5 Unexpected Sources of Retirement Income | Smart Change: Personal Finance

(Selena Maranjian)

Here’s a majority you don’t want to be in: Most people have not saved enough for retirement. According to the 2022 Retirement Confidence Survey, only 33% of workers have saved $250,000 or more for retirement, meaning that 67% have not. (Indeed, 19% have saved less than $1,000.)

If you’re way behind in your saving and are hoping to squeak by in retirement with Social Security income, know that the average monthly Social Security retirement benefit was recently just $1,673, or only about $20,000 annually. Clearly, you will need some other sources of retirement income. Here are seven, some that require having some money to spend and some that don’t

Image source: Getty Images.

1. Interest

This source of income has been close to useless for many years, as we have gone through a long period with ultra-low interest rates. Not anymore, though — they have been climbing. If you have $20,000 in the bank and are earning, say, 2% on it, that’s only $400 per year. But when interest rates are higher and you’re earning, say, 7%, that principal can deliver $1,400.

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2. A part-time job

Here’s an obvious way to generate more income in retirement: work. You may not be eager to do so, but a little brainstorming and exploration might turn up some appealing part-time jobs or side gigs. As a bonus, they can keep you from getting bored or feeling aimless and even depressed in retirement. If you work, say, 12 hours a week and earn $15 per hour, you can collect about $780 per month (more than $9,000 per year), pre-tax.

3. A fixed annuity

If you have a significant chunk of change as you approach or enter retirement, you might convert some or all of it into very dependable income by buying an annuity. In general, fixed annuities are simpler and arguably preferable to variable or indexed annuities, but read up on annuities before buying one, anyway. You can get annuities that start paying you every month for life, starting immediately or starting in the future.

Here’s an idea of ​​the kind of income you may be able to buy via an annuity these days:



Monthly Income

Annual Income Equivalent

65-year-old man




65-year-old woman




70-year-old man




70-year-old woman




65-year-old couple




70-year-old couple




75-year-old couple




Source: immediateannuities.com.

4. Dividends

Another powerful income-generating strategy is investing in dividend-paying stocks. Much like with annuities, if you commit a big chunk of money to them, you can receive a meaningful income stream. Even better, while you exchange a sum of money for annuity payments, with dividend-paying stocks, you keep your money and don’t forfeit it, while you receive dividend payments (and, ideally, enjoy stock-price appreciation, too). But while annuity payments are guaranteed (as long as the annuity provider remains solvent), stocks and their dividends don’t make long-term promises. Still, if you focus on healthy and growing dividend payers and you have a $300,000 portfolio with an overall average yield of 4%, you can expect $12,000 per year.

5. Your home

There are multiple ways to wring value out of your home. Reverse mortgages, for example, can serve some people (but not all) well, delivering regular income until they no longer need their home, at which time the borrowed money is due.

You might, alternatively, downsize into a smaller, less expensive home, or move to a less expensive region. Doing so can save you a lot on expenses such as property taxes, home insurance, mortgage payments, maintenance, utilities, etc.

Another home-centered way to generate income is to rent out space in it — or rent out the entire home — on a short- or long-term basis. You might do so via a service such as Airbnb. Taking in a boarder for a while can be a great win-win situation, too, if your boarder can help you with various needs as you age, such as shopping, home chores, or just keeping you company.

Those are just a few of many possible ways to generate more (or more reliable) income in retirement. A little digging around online can turn up other possibilities — such Health Savings Accounts (HSAs) or selling your life insurance policy. Just be sure you’re not counting solely (or mainly) on Social Security.

The $18,984 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 $18,984 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.

Selena Maranjian has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Airbnb, Inc. The Motley Fool has a disclosure policy.


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