Every single retirement expert seems to agree on one thing: You should wait until at least your full retirement age (FRA) before taking your Social Security retirement benefits. The reason for this consensus is the fact that taking retirement benefits before reaching that all-important FRA will result in permanently reduced benefits — which could be a serious problem as you get older.
But what do you do if you can’t afford to wait until your FRA? Those same retirement experts may wag their fingers at you for taking early benefits, but are they offering solutions for how to bridge the financial gap until you have reached your FRA?
Thankfully, there are legitimate ways to bring in income while waiting to reach your full retirement age — and none of them require you to pull a Walter White. Here are four options for bringing in money while waiting for that magical moment known as FRA.
Tap your equity with a reverse mortgage
With a reverse mortgage, any homeowner over the age of 62 who owns their home free and clear (or has significant equity in the home) may access the equity in their home, either in a lump sum or in monthly installments, while still living on the property.
If all you know about reverse mortgages comes from the attractive seniors on daytime commercials, you might assume that this is a great option with no downsides. However, reverse mortgages do come at a cost, and it’s important for homeowners to understand what they are agreeing to before they sign on the dotted line.
To start, reverse mortgages, just like their traditional counterparts, come with closing costs. In particular, you can expect to pay an origination fee of approximately 2 percent of the home’s value, an upfront mortgage insurance premium, and traditional closing costs. In addition, during the life of the loan, you can expect to pay an annual mortgage insurance premium and a monthly servicing charge.
You should also remember that your reverse mortgage loan can come due for any of the following reasons:
If you sell the house.
If you pass away.
If you can no longer consider the home a primary residence. In particular, if you have to spend more than 12 months in a nursing home, your house will no longer be considered your primary residence.
If you don’t pay your property taxes, don’t have adequate homeowners’ insurance, or if you don’t maintain your home properly.
Reverse mortgages can be a good option for seniors who need to bridge the gap until reaching full retirement age, but they are certainly not a cure-all solution. If there’s any possibility that you can’t keep up with maintenance (including paying your taxes and insurance bill), that you might need some sort of long-term, off-site care, or that your kids are counting on inheriting the house from you when you pass away, this is not a good option for you. (See also: 5 Downsides of a Reverse Mortgage)
Rent out your property
You probably don’t have a spare house available, but that doesn’t mean you can’t make some money by renting out your space or even the things you own. To start, if you live in an area that draws tourists, renting out a spare room (or even the entire house) on Airbnb can be an excellent way to bring in extra cash. If you rent out your entire home, you could house or pet sit while your guests are in your home — and potentially make money on both ends. (See also: 5 Easy Ways to Make Good Money From Airbnb)
Of course, not all rentals are about a place to hang your hat. Don’t use your car every day? Rent it out with a service like Getaround or Turo. Have a two-car garage and only one vehicle? Rent out that extra parking space with a service like Parking Panda or Spot. Have power tools or sporting equipment gathering dust? Rent it all out with a service like Loanables or RentNotBuy.
Embrace the side hustle
No one wants to hear that they have to work longer in retirement, but side jobs ain’t what they used to be. These days, you can find any number of rewarding gigs that can help make ends meet — and fit in with the lifestyle you want in retirement.
For instance, finding a way to make money off a hobby you’re already doing can be a good way to bring in extra income without feeling like you’re still stuck in the daily grind. Avid gardeners could become garden consultants for neighbors with black thumbs. Animal lovers could offer daily dog-walking services. Crafters could make their wares for sale, or offer classes on how to create their beautiful designs.
If you’re not interested in monetizing a hobby, think about what sorts of things people turn to you for. If you have an impeccable eye for fashion, offer to help people look their best. If you know how to get the best deal on a used car, create a consulting service for buying cars. The sky is the limit in terms of creating a side hustle that will fit with your preferences, abilities, and schedule. (See also: 9 Easy Ways Retirees Can Earn Extra Income)
Sell your stuff
If you have the time to post your items on Craigslist or eBay, this can be a great way to both downsize your stuff to a more manageable (and retirement-ready) amount while making some money at the same time. As a bonus, a lot of the stuff that was new when you were in college is considered vintage these days — which means you might get some good money for the stuff you’d otherwise just give away. (See also: 5 Things You Can Resell on eBay That Make the Most Money)
Making it until FRA
Though it can seem like the wait to reach full retirement age is interminable when you could use the Social Security retirement benefits each month, you will be glad you waited. Finding a way to bring in other income while you wait for your FRA may not be the retirement you dreamed of, but you’ll feel good that you ensured higher monthly benefits for life.