Insights

6 Unexpected Sources of Retirement Income

Before you enter retirement, you should have lined up sufficient income streams to support you for many years. After all, if you retire at, say, 65, you may well have 30 or more years of retirement ahead of you. Fail to prepare, and you may run out of funds before you run out breath.

Fortunately, it’s not too late to beef up the income you collect in retirement — even if you’ve already retired. Here are six income sources to consider.

Image source: Getty Images.

1. Your home

For starters, consider a reverse mortgage, through which you borrow money using your home as collateral, and typically receive a monthly income stream. Better still, the payments are likely to be tax-free, too.

That income can be a lifesaver in retirement, though it often may not be quite as much as you’d hoped for. The loan typically won’t have to be repaid until you’re no longer living in your home, such as when you die or move into a retirement home or care facility. At that point, many borrowers choose (or have) to sell the home to pay off the loan. If a reverse mortgage appeals to you, be sure to do more research on the pros and cons.

2. Your home (again)

There are other ways to profit from your home, such as by renting out space in it. You might do so on a temporary, short-term basis via a service like Airbnb or VRBO, allowing people to live in part or all of your home for one night or a week or two at a time.

For even more income, you might be able to take in a boarder for a year or more. This can actually be a great arrangement for some seniors, if you have one or more younger people living with you who can help out around the house.

3. A different home

A third home-related way to generate more income — or simply spend less in retirement — is relocation. You might relocate to a town or region with a lower cost of living, or you might stay in your current area, but move into a smaller home. Either way, you may end up able to spend a lot less on property taxes, insurance, utilities, maintenance, and repairs. In a lower-cost region, you might spend less on food, healthcare, and other expenses, too.

4. Renting out surprising things

Along with renting out space in your home (or the entire home), you may be able to generate retirement income by renting out other things. There are online services, for example, that let people rent another person’s car, garage, swimming pool, boat, camping equipment, recreational vehicle, garden, bicycle, and more. Depending on what you have to offer, you may be able to generate some handy income from things you don’t use very much.

5. Paying off debts

Paying off debts, especially those with high interest rates such as credit card debt, is a powerful strategy that won’t generate new income, but it can help you keep a lot of money from leaving your pocket. If you owe $25,000 and you’re being charged a 20% interest rate on it, you’re going to be forking over around $5,000 annually just in interest. Once you pay off that debt, that $5,000 stays with you instead of going to your credit card lender. Similarly, paying off your mortgage before you retire can free up a lot in mortgage payments you won’t have to pay.

6. Dividends

Finally, here’s a classic way to generate retirement income: dividend-paying stocks. They’re terrific for retirees and near-retirees, but they can serve all investors surprisingly well. Imagine, for example, that you have a portfolio of stocks worth $400,000 with an overall dividend yield of 3%. That should deliver $12,000 in annual income — and that income should increase over time, too, as companies hike their payouts.

Retirees can use that money — about $1,000 per month, on average — to live on, but those far from retirement can use that cash to reinvest in stocks. This can be especially handy when you’re having trouble generating funds to invest.

For a little inspiration, here are some familiar companies and their recent yields:

Company

Recent Dividend Yield

Verizon Communications

5.8%

IBM

5.2%

Walgreens Boots Alliance 

5%

3M

4.4%

Realty Income 

4.2%

AbbVie

3.8%

Pfizer

3.1%

Coca-Cola

2.9%

Procter & Gamble

2.6%

Nucor

1.7%

Nike 

1.1%

Data source: Yahoo! Finance.

Don’t ignore lower yields until you check to see how fast they’ve been growing: A dividend of $1 today might be $2 in a few years if it’s increasing quickly.

These are just a few of many possible ways that you might generate valuable retirement income. A little online digging can turn up additional ways. Tend to this issue, and your retirement may end up much more secure and enjoyable.

Selena Maranjian has positions in AbbVie, Procter & Gamble, and Realty Income. The Motley Fool has positions in and recommends Airbnb, Inc. and Nike. The Motley Fool recommends 3M and Verizon Communications and recommends the following options: long January 2024 $47.50 calls on Coca-Cola. The Motley Fool has a disclosure policy.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

  • This field is for validation purposes and should be left unchanged.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Rebate Rewards

Level 2 Rebate

Deposit $2,000 and get $200 Rebate
$ 200 Rebate
  • 3 Simple Steps
  • 1. Register Using The Link Below (Promo-Code: WEBREBATE)
  • 2. Deposit $2,000 and place one trade at any non-Austalian market within 30 calendar days
  • 3. Receive Your $200 Rebate
Popular

Level 1 Rebate

Deposit $1,000 and get $100 Rebate
$ 100 Rebate
  • 3 Simple Steps
  • 1. Register Using The Link Below (Promo-Code: WEBREBATE)
  • 2. Deposit $1,000 and place one trade at any non-Austalian market within 30 calendar days
  • 3. Receive Your $100 Rebate

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex Securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

EASY QUALIFICATION & LOW ENTRY
NEW CLIENT REBATE OFFER
EARN UP TO $200 CASH REBATE
Act Fast - Promotion Ends In
Click Here To Get Started
EASY QUALIFICATION & LOW ENTRY
NEW CLIENT REBATE OFFER
EARN UP TO $200 CASH REBATE
Act Fast - Promotion Ends In
Click Here For More Info