3 unexpected sources of retirement income

Chances are, you’ll need some extra income in retirement. Social Security, for example, is likely to earn you less income than you expect. The average monthly retirement benefit is only $ 1,560 – only $ 18,720 per year.

Here are three sources of income that you may not have thought of.

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1. Your home

Your home can provide several sources of income. For starters, you may be able to rent rooms or the entire house for part of the year through services such as Airbnb Where Expedia Group VRBO. Much will depend on how much space you have, of course, as well as your ability to make that space available and the desirability of your location.

Then you may be able to get a reverse mortgage as you approach or near retirement. It’s not for everyone, but a reverse mortgage is basically a loan, where you receive a lump sum or regular, reliable income as long as you live in your home, after which the loan will need to be paid off, often by selling the property.

Another way to earn extra retirement income from your home is to sell it and buy a cheaper home. For example, if you can sell your home for $ 500,000 and buy a home for $ 300,000 that is either smaller, less luxurious, or located in an area with a lower cost of living, you may be able to generate nearly $ 200,000 in income – an amount that can go a long way in helping you retire.

2. Annuity income

Annuity income is an option that many don’t consider, but it’s worth doing. There are problematic types of annuities, such as variable annuities and equity-indexed annuities, but fixed annuities – which can be immediate or deferred – are simpler and more straightforward.

With an annuity, you usually pay an insurer a large sum in return for regular, reliable income. It can be structured to continue until you and your spouse die, or it can be tied to a single life. You may be able to add inflation adjustments (at a cost), among others.

Here is an idea of ​​the type of income that some people can currently buy through an annuity:

Buyer (s)


Monthly income

Annual income equivalent

65 year old man

$ 100,000

$ 493

$ 5,916

65 year old woman

$ 100,000

$ 469

$ 5,628

70 year old man

$ 100,000

$ 5,743

$ 6,888

70 year old woman

$ 100,000

540 $

$ 6,480

65 year old couple

$ 200,000

$ 824

$ 9,888

70 year old couple

$ 200,000

$ 924

$ 11,088

75 year old couple

$ 200,000

$ 1,078

$ 12,936

Data source: immediatelyeannuities.com.

Annuities are a great way to make sure you don’t run out of income in retirement, so be sure to learn more about them.

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3. Your health savings account

Finally, there are health savings accounts (HSAs), which few people consider to be retirement accounts. But they can be used as retirement accounts because the money you (and maybe your employer too) put into them isn’t there on a use-or-loss basis. It can stay in the account, accumulate and grow, as it can be invested in stocks or other things while it is there.

It is meant to allow you to pay for eligible healthcare expenses tax-free, but if you don’t spend all of them, once you reach age 65, you can spend them on anything. what. Anything you spend on non-qualifying health care expenses or non-health related expenses will be considered taxable income, just like withdrawals from a traditional or 401 (k) IRA account.

However, many retirees have significant healthcare expenses – so there’s a good chance you can cover many eligible healthcare bills with your HSA account.

More sources of retirement income

These are just a few of the many possible sources of retirement income that you could use. Here are others:

  • Pay off high interest debt: Anything you pay back now won’t cost you interest expense in the future, freeing up income.
  • Investing in dividend paying stocks: It is an obvious and effective strategy. For example, if you invested $ 300,000 in a group of dividend-paying stocks with an overall dividend yield of 4%, you are set to raise $ 12,000 per year – an amount that is likely to increase over time. as dividend payments increase.
  • Delay retirement for a few years: This strategy will allow you to save and invest more, which means that your nest egg will have to support you for fewer years. Delaying the start of collecting Social Security, meanwhile, will increase the amount of your benefit checks.

Take the time to think about how much money you will need in retirement and how you will accumulate it. Make a plan so that you don’t try to live on a lot less money than you need to.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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