Tips for Homeowners Renting Out a RoomIf you’re a homeowner who wants to make some extra money but you don’t have enough money saved up to invest in a rental property just yet, renting out a room in your primary residence might be an option.

Over one-third of Americans are renters, which means demand is consistent for non-homeowners seeking places to live without the burden of a down payment and mortgage.

Tips for Homeowners Renting Out a Room

Even if you only have one bedroom available, there are a few things to consider before renting out a room in your home:

Host with Airbnb or Rent Long-Term?

Millions of people love finding accommodations on Airbnb, and hosts even have the option of offering long-term Airbnb rentals. There are many advantages to hosting guests through Airbnb.

You’ll meet tons of fascinating new people from around the world, you might make more money if you live near a popular tourist destination, and you can stop hosting whenever you want to, rather than waiting for an annual rental agreement to expire.

Of course, there are also some downsides to Airbnb hosting, such as more cleaning, possible property damage, and having to deal with rude guests. Luckily, as a short-term rental option, these bad eggs won’t be around for long, and Airbnb’s ratings system for guests and hosts allows you to check out what other hosts had to say about your potential guests before you rent out your home to strangers.

It’s also worth noting that there’s a whole website dedicated to nightmarish Airbnb experiences – Airbnb Hell – but remember that millions of people host and stay with Airbnb, so the likelihood of having a bad experience is relatively small.

There might be more stability with a yearlong lease agreement with a single person or couple, but if any issues arise during the rental period, it could make for an awkward living arrangement until they ultimately move out. Despite its flaws, Airbnb at least offers you a way out if you want a break from visitors for a while.

Over one third of Americans are renters. Here's how to make money renting out a room.Click To Tweet
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Here is the next installment in our Reader’s Questions Series, which highlight questions emailed to me by you, the readers of Money Q&A. This time, we’re talking about income replacement with dividends when you retire. Be sure to find out at the end of this article how you can receive a free copy of Dave Ramsey’s book, The Total Money Makeover.

If you’re not familiar with Dave Ramsey’s book, you should run right out and get it. It is one of the best personal finance books that everyone should read. Now….on to our reader’s question. This week’s Reader Question is from Kim who writes…

I am retired and do not work. Can I still contribute to either my Roth IRA or traditional IRA while retired? My husband is still working and contributing to his company 401k retirement plan.

Yes, you absolutely can continue to make IRA contributions after retirement with a Roth IRA or traditional IRA. And, you should! It may seem a little counterintuitive to continue to invest for retirement while you are actually retired. There are many reasons why you should make IRA contributions after retirement. But, there are also a few roadblocks to consider as well.

Why You Should Still Make IRA Contributions After Retirement

Why You Should Still Make IRA Contributions After RetirementLet’s face it. We’re all going to need as much money in retirement as we can possibly get. We’re not saving enough. Recent studies have bee abysmal on how little Americans are saving for retirement lately. More than one-third of Americans not even saving for retirement. So, in most cases, saving more – even in retirement – is almost always better.

Investing more money into IRA contributions after retirement can help you to build a retirement nest egg. Investing during retirement can help you to stay within your family’s monthly budget and limit your spending. It can also help you delay taking Social Security benefits until you’re older, which equates to hire monthly income. Investing more money into IRA contributions after retirement can also help justify taking Social Security benefits at 62 instead of waiting for your full retirement age.

Additionally, it is worth noting that investing more money into IRA contributions after retirement can increase the size of your estate for your heirs if you die before exhausting your retirement savings. While this isn’t an issue for most Americans, high-income earners will have to consider the implications for the Estate Tax and plan accordingly.

Contributing to 401k Retirement Plans After Retirement

You also can’t contribute to a 401k retirement plan after you leave your job. You can often continue to leave your money in your plan to earn interest and capital gains, but you will not be allowed to add to your 401k after you retire.

Most financial planners recommend rolling over your 401k retirement plan to a traditional IRA after you leave your employer. This will allow you to consolidate your investments and have better oversight of them. You can then add to, change allocations, and change investments after rolling over your 401k retirement plan to a traditional IRA.

Betterment even offers 401k rollovers into a rollover IRA. So, you can move that 401k retirement plan from your old employer over without any hassles. It is a great option to moving your money especially if you have changed jobs recently. Get up to 6 months of service free if you sign up here.

You may want to consider a partial rollover if you are still with your current employer. Check with your human resources department to see if your plan allows it. [click to continue…]


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