7 Places to Find Income Once You Retire
Try these sources of income in retirement to help cover expenses from health care to spoiling your grandchildren.


Where are you going to find income once you retire? Even if you’ve got a trunk load of cash saved, you can’t just live off the principal. Because with interest rates stuck in low gear, just to keep up with inflation your money’s going to have to earn income.
And then there’s all those unexpected health care expenses, along with your grandchildren’s college educations.
What should you do?
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.

Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Here are seven places to find income once you stop working, with a tip added to each to help nudge your thinking toward the future.
1. Retirement Savings Account
Let’s begin with retirement savings accounts. Obvious? Sure. But it’s not reasonable for most Americans who have them to think they can live off them, at least not at their present values.
While almost 50% of working Americans say they intend to “rely heavily” on a retirement savings account to fund their post-work life, the numbers don’t add up. That’s because the average 401(k) account holds a fairly paltry $91,000.
That amount isn’t merely a little short of what you’re going to need, it’s far short.
My advice is to marry yourself to the catch-up contribution provision (if you are over 50), and don't mortgage your future by treating your 401(k) like a cash machine. According to Vanguard, one of the nation’s largest 401(k) managers, 18% of working Americans with a defined contribution plan such as a 401(k) have an outstanding loan against their balance. This means that the $91,000 average 401(k) account balance referenced above is probably much less.
2. Social Security
What can we expect from Social Security? According to Gallup, Social Security is the most common retirement income source, with 56% of retirees relying on the program to cover most of their expenses.
This never ceases to worry me because the radical changes to the program certainly won’t end with last year’s sudden cancellation of the popular (and lucrative) file and suspend approach to increasing lifetime benefits.
I’m not insinuating that Social Security will disappear, but I do usually tell younger people to assume that the program (in terms of both benefit amounts and eligibility) will look very different in the years to come.
My advice on Social Security is that if you are well off, consider applying for benefits as soon as possible, before any changes to the system can occur.
3. A Diversified Investment Portfolio
Take my diversified portfolio, please? For most people, there is no dollar amount that guarantees you’ll be flush throughout retirement.
That’s right. There is no game-winning touchdown. And I’m sorry to say you don’t get to spike the ball after crossing the goal line. Once you score, you just have to line up and do it all over again. That’s because the game of saving, investing and earning money doesn’t stop until the very end of your life.
It’s pretty simple: Even after you leave the workforce, your investments have to keep earning income. (I’m sorry, but nasty old inflation will insist.) A well-diversified portfolio and sound investment allocation is, for most people, the difference between barely getting by and buying that RV you’ve always dreamt of clogging traffic with.
Remember, most investment mistakes are emotionally driven. That means they are also avoidable. Work with a trusted adviser to help you make unemotional financial decisions.
4. Reverse Mortgage
What about a reverse mortgage? I like to say that you own retirement when you own your home. One of the first things I tell clients is that if, at all possible, you want to retire mortgage free. According to Gallup, however, almost 19% of retirees either use a reverse mortgage or sell their homes outright to fund their day-to-day retirement expenses.
But the reverse is true, as well. Will your home own you? One of the worst ways to spend your retirement is trying to pay off a big mortgage with five or 10 years left on the note, just so you can be mortgage free, but poorer in health, experience and cash at, say age 76. If you retire and still have more than five years left on your mortgage, to improve cash flow, consider refinancing out 20 or even 30 years. Your heirs may not like it, but you and your spouse will.
5. Pension
Got a pension? Unlike previous generations, private companies that offer defined benefit plans (pensions) are fast becoming extinct (just 4% of private sector employees work for companies that only offer a traditional pension, which is down from 60% in the 1980s). However, if you work for the government, you may still be golden. My advice is that, if you care to know nothing else, at least know both your pension’s “funding status” and its “hurdle rate.” As we’ve seen with American Airlines, and with some cities that have filed for bankruptcy, knowing how (or even if) your pension is adequately funded may impact the way you prepare for retirement, which might just help you avoid (or adapt to) surprises down the road. A private company with an unfunded (or pay-as-you-go) pension plan might not be the type of company you want to tie your career, or your future retirement, too.
6. Work
You could always get a job. Even if they don’t need the money, a lot of my clients work part-time jobs. It’s simply a matter of having a purpose (and the extra money is never a bad thing). Lots of people delay Social Security and work part time.
My advice here is to make sure you balance any work income with Social Security, or you could get pushed into a higher tax bracket. Check with your adviser to make sure you won’t be working for free.
7. Inheritance
The last place to find retirement income is also the least likely to happen: inheritance. According to Gallup, roughly 4% of people can afford to live free and clear on money left to them by a relative or benefactor. And even if you are one of the lucky few, according to the National Endowment for Financial Education, 70% of the people who inherit a large sum of money are broke within seven years.
If you’re going to inherit money, you must plan for it, just as you would plan for anything else, including where you are going to get income in retirement, and how you are going to budget so that your money lasts as long as you do.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Scott Hanson, CFP, answers your questions on a variety of topics and also co-hosts a weekly call-in radio program. Visit HansonMcClain.com to ask a question or to hear his show. Follow him on Twitter at @scotthansoncfp.
-
Ask the Editor — Tax Questions on the SALT Deduction
Ask the Editor In this week's Ask the Editor Q&A, we answer questions from readers on the OBBB's changes to the SALT deduction.
-
Greed, Fear and Market Volatility: A Financial Adviser's Guide to Keeping Emotions Out of Investment Decisions
Don't panic! And don't be so confident in the stock market that you overlook risk. Instead, be logical. Your retirement security could depend on it.
-
Greed, Fear and Market Volatility: A Financial Adviser's Guide to Keeping Emotions Out of Investment Decisions
Don't panic! And don't be so confident in the stock market that you overlook risk. Instead, be logical. Your retirement security could depend on it.
-
Want a Financial Adviser Who Shares Your Faith? Look for One With a CKA Designation
Financial professionals with a Certified Kingdom Advisor certification are committed to integrating biblical principles with sound financial advice.
-
10 Ways to Stay Safe From Grandparent Scams and Other Fraud, Courtesy of a Financial Planner
Scams are increasingly hard to detect, and anyone can be fooled, from older people to educated professionals. Here are 10 ways to avoid becoming a victim.
-
This Is How the Student Loan Bubble Is Primed to Pop, From a Student Funding Expert
Fueled by easy money, inflated tuition and high default rates, the student loan bubble mirrors the 2008 subprime mortgage crisis. We could be headed for a potential financial collapse. What can we do?
-
More Than Money: The Hidden Toll of Financial Abuse of Older Adults
Financial abuse from schemes involving tech support, government impostors, false sweepstakes, grandchild hoaxes and online shopping issues can cause thousands of dollars in losses.
-
I'm a Financial Planner: Here Are Three High-Impact Ways to Make a Difference With Your Dollars
The world often feels out of control, but here are three ways to use your money — through investments, charitable giving and political donations — to help create a more just and sustainable future.
-
The Unsung Hero of Aisle 5: A Tale of Forgotten Change and Compassion at the Supermarket
This supermarket manager went above and beyond to help when a child forgot her change at the checkout counter. You might be surprised at some of the complications that supermarkets face when it comes to customers' forgotten change.
-
Train, Integrate, Retain: A Strategic Playbook for Adviser Onboardings
Build a thriving practice by training new advisers with clear goals, structured processes and consistent mentorship for strong team growth.