The average baby boomer today has $120,300 in retirement savings, according to Northwestern Mutual. But your savings balance may be a lot lower if you never got an opportunity to fund an IRA or 401(k) while you were working.
It's not unheard of to reach your 60s with no retirement savings. But if you're on the cusp of wrapping up your career, you may be resigned to live on Social Security alone.
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Unfortunately, that could put you in a pretty tough spot, seeing as how the average retired worker today only gets about $1,916 per month in benefits. If you think that's not enough to live on but you also know you've run out of time to build savings, here's what you can do to avoid having to retire on Social Security and nothing else.
1. Downsize and cash in on today's market
Home values today are elevated across the board due to a glaring lack of real estate inventory. That gives you a prime opportunity to cash in on a larger home you may no longer need.
Let's say you own your home mortgage-free and in the course of downsizing, you're able to pocket $120,000. Suddenly, you've got a nest egg that's on par with that of the typical baby boomer. You can then invest that money and tap that balance when you need to supplement your Social Security checks.
Not only might downsizing to a smaller home put a nice sum of cash in your pocket, but the ongoing expenses might be less of a burden. Lower property taxes and maintenance costs could be instrumental in stretching a smaller retirement paycheck.
2. Keep your larger home -- but rent part of it out
You may have your reasons for not being able to downsize or not wanting to. Maybe there aren't smaller homes in your neighborhood and you don't want to give up the community you know and love. Or maybe you're still carrying a mortgage and don't want to be put in a position where you have to borrow for a smaller replacement home, given where mortgage interest rates are today.
In that case, you may have the option to turn your current home into a cash source by renting out a portion of it. That could mean having a tenant take up occupancy in your finished basement or renting out a spot in your driveway or garage if parking is hard to find where you live. There even are websites that make it easy to rent out your swimming pool by the hour.
3. Get a part-time job
There may come a point when you can no longer manage a 40-hour-per-week schedule. That's understandable, especially if your job also happens to be stressful. But rather than retire on Social Security alone, look to work part-time in retirement so you're able to bring in some steady income on top of those benefits.
These days, part-time work doesn't have to mean spending hours at a cash register or giving out food samples at your local warehouse club store. Instead, you could embrace the gig economy and find work you actually enjoy.
Maybe you're passionate about gardening. Approach your local community center and see if you can run an ongoing class that gives you a weekly paycheck and gives them a cut of the profits so that everyone wins. Or if you love animals, become a pet sitter for folks who need coverage when they're going out of town. There are many possibilities, and your schedule may end up being more flexible than expected.
It's not a great thing to retire on only Social Security. But if you play your cards right, you can better your financial picture, even if it's too late to build retirement savings.
