You’ll need more than your monthly benefit to stay afloat.
As of early 2023, the average senior on Social Security was looking at a monthly benefit of $1,827. If that doesn’t sound like a lot of money, well, it isn’t.
Now if you’re nearing with retirement and happen to have a massive nest egg to fall back on, you’re in pretty good shape. The problem is that many people don’t have tons of savings and therefore become pretty reliant on Social Security once their careers wrap up.
A better bet, though, is to line up some other income sources for yourself. Here are a few to look at.
1. Investment income
Ideally, you’ll have some amount of money invested during your retirement. And at that stage of life, it could pay to focus on assets that pay you on a regular cadence.
Municipal bonds fit that bill. Not only do they commonly pay interest twice a year, but those interest payments are exempt from federal taxes. And if you buy municipal bonds issued by your state of residence, you can avoid state and local taxes as well.
You may also want to consider holding dividend stocks in retirement. Unlike municipal bonds, where your interest payments are part of your bond’s contract, companies are never forced to pay dividends, even if they start out doing so. But if you invest in companies with a long history of paying dividends, chances are, you’ll have that reliable stream of income to look forward to in retirement as well.
2. Rental income
If you have a larger home you’re not looking to downsize, renting it out in some capacity could be a great way to drum up retirement income. If your home has a finished basement or other separate living quarters, you could line up ongoing monthly rental income that helps you cover your expenses. But if that’s not your cup of tea, you can look to rent out your home during those times when you won’t be using it.
3. Income from a job
Working during retirement is a great way to boost your income. And on top of earning money, it might allow you to save money.
It’s important to stay busy once your career wraps up, and working is a great way to do that. If you don’t spend at least a few hours a week working, that’s another set of hours you’ll have to fill. And it might cost you money to do that.
Plus, these days, working as a retiree doesn’t have to mean committing to a preset, rigid schedule. Joining the gig economy could allow you to generate earnings while still getting to do the things you love.
Unless you’re really looking at a giant monthly benefit from Social Security, there’s a good chance you’ll need additional income to enjoy a comfortable lifestyle. If you load up on the right investments, monetize your home, and push yourself to work, in some capacity, you may find that you’re able to get by quite nicely in retirement without experiencing the financial stress so many seniors do.
