With longer lifespans and a growing desire to age in place, today’s seniors face a host of financial challenges.
According to a 2015 Wells Fargo survey, Americans age 60 or older have saved a median of $50,000 for retirement. However, there are ways to boost your retirement withdrawals or Social Security checks. Here are three ways that seniors can supplement a fixed income without taking on new work.
Take advantage of your life insurance policy
If you’ve paid life insurance premiums for decades, it might be time to make your policy work for you. Whether you need quick cash, or don’t want to keep paying premiums, life insurance policies offer a number of ways to cash out:
- Surrender. The most straightforward option is to surrender (i.e., sell) your life insurance policy back to the insurer for a lump-sum payment that’s less than the full benefit.
- Withdraw. Some policies also let you withdraw from the policy – taking less money than you’d get with a surrender, but still remaining eligible for the death benefit. However, doing so may reduce the policy’s payout.
- Life settlement. Another option is to bypass your insurer completely, and sell your life insurance policy to a third party. You could potentially get more money than by surrendering your policy, so it’s always worth calculating the payout of life settlements.
Consider a reverse mortgage
If you own your home, you can use a reverse mortgage to get cash in exchange for equity on your house. That is, you’ll get monthly payments from a lender, and defer repayment until you’re no longer a resident. Reverse mortgages were designed specifically for seniors to supplement their income – you must be 62 or older to get one. If you’re house-rich and cash-poor, this is a way to equalize your wealth.
Tap into the sharing economy
Finally, the burst of sharing economy startups offers a way to put your assets to use. One option is to rent a spare room on Airbnb – you’ll have the option to charge a cleaning fee, so you can outsource cleaning up after guests if you can’t or don’t want to do it yourself. Some Airbnb hosts never see their guests, but simply put the keys in a lockbox for pickup. Others, however, use Airbnb as a chance to meet new people from around the world.
If you have a car, you can rent it out by the hour with peer-to-peer car sharing with companies like Getaround or Turo. The car will still be there when you need it, but you’ll put its idle time to good use. This is an especially attractive option if you don’t use your car often. You can even rent out your garage or parking spot.
Living on a fixed income can be difficult, and picking up extra work isn’t an option for all seniors. Cashing out a life insurance policy, getting a reverse mortgage and renting out your unused assets can provide cash without getting a new job.
Anisha Sekar writes for Ovid, a company dedicated to helping seniors get the most out of selling their life insurance policies.
Source: Sunrise Senior Living