Many of us will need multiple income streams in retirement. Here are a bunch to consider.

If you’re thinking that when you’re retired, you’ll get by on Social Security income alone, or maybe Social Security and a little more, think again. As of September, the average monthly Social Security retirement benefit was just $1,841, or about $22,000 for the year.

Most retirees will need a lot more income than that, and they may need to set up multiple income streams for retirement. Here’s a look at a bunch of possible income sources for your retirement. See which ones make the most sense for you.

1. Pension

Pensions are far less prevalent these days, replaced at many companies by 401(k) plans and the like. If you work at a government job or belong to a union, you may have pension income coming to you, and if so, that’s a terrific and potentially powerful income stream in retirement. If you’re young and like the idea of pension income in your future, look into the kinds of jobs that offer it.

2. Dividends

Dividend-paying stocks are often underappreciated, but they can be powerful wealth builders. Remember, after all, that not only do they pay a dividend, and tend to increase that dividend over time, but as long as they’re healthy and growing, their stock prices should rise over time, as well. If you have a portfolio worth, say, $400,000, with an overall dividend yield of 3%, you’re set to collect $12,000 per year — a sum likely to increase over time.

3. Annuity

There are many kinds of annuities, and some are much better than others. Simple fixed annuities can promise you a certain sum every month for the rest of your life, while variable and indexed annuities will tie your payments to some security’s performance. You can buy annuities that will pay until both you and your spouse die, and you may be able to build in an annual percentage increase, too, to help keep up with inflation.

4. Reverse mortgage

While it’s not right for every retiree, a reverse mortgage can serve some very well. It involves collecting a lump sum or regular payments from a lender, using your home as collateral. This can mean your heirs won’t inherit it, unless you or they pay off your loan when you’re no longer living in the home.

5. Rental income

This is another option not suitable for everyone. Owning rental properties and collecting rents can seem wonderful, but it can come with hiccups, too, such as periods when the property is empty and you still have to pay for insurance, maintenance, repairs, taxes, and so on.

6. Retirement accounts and other investment accounts

This is a classic source of retirement income for many: your various retirement accounts, such as IRAs and 401(k)s, and other investment accounts, full of stocks, bonds, and/or mutual funds, typically. You might collect dividends or interest from them, but you can also sell off chunks of these accounts over time to generate income for yourself.

7. Life insurance with cash value

If you have a life insurance policy that features a cash value, you may be able to cash it out, or surrender the policy, for the cash surrender value. That cancels the policy, but can put some handy dollars in your pocket.

8. Inheritance

Many people will inherit money from loved ones, and that money can be saved and/or invested, to be drawn on in retirement. For some people, this may be a lot of money, and for many others, it won’t be much. Still, even if you receive, say, $30,000, that can go a long way in a year and can keep you from having to tap other sources.

9. Side gigs

You probably won’t want to or won’t be able to work a part-time job throughout your entire retirement, but it can be a smart move in your early years. It can keep you busy, for starters, preventing you from feeling lonely, restless, or even depressed, as happens to many retirees. If you find some paying activities you enjoy, this won’t even be such a chore.

10. Social Security

And then, of course, there’s Social Security. While the average benefit was recently $1,841 per month, millions collect more than that — though perhaps not as much as you might hope. The nearly unattainable maximum monthly benefit was recently $4,555, or about $54,600 on an annual basis. Note that there are ways to increase your Social Security benefits, too.

There’s much more to know about each of the income sources above, so be sure to investigate any of interest further. With some digging and thinking, you may come up with some other solid possibilities, as well. Health savings accounts, for example, can serve as retirement accounts.

By Selena Maranjian – Nov 11, 2023