3 Alternate Income Sources for Retirees

• The right dividend portfolio could offer steady income.

• Municipal bonds can provide income that won’t add to your tax burden.

• Annuities offer guaranteed income that cannot be outlived.

• If you’re thinking about retiring or know someone who is, there are three quick questions causing many Americans to realize they can retire earlier than expected. take 5 minutes to learn more here

There are plenty of retirees today who get the bulk of their income from Social Security. Some seniors, in fact, manage to live on Social Security alone (though they don’t necessarily live well).

But you should know that the average retiree on Social Security today gets about $2,015 per month. Even if you’re willing to live very frugally, that may not be enough money to cover your bills, especially when you factor in rising healthcare costs and persistent inflation.

That’s why it’s important to set yourself up with alternate income sources outside of Social Security. Here are three all retirees should consider.

The nice thing about dividend stocks is that they offer you two ways to make money. First, if the value of your shares rises over time, you could sell them at a profit. Secondly, if you choose companies with a solid history of paying and increasing their dividends, you can set yourself up with predictable quarterly income to nicely supplement your Social Security checks.

Dividend stocks aren’t necessarily the only type you should invest in as a retiree. Growth stocks could do a lot of the heavy lifting in your portfolio, allowing you to generate strong returns later in life.

But your dividend stocks, in addition to serving as an income stream, could act as a hedge against market volatility. Just make sure to either choose dividend stocks across a range of market sectors or load up on dividend ETFs for proper diversification.

Many retirees are surprised to learn how problematic taxes are for them. But there’s no rule stating the IRS will leave you alone once you stop working. So you may be interested in setting yourself up with income that doesn’t add to your tax burden. That’s where municipal bonds, or munis, come in.

The nice thing about munis is that the interest they pay is always exempt from federal taxes. And if you buy munis issued by your state of residence, you shouldn’t have to worry about state taxes on your interest payments, either.

Plus, unlike dividends, bond interest is a contractual obligation. This means you can look at muni bond interest as a steady, predictable paycheck on top of whatever Social Security is paying you.

Even if you bring a nice amount of savings with you into retirement, there’s no guarantee that you won’t outlive your IRA or 401(k). Annuities, on the other hand, offer you guaranteed income for the rest of your life — something no stock or bond can do.

There are different annuity types you can look at for retirement income. An immediate annuity starts paying you right away, while a deferred annuity begins paying you at a later point in time.

You can work with a financial advisor to see which type of annuity is most suitable for you. But combined with Social Security, it can be a very powerful tool — one that gives you peace of mind at a time in life when you deserve nothing less.

You may think retirement is about picking the best stocks or ETFs, but you’d be wrong. Even great investments can be a liability in retirement. It’s a simple difference between accumulating vs distributing, and it makes all the difference.

The good news? After answering three quick questions many Americans are reworking their portfolios and finding they can retire earlier than expected. If you’re thinking about retiring or know someone who is, take 5 minutes to learn more here.