4 Things Boomers Should Do If They’re Worried About Social Security Funds Running Out
Written by
Sean Bryant
Edited by
Rebekah Evans
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Retirement is an exciting time in many people’s lives. You spent most of your working years saving enough money to live comfortably and do the things you enjoy. Unfortunately, things can happen that make you question whether you’ve saved enough. Over the past several years, inflation has caused nearly everything in our lives to cost more. This has had a significant impact on retirees with a fixed income.
If you’re already collecting social security benefits but worried that you now might not have enough money in your retirement accounts, here are a few things you can do.
Also see how much the U.S. spends on Social Security every year.
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Invest Conservatively
Your investments should become more conservative as you progress through life. While you might have had your entire portfolio in stocks during your 20s, you should be taking on much less risk as you approach and enter retirement.
“Focus on conservative investments like dividend-paying stocks, bonds or money market funds to ensure stable income with minimal risk,” said Yuri Nosenko, wealth advisor at Imperial Fund Asset Management. “It’s also important to keep a portion of funds in liquid instruments, such as money market accounts, to maintain easy access to cash for emergencies.”
Create Additional Income Streams
While you might have given up your day job, most people decide to keep working during retirement. They choose to do things based on happiness and not because of money. If you decide you don’t want to work during retirement but are concerned about your finances, it might be a good idea to find a fun job to help bring in some extra monthly income.
“If health allows, finding flexible work related to their expertise or hobbies — such as consulting, tutoring or freelancing — can provide extra income while keeping them active and engaged,” Nosenko said.
Consider Using a Reverse Mortgage
If you’ve paid off your home, reverse mortgages can be a great way to add another income stream for retirement. Unlike a traditional mortgage, where you make payments to your lender, building up equity, your lender will pay you in exchange for your home’s equity.
While this can help create a steady income stream, it won’t be for everyone. You’ll still be required to pay property taxes, insurance and maintenance. Plus, you’ll be reducing the available equity to pass down to your heirs if you plan to do this.
“For baby boomers collecting Social Security and worried about outliving their savings who own their homes, a reverse mortgage can be a powerful solution to provide financial flexibility,” said James Mittleman, senior vice president of retail sales of Finance of America. “It allows older homeowners who meet their loan obligations to tap into their home equity tax free and without required monthly mortgage payments.
“This can help in covering expenses and preserving other retirement assets,” Mittleman added. “With multiple loan payout options like a lump sum, monthly payout or line of credit, it’s a dynamic tool for those with significant untapped equity to enhance cash flow and age in place comfortably.”
Work With a Financial Planner
Many people work with a financial planner as they prepare for retirement. However, once they enter retirement, this relationship can dwindle. But this shouldn’t be the case. Financial planners can be a great resource to have at any stage of your life.
If you’re worried that your finances are getting a little off track, pick up the phone and contact a financial planner. They’ll be able to look at your financial situation and suggest changes to your withdrawal strategy.
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