If you’re thinking about retirement, and you’re worried that your expected income may not be enough, here’s some good news: There are many possible sources of retirement income, and some of them may be surprises to you.
Here’s a look at some ways to generate income in your later years. See which ones make the most sense for you.
Dividend income is probably the least unexpected in this group, but the amount of income dividend stocks can generate is often underappreciated and potentially surprising. For example, if you retire with a stock portfolio valued at $500,000, and it has an overall dividend yield of 3%, you’re looking at around $15,000 in annual income — and that sum is likely to grow over time, as dividends from healthy companies tend to be increased every year or two.
Here are some examples of well-regarded dividend payers — and their recent yields:
|Stock||Recent Dividend Yield|
If you don’t already have some dividend-paying stocks in your portfolio, consider adding them.
2. Your house
Your house, perhaps unbeknownst to you, is a possible income generator — now and/or in retirement. For one thing, you might rent out space in it — or rent out the whole home — for short or long periods via services such as Airbnb. You might also take in a boarder for a few years, if you and your home can accommodate that.
Then there are reverse mortgages, which are not suitable for all retirees, but which can serve some very well. They involve essentially borrowing from a lender with your home as collateral. The lender can pay you a lump sum or regular payments over time, while you stay in the home. Once you no longer do — because, for example, you moved to a retirement home or died — the lender claims the home, unless your heirs want to and can pay back the loan.
3. Your car
Your car can also be a source of income for retirement. Now, or in your early years of retirement, you might earn money driving for a service such as Uber or Lyft.
Another strategy is to pare one vehicle from your household’s fleet. If you have three, try living with two. If you have two, see if you can get by with one. It can be fairly easy for many couples to share just one vehicle once they’re retired and not commuting to jobs. By shedding one vehicle, you can collect some cash for it upfront, and then you’ll simply save money in the future, not having to pay for insurance, maintenance, and repairs.
4. Your junk
Some of the money you’ll want in retirement is all around you, in the form of items you no longer need or desire — and perhaps have never even used. Spend a little time reviewing things in your attic, basement, garage, and even your storage unit, if you have one. All those unnecessary things could fetch lots of dollars at a yard sale — and some you might want to offer online. Particularly valuable items, such as some collectibles, might be sold to dealers or others who appreciate their value.
Finally, an often overlooked way to generate more money for retirement while getting to keep more money in your pocket over time is downsizing. You can downsize in a variety of ways. If you love your neighborhood or town, you could sell your home and buy a smaller and/or less costly one in it. If you’re not so attached to your current location, you might move to a less costly town or state — or even a less costly country. You might be able to move closer to family or loved ones that way, too.
By downsizing to a less costly home, you can probably pocket some gains, and you’ll likely pay less in utilities, property taxes, insurance, landscaping, and maintenance (among other things) over time.
These are just some ways to generate more money for your future, for a financially secure retirement. If some of them make a lot of sense for you, start looking into acting on them.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.