In past generations, older adults looked to retire with three sources of income: savings, pensions, and Social Security—called the "three-legged stool" of retirement income. But with the decline of company pensions and financial markets taking a hit during economic downturns, many seniors face less income than they expect in retirement.

About 19 million (45%) older adult households lack the income needed to cover everyday living costs, based on cost-of-living data from the Elder Index. And 34 million households (roughly 80%), would struggle to absorb a major financial shock like a serious illness.¹

The good news is there are ways to brighten your financial outlook for retirement. By creating a realistic budget, taming unnecessary expenses, exploring available benefits, and finding opportunities to save, you can stretch your income and build greater financial security.

Boost Your Retirement Income & Savings: 5 Strategies

How much income will I need in retirement? 

According to the Social Security Administration, you’ll likely need between 70% and 80% of your pre-retirement income to be financially comfortable in retirement.² This includes Social Security, which is only designed to replace about 40% of your working income. 

For example, if you earned $80,000 per year before retiring, you may need approximately $56,000 to $64,000 annually in retirement income to maintain a similar lifestyle. But your actual expenses may be higher or lower, depending on where you live and how you plan to spend your retirement years.

Learn more:

• Will My Basic Expenses Be Covered by Social Security in Retirement?
• How Much of My Income Will Social Security Replace?

How can I make my money last through retirement?

Below are five smart money management tips to help you boost your income and savings after leaving the workforce. 

1. Consider delaying retirement

By delaying the age you start to receive Social Security benefits, you can increase your benefit amount. While you can draw benefits starting at age 62, claiming early can reduce your benefit amount by up to 30%. Waiting until age 70 or later to take Social Security will provide a significant (and permanent) increase in your monthly payment. This calculator can help you understand how your retirement age affects your monthly payment.

Learn more:

• When to Take Social Security Benefits
• Tips to Protect Your Retirement Income
• 5 Simple Ways to Build Your Retirement Confidence

2. Return to work

Even if you’ve already stopped working and started getting Social Security, a part- or full-time job can help offset extra expenses. It can also help you stay active and engaged with your community. Learn 7 effective job-search strategies for older adults.

If you’re a mature worker age 55+ with very limited or no income, one option to consider is the Senior Community Service Employment Program (SCSEP). SCSEP provides workplace training and part-time community service work that often leads to full-time employment opportunities. In addition to job placement, SCSEP helps older adults build their confidence and find financial stability.

3. Explore benefits assistance programs

Depending on your income, you might be eligible for public and private programs that can help you pay for health care, prescriptions, food, utilities and more. Visit BenefitsCheckUp.org—NCOA’s free, confidential online tool— and type in your ZIP code. You’ll get a list of money-saving benefits programs you may qualify for. You can even get help applying!

“Among older adults who are eligible, we found that a staggering $58 billion in benefits go unclaimed every year,” Johnston said. “You could be one of those people leaving money on the table. The help is there for the taking, so it’s worth seeing what’s available to you.”   

To claim all the benefits you might qualify for, visit BenefitsCheckUp.org—NCOA’s free, confidential online tool— and type in your ZIP code. You’ll get a list of money-saving benefits programs available in your area. You can even get help applying.

4. Consider leveraging your home equity

There are several ways that you can use your home equity to boost your income in retirement:

• A home equity loan, sometimes called a second mortgage, provides a lump sum of money with a fixed repayment schedule. This type of loan could be a good choice if you have a home improvement project or want to consolidate debt.
• A home equity line of credit (HELOC) provides money when you need extra cash and requires only the interest on the borrowed amount be paid. HELOCs make sense for a “rainy day” fund or cash to pay for major purchases. Learn more about home equity loans and HELOCs from the Federal Trade Commission.
• A reverse mortgage is a type of home loan that allows you to convert the equity in your home to cash to meet a wide range of financial needs. With a reverse mortgage, the lender pays you. You make no payments, and all interest is added to your loan. A reverse mortgage must be repaid when moving or selling the property or upon your death by your heirs.

To get unbiased information about reverse mortgages, read Use Your Home to Stay at Home©, the official booklet approved by the U.S. Department of Housing and Urban Development. Before agreeing to a reverse mortgage, you will be required to get counseling from a government-approved organization like NCOA. Get the facts on older adults and home equity.

5. Get financial help from family

If you’re facing high medical bills or having trouble affording daily living expenses, leaning on your family for support could help preserve your finances. 

“But that’s only if they’re willing and financially able to provide support,” cautions Jessica Johnston, Senior Strategist for Economic Well-Being at NCOA. “If your adult children or other family members are helping out financially, that support shouldn't come at the expense of their own financial goals or retirement savings. Money can be a sensitive topic, but having honest conversations about what is and isn't realistic can help everyone set healthy expectations.

Note: The government has made it less costly for families to pay medical bills or elder care if the taxpayer can claim an elderly relative as a dependent. This can make it easier to support older relatives who want to stay at home, and it may help to ease the burden that caregiving can place on the family.

Incorporating these simple yet powerful tips can help you take control of your financial situation, increase your income, and even build savings for a more secure future. For more insights on budgeting, financial planning, and earning extra money, visit NCOA’s Budgeting resource library.

Frequently asked questions (FAQ)

How do I create a retirement budget?

Write everything down first. List your expected income sources, including Social Security, pensions, and any retirement savings (like a 401(k)). Then compare that income to your basic living expenses (e.g., rent, utilities, groceries), health care costs, and discretionary spending to identify any gaps. Then, adjust your spending plan accordingly.

What are the biggest retirement expenses?

Housing, health care, food, transportation, and long-term care are typically the biggest retirement expenses. Many retirees underestimate medical and long-term care costs, which makes planning ahead especially important.

When can I afford to retire?

 You can generally afford to retire when your expected income from Social Security, savings, pensions, and other sources can reliably cover your anticipated expenses (like housing, utilities, groceries, and health care) throughout retirement. Creating a detailed retirement budget is the best way to see if you’re truly ready.

Source

1. UMass Boston. Elder Index. Measuring the income older adults need to live independently. Found on the internet at https://elderindex.org/