5 unexpected sources of retirement income

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

If you’re way behind on your savings and hope to spend your retirement on Social Security income, know that the average monthly Social Security retirement benefit was recently only $1,673, or only about $20. $000 per year. Obviously, you will need other sources of retirement income. Here are seven, some that require money to spend and some that don’t.

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1. Interest

This source of income was almost useless for many years as we went through a long period of ultra low interest rates. Not anymore, though – they climbed. If you have $20,000 in the bank and you earn, say, 2% on it, that’s only $400 a year. But when interest rates are higher and you earn, say, 7%, that capital can earn $1,400.

2. A part-time job

Here is an obvious way to generate more income in retirement: work. You might not be looking forward to it, but a bit of brainstorming and exploring might find you some enticing part-time jobs or side gigs. As a bonus, they can keep you from feeling bored or feeling aimless and even depressed in retirement. If you work, say, 12 hours a week and earn $15 an hour, you can make about $780 a month (over $9,000 a year), before taxes.

3. A fixed annuity

If you have a significant amount of change nearing or approaching retirement, you can convert some or all of it into very reliable income by purchasing an annuity. In general, fixed annuities are simpler and probably preferable to variable or indexed annuities, but research annuities before buying one anyway. You can get annuities that start paying you monthly for life, now or in the future.

Here’s an idea of ​​the kind of income you might be able to buy through 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: annuitésimmédiates.com.

4. Dividends

Another powerful income-generating strategy is to invest in stocks that pay dividends. Just like with annuities, if you spend a large amount of money on them, you can receive a significant stream of income. Even better, while you’re exchanging cash for annuity payments, with dividend-paying stocks, you keep your money and don’t lose it, while you receive dividend payments (and, ideally, also enjoy share price appreciation). 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, growing dividend payers and have a $300,000 portfolio with an overall average yield of 4%, you can expect $12,000 per year.

5. Your house

There are many ways to enhance your home. Reverse mortgages, for example, can serve some (but not all) people well, providing them with a steady income until they no longer need their home, at which time the borrowed money is due.

You can also downsize to a smaller, less expensive house or move to a less expensive area. This can save you a lot on expenses such as property taxes, home insurance, mortgage payments, maintenance, utilities, etc.

Another home-centric way to generate income is to rent out a space – or rent out the whole house – for the short or long term. You can do this through a service such as Airbnb. Taking on a boarder for a while can also be a great win-win situation, if your boarder can help you with various needs as you get older, like shopping, household chores, or just keeping you company.

These are just a few of the many possible ways to generate more (or more reliable) income in retirement. A little research online may reveal other possibilities, such as health savings accounts (HSAs) or selling your life insurance policy. Just make sure you’re not relying solely (or primarily) on Social Security.

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