While all groups in the United States struggle to save enough money to live comfortably in retirement, the issue is particularly striking for African Americans.
According to the Urban Institute, the average white family had more than $130,000 in liquid retirement savings, compared to $19,000 for the average African American family.
This makes it imperative that people in the black community, and others, figure out ways to supplement their retirement income.
“Most likely for most of us, life in retirement isn’t going to look a whole lot different from our life before retirement,” says Carla Dearing, CEO of SUM180, an online financial planning service created by women for women.
“That’s the life you’ll need to fund—not the one with the private jet, and sumptuously landscaped manse with Adirondack chairs dotting the grounds and a view of the ocean. Since that’s not the lifestyle most of us are preparing for, most of us will need about 80% of what our annual costs are right before we retire,” she adds.
Dearing offers the following tips to help boost retirement income.
- Rental income of all types is a great contributor to your annual income. Imagine if that same woman converted her basement into a one-bedroom apartment and rented it to her nephew for $600/month—that’s a total of $7,200/year. Or, rather than renting a portion of her home’s interior, this woman realizes she can gain income from some land behind her house.
- The sharing economy—also known as the shareconomy or collaborative consumption—is the term used to describe peer-to-peer-based sharing of access to goods and services. What you need to know is that it provides a host of new sources for income. Among popular services are Airbnb, Uber, Lyft, TaskRabbit and DogVacay.
- Asset sales are a way to supplement income within a given year. For example, my dad sold his Harley to my nephew last year. He opted to take monthly payments of $200 until it was paid off; netting him a total of $2,400 for the year. Another example is selling your Hummel collection on eBay and then, when the cabinet is empty, selling it on Craigslist. Typically these aren’t recurring sources of income, but don’t discount creativity. I learned of an insurance agent who shops at Walmart on Black Friday and then sells the items he bought at a deep discount for 4x their original price on eBay.
While saving for retirement is one of the biggest challenges facing the American public, it’s important to keep in mind that with a little creativity you can supplement your savings and create financial security in your golden years.