Sometimes, using savings earmarked for retirement is unavoidable. The downturn in the job market during the pandemic has meant 29% of American adults worry every day or almost every day about their ability to save for retirement, with many people digging into their retirement savings to bridge the gap between jobs.
If you’ve had to cash out some of your savings, it’s normal to experience anxiety about how you’ll recover in time to reach your retirement goals. Here are four ways you can replenish your savings.
Earn money from your home
Travel is expected to increase throughout 2021 and into 2022 — 62% of American adults feel comfortable taking a vacation, and 55% of American companies that are not currently allowing business travel plan to do so by the end of the third quarter. This means there will be an increased demand for accommodations, which could be a good opportunity to earn extra funds by listing a space in your home on a platform such as Airbnb or Vrbo
If short term rentals aren’t in the cards, you could also consider taking on a boarder (like a student) or finding a roommate. Don’t feel great about living with a stranger? There are other ways you can put your home to work. Consider renting out garage space, a parking spot or even your pool through websites like Swimply. Or, if you have extra space inside your home, you can rent it as storage through services such as StoreAtMyHouse.
Monetize a hobby or skill
If you’re one of the 77% of Americans who regret taking money from their retirement savings accounts as a result of the pandemic, don’t be too hard on yourself. It can be disappointing to have to redirect retirement savings for other purposes, but you can recover. One smart way is to join the gig economy by monetizing skills or interests you already have.
Earnings from house cleaning, tutoring, pet sitting, dog walking and similar gigs can add up over the course of a year to help you replenish your savings. If your place of work is OK with you taking on outside work, you can even leverage your professional skills through freelance work via websites such as Fiverr or UpWork.
Don’t forget about ridesharing or delivery options that could provide you with flexibility, and if you consider yourself handy with tools or maintenance, sites like Taskrabbit can help you monetize this skill.
Rethink your living space
Chances are your living space makes up the bulk of your monthly budget. Downsizing your home can allow you to redirect more money each month toward your retirement. If you own your home, you don’t necessarily have to sell it to achieve this. You can rent your entire home, move to a less expensive home or apartment and put the difference between your rental earnings and your monthly living expenses toward your retirement.
Maybe you want to try the tiny home trend, or if you are able to work remotely, perhaps the timing is right for you to move to a state with a lower cost of living so you can direct more funds into your retirement accounts. Many states and cities have created incentives to attract new residents.
For example, through the Newtown Housing Initiative in Newton, Iowa, new homeowners receive $10,000 and a $2,500 welcome package. Similarly, Choose Topeka is offering either $15,000 to professionals who buy a home within their first year of relocating to Topeka, Kansas, or $10,000 to professionals who rent.
Ascend West Virginia offers $12,000 to professionals who relocate for two years. There are many similar programs through the United States, which could provide a helpful boost to your savings while also reducing your cost of living.
You could also consider moving abroad to reduce your living expenses, but don’t forget to factor in costs such as international taxes and health care when weighing this option.
Use interest to your advantage
Any funds you are saving should be earning the highest amount of interest possible, after you take into account your risk tolerance and liquidity needs. Be sure to shop around for the savings vehicle that is right for you.
If you want to have your funds on hand in case of a future emergency, contributing to your retirement accounts might not be the best option for you at this time. Instead, consider high-interest savings accounts or a certificate of deposit.
No-penalty CD rates are as high as 0.62% as of July 2021. Keep in mind, though, that any investment you make should outpace inflation — this is often a risk with CDs when entering a period of high inflation.
If you have a high risk tolerance, you can also consider broadening your investment portfolio through stocks, bonds or mutual funds. However, remember that while there can be tremendous upside in participating in the marketplace, there’s no guarantee you will make money or even retain your initial investment.
Dipping into your retirement savings doesn’t have to be catastrophic to your financial future. There are many creative solutions to help you get back on track with your savings goals.
While your initial earnings and savings might not seem like much immediately, they can add up over time to help you hit your money targets.
Jolene Latimer has her master's in Specialized Journalism from the University of Southern California. She writes about personal finance, marketing and sports.
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