For some people, managing money in retirement becomes more complex than it was when money was coming in every week from a job. 

Few people are set for life when work ends. You have to continue to bring in money each month to pay your bills and live your life, even if your cost of living has generally decreased.

Retirement from the workforce generally happens along with a few years of several other life changes. Your kids may move out and start families of their own. You might sell your home and relocate, adopt new hobbies, start traveling, or further your education. Any of these events can also drastically affect how much money you’ll spend (or earn) after retirement.

To ensure a happy and healthy next chapter, you’ll need a plan to keep money coming in—and to make the most of what you’ve got.

10 strategies for generating income in retirement

Your retirement savings account is an obvious and common way to generate income after retirement, but it’s just one of many strategies. Diversify your options by considering all of these ways to generate retirement income:

1. Social Security

Once you’re at least 62 years old and have paid into Social Security (through your paycheck) for at least 10 years, you’ll receive monthly benefits based on your income during your 35 highest-earning years of work.

2. Retirement accounts

You can begin penalty-free withdrawals from your pension plan, 401(k), or IRA after you turn 59 1/2. Depending on how your plans are set up, you may receive distributions as lump sums, or annuities that pay over a fixed period or over your lifetime.

3. Interest-bearing checking accounts

The bulk of your retirement savings should be in an investment account because of the likelihood for higher returns, but you may also have some cash stowed in high-yield bank accounts.

Many banks offer checking accounts that offer interest rates that are competitive with traditional savings accounts, so you can earn interest income while retaining greater access to your funds than with a federally regulated savings account.

4. Short-term CDs

Certificates of deposit generally yield higher interest than a savings account, and your rate is locked in for the term of the CD, which makes it a more stable investment option than either a bank account or stocks. However, your money is tied up for the duration (or you’re subject to early withdrawal fees). 

Choose a high-yield CD with no or low minimum deposit and a term of one to two years to make the most of this option.

5. Annuities

Collect payments from investments or a permanent life insurance plan. This option is particularly useful if you outlive the assets in your retirement savings accounts.

6. Spouse/partner's income

If you retire before your partner, you can plan to reduce expenses and rely primarily on a single income. Conversely, if your partner dies before you, you may be eligible to receive their Social Security or retirement benefits, or a payout from a life insurance policy.

7. Part-time employment

Many retirees continue working after retirement, though the income you generate from retirement accounts and Social Security, along with reduced living expenses, means you don’t necessarily have to earn as much as before from your job. Reduce hours at your current job, look for easier part-time work, or work for yourself by freelancing or starting a part-time business.

8. Rental property or property sale

A rental property purchase can generate income quickly compared with other types of investments. Run the business yourself or hire a management company to handle renters and maintenance.

Purchasing property to improve and flip for a profit is also a short-term way to earn from a property investment. 

9. Home (or business) sale

Leaving the workforce could mean concurrent life changes for you, such as leaving your business or moving to a new location. Proceeds from selling your home or business could generate significant funds to boost your retirement income.

10. Reverse mortgage

If you’re age 62 or older and have paid off all or a significant portion of your home, you can borrow against your home equity for a lump sum payment, monthly payments or a line of credit. A reverse mortgage is a form of debt, but it doesn’t require you to make payments. Instead, the balance becomes due when you sell the home or after your death.


How to stretch your retirement savings

How much income your retirement savings and other strategies generate depends on what you do with the money you earn and save. Regardless of how much you’ve saved or what you earn after retirement, some smart strategies can help you stretch every dollar.

Here are some popular ways to make the most of your retirement nest egg:

1. Follow the bucket plan

Popularized in the book of the same name by Jason L. Smith, the bucket plan divvies your retirement savings to ensure security while letting some funds grow. 

You’ll use three accounts:

    • Savings or money market with about three years’ expenses in cash
    • Bonds for modest fixed-interest earnings
    • Stocks for faster growth (but more volatility)

Funnel your interest earnings from the latter two buckets into the first as needed to replenish.

2. Adhere to the 4% rule

Advisors typically recommend this withdrawal method to ensure you have enough income to last through your retirement. From a classic retirement portfolio balanced 60/40 between stocks and bonds, you’ll withdraw 4% of your holdings per year, plus an additional amount equal to inflation.

3. Treasury inflation-protected securities (TIPS)

These U.S. government bonds protect your investment against inflation by increasing or decreasing the principal according to the Consumer Price Index. A fixed interest rate is applied to the greater of the original or the adjusted principal twice per year.

4. Use tax-deferred accounts strategically

Ease your tax burden during retirement by holding your investments in the most advantageous accounts. 

Income you earn from bonds is taxed at a normal income tax rate, so you’re better off keeping those in an IRA or other tax-deferred account, while you might keep dividends from stocks in a taxable account like a savings account.

5. Consider investing in dividend-paying stocks

If you want to receive regular income from your investments, you’ll want to consider investing in stocks, mutual funds or exchange-traded funds (ETFs) that pay dividends. 

These stocks traditionally distribute a portion of a company’s earnings to shareholders each quarter. If you invest in stocks without a history of paying dividends, then you may have to sell shares to realize any gains from  increased values.

6. Delay your retirement (or at least your benefits)

If you keep working or can live off of other income or assets until you turn 70, you’ll get a significant boost to Social Security benefits. 

For every month after you reach retirement age (66 for most Baby Boomers and 67 for younger generations) until age 70, your benefit amount increases by a small percentage. If you delay receiving benefits until age 70, you’ll receive 132% of your full benefit.


How will you generate retirement income?

You have a lot of options for generating income in retirement and stretching your money as far as it can go. Unfortunately, there’s no one set of strategies that’s best for everyone. Which moves make sense for you depends on a host of personal circumstances, including:

    • Your age and health.
    • Your living expenses.
    • How much you’ve saved.
    • What kind of work you do. 
    • Your retirement plans.

A financial advisor can take a look at your situation and recommend a financial plan and investment vehicles to best meet your goals.

In the meantime, stay open to the possibilities, and don’t be discouraged if your retirement savings isn’t exactly where you want it to be. With a little knowledge and creativity, you can make sure your finances are set up for a happy retirement.  


Disclaimer: Altruist or its affiliates do not provide tax advice and investors are encouraged to consult with their personal tax advisors. In no way should use of the word 'pro' be interpreted as providing potential investors any accreditation or level of sophistication.