Q&A: How do I boost my retirement income if I can’t work?

Hi Heather,
 
Thank you so much for launching your podcast. I am really enjoying all your advice.
 
My name’s Vivienne. I’m single and in my late 60s. I receive the state pension and find that I struggle to make ends meet – my saving grace is that I own my home outright but I don’t have any other investments outside of that. Although I would like to work because I get lonely sometimes, I lack the energy I used to have in my younger days and certainly I find a full day’s work very exhausting nowadays. Is there anything you can think of that can help me boost my income?
 
Thanks

The Money Spot™ - UK Personal Finance · #14 How do I boost my retirement income if I can’t work?

​Thanks for this question Vivienne.
 
Given you are not working, I won’t give you advice about saving and investing at this stage as I normally would.
 
I’m sorry you get lonely – loneliness is a rising issue in Britain and not only amongst older people – in 2016/17 Younger adults aged 16 to 24 years reported feeling lonely more often than those in older age groups according to the Office of National Statistics.
 
I have two income boosting suggestions for you that could help boost your income and reduce your loneliness too.
 
In the past, I have also given people advice about boosting their income by monetising any skills they might have on freelance sites like fiverr.com or upwork.com or by tutoring via websites like tutorful. However, I am going to suggest something totally different to you, perhaps even radical: have you considered taking in a lodger or renting out any spare rooms you might have on airbnb.com?
 
You could do this even if you didn’t own your home as long as you get permission from your landlord to sublet.
 
There are pros and cons with each option.
 
Option 1: LODGER
 
If you take in a lodger, you will have someone living in your home on a full time basis and you will probably have to give up some of your space in places like the kitchen to them. You will also need to be comfortable with that person using your appliances and white goods.
 
Are you happy for someone to share your hob, your fridge space, your washing machine and your living space that closely.
 
Taking a lodger in could flip you from being lonely to being frustrated very quickly if that person has very different habits and a very different lifestyle to you.
 
Instead of a full-time professional lodger perhaps you could take in a more transient lodger like a student. Some students, especially international students don’t see university as one long party and may well be studious, well-behaved and easy to live with.
 
If the person comes from Europe, they are also likely to go back home regularly leaving you to enjoy your living space on your own terms during such periods.
 
The government allows you to earn up to £7,500 a year tax free by letting a room in your home. This amounts to £625/month, all tax free.
 
Given that the state pension currently sits at c.£8,800 a year, you would almost be doubling your income if achieved this amount. If you have a generous spare room with an ensuite you might well be able to charge this kind of rent. Or if you have two spare rooms you can get a couple of lodgers.
 
You could also exclusively look for someone that is retired with the objective of keeping each other company in retirement. The type of person you decide to let a room to is entirely up to you.
 
One downside is that you might find a lodger who keeps too much to themselves and isn’t interested in bonding with you which might make you feel even more lonely. This brings me to option 2.
 
Option 2: AirBnB
 
Have you considered renting any spare rooms out on AirBnB? If you have the energy to change sheets and provide a breakfast this can be a fantastic little earner especially if you live in a popular city.
 
However, even if you are in a quieter city it is certainly something that is well worth trying.
 
A major advantage of letting rooms out on AirBnB is that you will retain full control over your home and kitchen space. When you are not home, for instance, if you are on holiday or visiting friends and family you won’t be leaving the house to a lodger which may offer you some peace of mind.
 
Just as importantly, during times when you expect visitors such as at Christmas you can have the house free of AirBnB guests.
 
A key advantage of AirBnb over a lodger is that you will get exposure to many different types of people with many curious about you and your city – based on them having to rent an AirBnB you can assume that most won’t be as familiar with your local area as you are and you can enjoy telling them about it and where to visit.
 
Personally, if I were in your shoes, I think I would go for the AirBnB option but you should decide based on your own personality and preferences. For instance, you might find the perfect lodger for you – someone who is perhaps older and not transient and even wants to spend time with you.
 
When I was single, once I bought a house, I always had a lodger for two reasons: firstly, I didn’t like the person I was becoming when I lived alone – I was becoming very rigid and set in my ways; secondly, I needed the extra money because my first mortgage was expensive and the monthly income boost made a big difference to me. I was also very likely to always find lodgers that I had things in common with so we could do some things together.
 
Just as with getting a lodger, you can rent rooms out on AirBnB and not have to pay tax until you are earning over £7,500.
 
I hope this is helpful. Outside of this there are the more obvious things like getting a part-time job or baby sitting when you have the energy and inclination to do that kind of thing.
 
I hope this helps you thinks more broadly about how you can boost your income and get some companionship at the same time.
 
If you are enjoying listening to my podcast, please give me a 5* rating wherever you listen to podcasts. If I don’t yet deserve your 5*, please let me know how I can earn it.
 
I hope this helps!
Heather

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