How do you picture your retirement? Do you aspire to be free at age 55 or do you see yourself working well past age 65? Sadly, for a lot of Canadians, the decision to retire is purely financial. According to a recent Sun Life Financial survey, only 27% of Canadians expect to be retired by age 65. Worse yet, 63% of those working past age 65 said it was due to a lack of retirement income and savings. In a best-case scenario you’re debt-free with a generous pension and a large RRSP portfolio at retirement - and we know things don’t always go according to plan. While you can decide to work a few extra years to make up a retirement savings shortfall, there are other options available. Let’s take a look at some ways to generate income during your golden years.
House Rich, Cash Poor
House prices have appreciated at record levels in Canada in the last decade. While it’s good for your net worth statement, unless you cash in on your house your retirement savings will still fall short. If you’re looking to escape the stress and expenses of being a homeowner, selling and renting can be a great alternative. If you’ve always dreamed of living in the cabin by the lake, selling your spacious urban home and downsizing to a smaller community can work out great. If you’re not quite ready to give up your family home, renting out a part of your house can be a great way to generate income. You can rent out your basement or rent out a room to a friend or family member.
Freelance and Consulting
If you’re an expert in your field, but you want to escape the rat race of the corporate world, consulting is a great way to make some extra money. Consulting is best suited in an industry like financial services, where clients will pay for your time and expertise. If you don’t feel like starting your own consulting firm, freelancing is a great alternative. If you have marketable skills such as writing or web design and you can find at least a couple of steady clients it should help tide you over into retirement. You might even love freelancing so much you’ll continue to do it even in retirement.
If a 40-hour workweek is too onerous, but you still need to save for retirement, part-time work is a great way to fill the void. A lot of employers allow those approaching retirement to work a reduced workweek - maybe only three or four days instead of the traditional five. If you can stay at your current employer it will likely help your pocketbooks the most – it probably pays a lot better than traditional part-time work in the retail industry. Just keep in mind that by reducing your hours your CPP will take a hit.
Start a Small Business
Is your portfolio smaller than expected due to lacklustre returns? You might think about starting your own small business. Canadians are starting small businesses in record numbers – in fact, those age 50 and up account for 30% of all new businesses. While starting your own business can be a great way to generate some extra income, it can also deplete your savings and put you worse off. Starting a business is a tough decision you’ll have to think long and hard about. If you’re a retiree, as you can see you have a host of great options available if you don’t want to work into your 80’s. The key is to pick the option that works the best for you, so you can enjoy your golden years worry-free.