Running Out of Cash in Retirement? 4 Better Options Than Taking On Debt

Inflation’s making life tough on everyone right now, but it’s especially hard for retirees who have to make their nest eggs last an indefinite amount of time without a job bringing in steady income. When your financial accounts are dwindling, borrowing money to tide you over can feel like your only option. But it often leads to longer-term problems, especially if you wind up with high-interest debt.

You may have other choices available to you, though. Here are four options to consider before you apply for a loan or charge a bunch to your credit card.

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1. Get a job

Yeah, I know. Retirement is supposed to mean not working, but if you’re in serious financial trouble, getting a job can be one of the surest ways to get out of it. You’ll have a steady paycheck again, and you may even be able to add to your retirement accounts over time.

Getting a job doesn’t have to mean going back to some corporate cubicle you hate, either. You can choose something that’s a little more laid-back or in line with your interests. You can even start your own business.

2. Sell items you no longer want

If you have a lot of unused possessions, consider selling them to make a quick buck. This might not help you out long-term, unless you own valuable artwork, antiques, or something similar. But it could help you make ends meet for a little while until you can work out a better long-term plan.

It’s pretty easy to sell most items these days. Just create a profile on a marketplace website or post the item on social media and await offers.

3. Look into government assistance programs

You might qualify for government assistance programs that can help you cover your essential costs. For example, blind, disabled, and low-income seniors may qualify for supplemental security income (SSI) from the federal government. This is a monthly check, similar to Social Security, that you can use to pay your bills. If you’re not sure if you qualify, check out the Benefit Eligibility Screening Tool.

Explore the resources available to you at state and local levels as well. You may be able to get help paying for food, housing, medical care, and more.

4. Consider a reverse mortgage

A reverse mortgage is a kind of debt, but it might be a better choice for some than other types of debt, like credit card debt. Essentially, a reverse mortgage allows homeowners aged 62 or older to borrow against the equity they have in their homes. They can receive the cash as a lump sum, monthly payments, or a line of credit. And they don’t have to repay the loan as long as they’re alive and living in the home.

But there are a few catches. First, you need substantial equity in your home in order to be able to do a reverse mortgage. Also, when you die or permanently move out of your home, the balance of the loan comes due. This could make it impossible to pass your home on to your heirs if they’re not able to pay it off.

You will still face fees and interest with a reverse mortgage, but you don’t need an income or decent credit to get one. So it could be a good option if you don’t think you could affordably borrow money elsewhere.

Sometimes, borrowing money might actually be a smart option for you. But don’t rule out these other income sources without checking them out.

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