How to Boost Your Retirement Income: 4 Reliable Income Sources to Take Advantage Of

With Americans often living for decades after retirement, it’s important to know how to boost your retirement income. Through a combination of reliable income sources, maximal savings, and a financial advisor to help you develop a solid financial plan, you’ll have a more financially secure retirement during your golden years (and beyond). Even if your financial situation is less than ideal, it’s never too late to make positive changes.

4 Reliable Retirement Income Sources

While an experienced financial advisor can offer suggestions about what’s best for you based on your unique situation, needs, and comfort level, these 4 investment categories, historically, have been the most reliable retirement income sources.

1. Bonds

Bonds are less likely to lose money than stocks are, and they pay interest regularly. They can provide a steady stream of income that can help offset your losses during stock declines. In addition, some bonds provide tax-free income, but these generally pay lower yields. They’re often appropriate for retirees who are in a higher tax bracket. Following the investment strategy of laddering (buying bonds so they mature at different times) can be a good strategy.

2. Stocks that Pay Dividends

Stocks that pay dividends will often provide more money than investments like certificates of deposit (CDs). And although there’s risk in owning stocks, dividends can help you make money when the stock rises, as well as through the dividend itself. Some large companies, such as Procter & Gamble, have committed to raising their dividends each year and have done so for decades, even when the economy has taken significant downturns.

3. Roth IRA

Unlike a traditional IRA (individual retirement account), a Roth IRA is funded with money that you’ve already paid taxes on, and contributions to this type of account aren’t tax deductible. The money you withdraw from your account is tax free, which can come in handy during retirement, especially if you’re in a high tax bracket. Currently, individuals ages 50 and up can contribute up to $7,000 a year to a Roth IRA, as long as income is under $140,000 for singles and $208,000 for couples.

4. Social Security Benefits

Social Security benefits typically replace about 40 percent of pre-retirement income. Although this is a great help to most older Americans, it can’t be expected to provide for a secure retirement on its own. That’s why it’s so important to plan for other reliable sources of income.

How to Increase Your Retirement Income

If you’re wondering how to boost your retirement income, here are a few tips:

1. Work Until Your Full Retirement Age.

Your full retirement age is the age at which you can receive full Social Security benefits. This age varies depending on the year in which you were born. Your full retirement age is 66 if you were born between 1943-1954, and 67 if you were born in 1967 or later. Working beyond your full retirement age may also raise your benefits since they’re calculated based on your average wages over your 35 highest-earning years, after adjusting for inflation. 

2. Make Catch-Up Contributions If You’re Eligible.

You may be able to make catch-up contributions to an IRA, 401k plan, or certain other types of investments. This is available to investors ages 50 and older to let them catch up on contributions they may have missed during their career.

3. Contribute to a Health Savings Account.

Health savings accounts (not to be confused with health flexible spending accounts) can help you generate tax-free income in retirement, and contributions you make to the account are tax deductible. Withdrawals you use to pay for qualified medical expenses are also tax- and penalty-free before age 65. After age 65, you can withdraw the money and use it for anything without having to pay taxes or penalties.

Are You Getting the Financial Advice You Need?

Even if you already feel like an experienced money manager, you can still benefit from the professional guidance of a financial advisor. Our team at Tumwater will help you navigate your way through the many important financial decisions you’ll make throughout your life that will affect your retirement savings and income. We keep you on the right track ensuring you make the right financial decisions at the right time.

To learn more about how to boost your retirement income, download a free copy of our eBook, “How to Retire with Confidence and Clarity” and start planning your retirement by signing up for our Retirement Income Academy course!