, you can start a website or small business, you can work at your favorite retail store or you can be the neighborhood dog-walker. Just because you’re retired doesn’t mean you can’t earn a little extra cash on the side.
Play catch-up. If you’re age 50 or older, you can contribute more to your retirement accounts than those that are younger than 50. While this won’t completely make up for lost time, it can substantially help. Those aged 50 and older can contribute up to $24,000 to their 401(k) in 2015 and up to $6,500 to their IRAs in 2015.
Delay social security. At age 62, you can receive social security benefits, but for every year (up to age 70) you can delay the payments, you will receive more money in the future. Perhaps work part-time until age 70 to make up the income difference.
Find creative ways to save money. The less money you spend, the less you’ll need in retirement. If you have no debt, consider yourself ahead of the game. Creative ways to save money include using public transportation instead of owning a vehicle, receiving medical care overseas (open heart surgery, for example, is a fraction of the cost in India as opposed to the U.S.), cooking at home instead of dining out and insourcing all of the housework or asking the grandkids to pitch in. In addition to saving, you can sell your unused items for some extra cash whenever possible.
Get a reverse mortgage. A reverse mortgage allows you to take out a loan on the equity built up in your house. You do not have to pay it back as long as you continue living in the home and do not sell it. With a reverse mortgage, the bank or lender makes monthly payments to you. They get their money back once they sell the home after you’ve passed or no longer live in the home.
How do you plan on saving for retirement? Are you going the traditional route or planning on funding your retirement by some other means? Share in the comments below!