How to Boost Your Income in Retirement: 4 Smart Strategies
Are you asset rich but cash poor? If so, you’re not alone. Many older Australians find themselves with significant wealth tied up in their family home and other assets, but limited cash flow to cover everyday expenses. Many wish they could break free from being asset rich, but cash poor.
According to the Australian Bureau of Statistics (ABS), nearly one-third of older Australians in low-income households face this exact challenge.[1]
The good news? There are several ways to unlock financial flexibility and boost your income in retirement—without sacrificing your long-term financial security. The Team at Trusted Aged Care explore four options to assist.
1. Leverage the Value of Your Home 🏡
Your home is likely your biggest asset, but if it’s costing too much to maintain or limiting your financial options, it may be time to consider downsizing or using its value strategically.
Ways to Unlock Property Wealth:
✔️ Downsizing to a smaller home can help free up cash for retirement while reducing maintenance costs.
✔️ Using home equity through the Home Equity Access Scheme (HEAS) allows eligible retirees to access extra funds.
✔️ Considering a reverse mortgage may provide needed cash flow while letting you stay in your home but be sure to weigh the interest costs carefully.
💡 Important Consideration: Selling your home may affect your Age Pension. Some sale proceeds may be assessable under the Age Pension assets test, potentially reducing your entitlements. Always seek financial advice before making a decision.
2. Supplement Your Income with Part-Time Work 💼
Earning additional income—even just a few hours a week—can boost cash flow while keeping you active and engaged. Many retirees turn hobbies or past skills into profitable side gigs.
Ideas for Generating Extra Income:
✔️ Leverage past work experience by offering freelancing or consulting services in your area of expertise.
✔️ Turn your skills into an income stream through teaching, tutoring, or mentoring.
✔️ Help others with everyday tasks by providing handyman work or cleaning services on a part-time basis.
💡 Pension Impact: You can earn up to a certain amount before your Age Pension is affected. Speak to a financial adviser to understand how working part-time might impact your benefits.
3. Rent Out a Room or Holiday Home for Extra Cash 🏠
If you have extra space, renting a spare room or holiday home can provide a steady income stream.
Ways to Generate Rental Income:
✔️ Opening your home to a tenant can bring in extra income, whether it’s a student, professional, or short-term guest.
✔️ Turning a holiday home into a short-term rental through Airbnb or similar platforms can be a great financial move.
✔️ Sharing living space with a friend or relative may help reduce expenses while providing companionship.
💡 Tax Considerations: Renting out part of your home may impact capital gains tax (CGT) when you sell the property. Always consult an adviser to understand tax implications before proceeding.
4. Review and Optimize Your Investments 📈
If you’ve invested in shares, exchange-traded funds (ETFs), or other assets, a financial check-up can help improve returns while managing risk.
Smart Investment Strategies for Retirees:
✔️ Spreading investments across different asset classes reduces risk and improves financial security.
✔️ Investing in income-generating assets such as dividend-paying stocks, ETFs, or bonds can provide a stable cash flow.
✔️ Regularly reviewing and rebalancing your portfolio ensures it aligns with both your retirement goals and risk tolerance.
💡 Get Professional Advice: A financial adviser can review your portfolio, suggest tax-efficient strategies, and help you maximize income without unnecessary risk.
Understand the Risks & Seek Expert Advice 🔍
You can break free from being asset rich but cash poor. It doesn’t mean you have to struggle financially. With the right strategies, you can boost your income while maintaining long-term financial security.
Before Making Any Financial Decisions, Consider:
✔️ Consider how your decisions will affect the Age Pension, as certain income strategies may lead to reduced benefits.
✔️ Understand potential tax implications before renting out property or selling assets.
✔️ Evaluate risk factors carefully, especially when dealing with investments or equity release loans.
💡 Need Help Navigating Your Options?
We’re here to assist. Contact us today to explore the best strategies for your personal financial situation.
Reference:
[1] Australian Bureau of Statistics, March 2016, ‘Many older Australian households’ asset rich, income poor’, accessible at: ABS Report