Other Retirement Income Sources

Other Retirement Income Sources
Other Retirement Income Sources

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Reviewed by David KindnessReviewed by David Kindness

Social Security, for the most part, is the only guaranteed source of retirement income that a lot of Americans can count on. Unfortunately, those government checks don’t provide the level of support that most adults will need during their later years.

The average monthly Social Security benefit for retired workers in May 2024 is $1,916.63. This means that a typical retired individual is bringing in approximately $24,916 per year. Chances are that won’t be enough to cover all their bills, especially if they’re still paying a mortgage.

Unfortunately, many Americans haven’t funded their 401(k)s and IRAs enough to make up the difference. If that’s you, what are other ways to supplement your income during your post-working years? Here are some sources you’ll want to consider.

Key Takeaways

  • The average monthly Social Security check is approximately $1,916.63 a month.
  • Many Americans do not have enough money in their 401(k) or IRA accounts to supplement their Social Security income during retirement.
  • It may be worth investigating additional income streams to ensure you have enough to live on after retirement.
  • Fixed annuities can offer a steady amount of monthly retirement income.
  • Turning a hobby or an in-demand skill into a part-time job can be a way to earn extra money during your retirement years.

Taxable Investments

If you’re fortunate enough to contribute more than the 401(k) and IRA limits allow, taxable investments such as stocks, bonds, and mutual funds are another great way to save for retirement. Index funds and exchange-traded funds (ETFs) are particularly appealing, as they offer low expenses and built-in diversification.

The key is creating an appropriate mix of asset classes. Leaning too heavily on stocks can be risky for people with fewer years to recover from bear markets. However, a portfolio including only fixed-income securities, such as bonds, won’t provide the growth potential that most people need for a longer retirement.

A typical rule of thumb is to hold a portion of stocks equal to 110 minus your age. That means a 65-year-old would have a portfolio with 45% of its overall value in stocks and 55% in bonds. Of course, you can make modest adjustments to this formula based on your risk tolerance.


Living a long life may seem like a great proposition, but it’s not so great for your finances. A lot of people don’t have enough assets to support their lifestyle if they make it into their late 80s or 90s.

A fixed annuity, which offers a lifetime income stream at a set rate of interest, is one way to manage that risk. You can even buy deferred annuities that don’t pay out until you reach a certain age. Once they kick in they offer bigger payouts than immediate-annuity products.

Rental Income

Do you have a spare bedroom in your home now that your kids have moved out? Renting it can be an easy way to generate cash every month, as long as you can make peace with your new roommate. Finding people you either know or have good references for can help eliminate headaches down the road. 

Another idea would be downsizing into an apartment or condo while renting out your original home. One of the perks of becoming a landlord is that you can deduct things such as mortgage interest, depreciation, and utilities, lowering your income tax bill.


There are risks, of course, such as the inability to find a tenant or unforeseen maintenance costs. It can be complicated to evict a tenant, as well.

Selling Stuff

As you get older, there’s a good chance your basement or garage has filled up with things you no longer need. Selling those items on eBay or Craigslist can be a great way to earn a little extra cash—not to mention clear out your home. If you’re handy you can use websites such as Etsy to market your crafts and other homemade goods, creating a nice side business for yourself.

Home Equity

When other sources of income are in short supply, many older adults use the equity in their homes to get access to instant cash. One way to do this is with a home equity line of credit.

A HELOC can help you address short-term needs, as long as you anticipate having the income later to pay it back. And because it’s a line of credit, you only have to use as much as you need.

Another way to tap your home equity is with a reverse mortgage, which lets you stay in your home and borrow against its value. When you eventually sell the property, your proceeds are reduced by the amount of the loan that’s still outstanding.

Before agreeing to a reverse mortgage, however, know that they can be complicated agreements with significant loan origination fees and other costs. And if you’re married, be aware of how your spouse fits into the plan.

Part-Time Jobs

Because many Americans of retirement age don’t have enough investment income to live on, a significant number choose either to work longer or find a part-time job when they leave their career. The U.S. Bureau of Labor Statistics predicts that about 29.9% of adults between the ages of 65 and 74 will work in some capacity by 2032. 

For some retirees, working a reduced schedule in retirement is just what they need—an opportunity to be in a low-stress environment and meet new people. 

Side Businesses

Instead of working for someone else, you may decide you’d rather become your own boss once you retire. That could mean working in your previous field as a consultant or developing a whole new set of skills.

Perhaps you’ve always wanted to start up your own bakery or handyman service. Maybe you’d like to set up a tax-preparation business, so you only have to work part of the year. The advantage of being the CEO is that you can mold the position to your existing lifestyle.

What Is the Best Source of Retirement Income?

There is no one best source of retirement income; retirees should look to multiple sources of retirement income to fund their lifestyles once they stop working. Sources of retirement income include Social Security benefits, retirement accounts such as 401(k)s and IRAs, pension plans, and home equity.

What Is the Primary Source of Income for Retired Americans?

Social Security is the primary source of income for retired Americans, making up 30% of the income for people 65 and over. Almost nine out of 10 people were receiving Social Security as of Dec. 31, 2023.

What Is Considered Retirement Income?

As determined by the Internal Revenue Service (IRS), retirement income includes Social Security, annuities, retirement or profit-sharing plans, insurance contracts, and IRAs.

The Bottom Line

Social Security is a nice safety net for retirees, but it’s usually not enough to cover all your costs. If you’ve left the workforce and find yourself pinching pennies, it might be time to get creative and pursue other ways of bringing in additional cash.

Read the original article on Investopedia.