How to Pay for Retirement

There are many ways to pay for retirement.

The old adage of relying on a single source of income doesn't apply to retirement. The fact is that in paying for retirement, most seniors will count on multiple streams of income, and methods, to pay for expenses, while they may once have relied on a single salary source to live on. Americans use a wide range of methods to pay for retirement. Here are a few ways you can go about preparing, or paying, for retirement.

Instructions

1. Invest in a 401(k) or IRA plan, and then use it to pay for retirement. This is a method that requires some forethought, but it can prove to cover a substantial part of your living expenses, if you save diligently. U.S. News notes that only 21 percent of current American retirees use 401(k) or IRA's as a significant source of income, and they credit it to the fact that most Americans don't save as much as they should.

2. Tap into your home's equity. Many senior citizens heading into retirement tap into the equity built up in their homes by selling their house and moving somewhere more affordable or taking out a reverse mortgage. U.S. News estimated that 26 percent of Americans are planning on using home equity as a significant portion of their retirement income, while 22 percent of retirees already use their home's equity to supplement their income.

3. Rent out a room or two in your home. In many cases it is not necessary to refinance or completely sell all together. You can also rent out a room to family, students, or other retirees looking for a place to stay. Be sure to provide a formal tenancy agreement to your tenant, when entering into a landlord and tenant relationship.

4. Many retirees find it hard to leave the workforce completely and seek part-time employment to occupy their time ane earn supplemental income. Take advantage of your already preconditioned work ethic by taking on a part-time job that requires less hours and less effort than you are accustomed to working. This is a convenient way of covering minor expenses, while you buy more time for your savings to accrue interest.

References

• U.S. News;Ten ways to pay for retirement