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4 Ways to Create More Spending Money in Retirement

Retirement is a joyous and exciting time, but it can also be stressful if you're not financially prepared. Money is reportedly the No. 1 source of stress among American adults, according to a survey from Northwestern Mutual, and only around a quarter of U.S. households are considered financially healthy, according to a report from the Financial Health Network.

If you're concerned about having enough money to last through retirement, there are a few things you can do to strengthen your nest egg and ensure your money stretches as far as possible in your golden years.

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1. Delay claiming Social Security benefits

Roughly 9 in 10 recently retired adults say they claimed Social Security at age 62, according to a report from the Nationwide Retirement Institute. While you can claim benefits as early as age 62, you'll receive more per month if you wait to file.

For every month you delay claiming benefits past age 62, you'll receive slightly larger checks each month. By waiting until your full retirement age (FRA), which is age 66, 67, or somewhere in between, you'll receive the full amount you're entitled to. If you continue waiting beyond your FRA (up to age 70), you'll receive a bonus amount on top of your full benefits.

The biggest perk of delaying benefits is that you'll receive those bigger checks for life. So even if you live to be 110 years old, you'll still be receiving more each month by waiting than if you'd claimed benefits early.

These extra benefits can make a significant difference, too. For example, say your FRA is 67 years old and by claiming at that age, you'd receive $1,500 per month. If you were to claim at 62, you'd receive 30% less each month -- or $1,050. Wait until age 70 to claim, though, and you'd receive a 24% boost, or $1,860 per month. If you're struggling to make ends meet, those extra few hundred dollars per month could go a long way.

2. Pay off your debt before you retire

In order to maximize your discretionary spending in retirement, you'll need to minimize your necessary living expenses -- which include debt repayments. If you can eliminate your mortgage, car loans, student loans, and credit card debt, you'll have significantly more cash to spend in retirement.

If you can't pay off all your debt before you retire, at least aim to tackle any high-interest debt. This type of debt, such as credit card debt, is incredibly toxic and expensive and could cost you thousands of dollars in interest over time. And if you're spending thousands on interest when you're living on a fixed income in retirement, you won't have as much to spend on the things you enjoy.

To figure out which of your debts to eliminate first, prioritize them according to their interest rates. Pay down the debt with the highest interest rate first -- even if it's not your highest balance -- then work your way down the list until you're debt-free. If possible, it may be a good idea to hold off on retiring until the bulk of your debt is paid off -- especially if your savings are slim and a good chunk of your retirement income each month will go toward debt repayments. But if you'll still be paying down debt in retirement, make sure it's lower-interest debt, such as a mortgage.

3. Pick up a part-time job

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These days, it's easier than ever to start a side hustle at any age to earn some extra cash each month. And the best part is that, for many of these jobs, you can work as much or as little as you'd like, so you can still enjoy a flexible retirement schedule.

From walking dogs to becoming an Uber or Lyft driver to doing consulting work, there are plenty of part-time opportunities out there to earn some extra cash. You may even choose to start a business in retirement, and something as simple as selling your handmade crafts on Etsy can help generate some extra income. Sometimes, even an extra couple of hundred dollars per month can make the difference between thriving and just getting by.

Keep in mind, though, that if you're claiming Social Security benefits before your FRA, working could reduce your benefit amount -- at least temporarily. In the years leading up to your FRA, your benefits will be reduced by $1 for every $2 you earn above the 2019 income limit of $17,640. Then in the year you reach your FRA, you'll have $1 deducted from your benefits for every $3 you earn above $46,920.

Once you finally reach your FRA, your benefit amount will be recalculated to account for the reductions you received while working. So while you're not technically losing any money, it's an important factor to consider if you're planning on claiming Social Security early and continuing to work.

4. Consider finding more affordable housing

Housing expenses are one of the biggest costs you'll face each month in retirement. Even if you've paid off your mortgage entirely, you're still faced with property taxes, insurance, and utilities. And if the kids have moved out and you're left with more house than you need, you could be spending more than necessary on housing -- leaving you with less money for fun retirement activities.

If you're up for a move, finding a more affordable home -- whether it's across town or across the country -- can be a financially wise decision. Sometimes, you may even be able to move to an ideal retirement location and still lower your monthly expenses. If money is tight in retirement, there are some U.S. cities where you can survive on Social Security benefits alone and still spend your golden years comfortably.

Before you pack up and move, however, be sure to weigh the advantages and disadvantages of finding a new home. For example, will you be moving far away from family and friends? If so, will that outweigh any financial advantages? Also, how will taxes affect your monthly payments? For instance, some areas may charge higher property taxes, but several states have no state income taxes -- so you could still be saving money by moving to one of those states. Consider all the pros and cons and map out a new budget for your prospective new city to get an idea of what the costs will really look like, which will ensure you're making the best decision.

If your savings aren't where you want them to be and you're closing in on retirement age, all hope is not lost. There are ways to boost your disposable income and pinch pennies so that your money lasts as long as possible. By doing so, you'll give yourself the best chance at enjoying your dream retirement.

The $16,728 Social Security bonus most retirees completely overlook

If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,728 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.

Katie Brockman has no position in any of the stocks mentioned. The Motley Fool recommends Uber Technologies. The Motley Fool has a disclosure policy.

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