Six Ways to Generate Income in Retirement

August 19, 2022

Six Ways to Generate Income in Retirement

August 19, 2022

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Do you know if you will have enough money during retirement to cover the cost of your housing, food, entertainment, and other activities you enjoy? You need money to enjoy a comfortable retirement, whether that be from a basic savings account, retirement account, or a variety of other sources.

The reality is everything costs money. While you likely have retirement income sources that you’ve saved for during your working years, you may need to generate income during retirement to fully pay for your needs and wants. In this article, we will cover six ways that you can have money trickling in during your retirement years so that you can live your best life!

Six Ways to Generate Income in Retirement                                

1.   Social Security 

Social Security was created during the height of the Great Depression when President Roosevelt signed the Social Security Act into law on August 14, 1935. According to, “The traditional sources of economic security: assets; labor; family; and charity, had all failed in one degree or another. President Franklin Roosevelt would choose the social insurance approach as the ‘cornerstone’ of his attempts to deal with the problem of economic security.” Before the Social Security Act, Americans were essentially on their own to plan and save for retirement and didn’t have much of an economic safety net.

To qualify for Social Security benefits at your retirement age, keep in mind that you must have earned at least 40 Social Security credits. During your working years, you can earn up to 4 credits per year. The amount needed for each credit can change, but in 2022, you need $1,510 in covered earnings to earn one credit.

According to the Social Security Administration, as of March 2022, the average monthly social security benefit payment is $1,536.94. Bankrate states that “you can boost your Social Security payout as much as 24 percent, if you’re willing to delay taking your benefits.” Depending on what part of the country you live in, you’ll likely need a lot more money than your Social Security payment to cover your monthly expenses. But don’t fret – there are other ways you can generate income during retirement! Social Security is a major part of many people’s retirement income plans—but it’s only a starting point.

2.   Certificate of Deposit (CD)

CDs—certificates of deposit, not the type that contains your favorite music track—are a safe way to generate income during retirement. A certificate of deposit, commonly known as a CD, is a savings vehicle that allows you to earn interest on a lump sum for a fixed time. During that fixed time period, you cannot withdraw your money without risk of penalty fees or lost interest. CDs are offered by many consumer financial institutions, such as banks and credit unions. The most common CD terms are based on three, six, or 18 months or full-year increments—this is the length of time the money you put into a CD must remain untouched. The longer the duration of the CD, the more interest you’ll likely earn.

CDs generally offer higher interest rates than savings accounts due to lost liquidity when your money is tied up in the term length. Interest rates vary greatly from institution to institution, so be sure to shop around for the best rate. With CDs, you don’t have to worry about market volatility, and your deposit will be safe if your CD is at an FDIC-backed bank or a credit union, which is insured by the National Credit Union Administration (NCUA).

3.   Dividend Stocks or Index Funds

A dividend-paying stock “is a publicly traded company that regularly shares profits with shareholders through dividends” (according to Bankrate). It can be challenging to pick dividend-paying stocks, so some investors elect to invest in dividend stock funds, like certain ETFs. A dividend-paying index fund contains a diversified bucket of stocks from various companies, so your risk is spread across many stocks instead of concentrated in one or two. Most index funds that pay a dividend are comprised of blue-chip stocks, which are stable, publicly traded companies, such as Coca Cola or Apple, that have been around for some time.

It’s important to know that there is risk associated with a dividend index fund, especially if you’re not willing to hold to your position for the long haul. During the short term, given market volatility, your investment can swing in both directions. However, if you’re willing to hold on for the long haul, say at least 3–5 years, dividend index funds can be a great way to generate income during retirement. A longer holding time also leads to compounding, which can help your money grow faster. Stock dividends can also rise over time, meaning a stronger income stream for you.

4.   Bonds

Bonds are where you lend your money to a borrower, and in exchange, you earn interest on the money you lent. Bonds are used by corporations and governments to raise money from investors. A corporation may issue bonds to generate more cash flow or finance a debt. A local, state, or federal government may issue bonds to bonds to fund schools, highways, or other infrastructure or projects. 

There are typically three types of bonds: corporate, high-yield, and municipal bonds. Corporate bonds are issued by both public and private companies and have a high credit rating, which means they are relatively less risky when compared to high-yield or municipal bonds. But with more risk comes an opportunity for higher returns, and this is where high-yield bonds come in. However, do note that high-yield bonds can default, which means the bond issuer can go out of business and leave you high and dry. Municipal bonds are issued by governmental entities, including cities, counties, and states. Municipal bonds are safer than high-yield bonds, as the issuing government entity can also tax their citizens to pay bondholders.

Bond funds are another way to bring diversification into your retirement income plan and overall portfolio. When purchasing individual bonds, you must research, select, and purchase them yourself (unless you’re working with a financial professional, who may help you select and purchase them). A bond exchange-traded fund (ETF) allows you to purchase a range of diversified bonds from a variety of issuers and terms.

Bond interest rates can often be lower than other investment vehicles, so your returns can be more limited—but with more safety from volatility.

5.   Annuities 

An annuity is an agreement between you and an insurance company that will pay you a regular income now or in the future based on the agreed-upon terms. The payment can be a lump sum or paid to you in a series of payments over time. Annuities can be used to protect or grow your income or to provide you with guaranteed income in retirement. Think of them as insurance for your retirement, helping mitigate the risk of outliving your retirement income. It’s important to understand the tax implications of annuities when purchasing one, as unexpected taxes can significantly cut into your retirement income.

There are three types of annuities: fixed, variable, and indexed. A fixed annuity is where the insurance company gives you a fixed return on your contributions for a specific number of years.A variable annuity allows you to direct your annuity payments to different investment vehicles, such as mutual funds. Your payout will depend on how much money you put in and the return of the investment funds. An indexed annuity usually will give a return that is correlated with an index such as the S&P 500 Index. You can read more about annuities here.

Annuities are backed by the claims-paying ability of the insurer. Be sure to select a reputable annuity issuer.

6.   A Part-Time Job or Side Hustle 

If the money you earn from Social Security and other investments isn’t enough to cover your expenses during retirement, you can always find a part-time job or side hustle. Thankfully, we live in a gig economy where technology has made it easier to find this type of work. For example, if you have a smartphone, a car, and a clean driving record, you can easily earn money as a rideshare driver. You can also turn your hobbies into a side hustle. Do you love writing or editing? There are apps that will connect you with someone who may need your services and is willing to pay you. Even if you don’t need the money, working part-time can be a pleasant way to spend some of your time in retirement. After all, you’ll have a lot of time on your hands, and you may eventually get bored of watching your favorite sitcom for the hundredth time!


Many ways exist to help you generate income during retirement. As much with in the financial world, the sooner you start planning, the better you will be in the long run. For example, the more years you’ve worked, the higher your Social Security payments will be and the longer you are invested in your dividend index fund or annuity, the greater returns you’re likely to get. How much you earn during retirement is in your hands—all you have to do is get the ball rolling.

If you want to learn about more personalized and advanced wealth management strategies, schedule a 15-minute call with the Liberty Group team.

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Standard Disclosure

This blog expresses the author’s views as of the date indicated, are subject to change without notice, and may not be updated.  The information contained within is believed to be from reliable sources.  However, its accurateness, completeness, and the opinions based thereon by the author are not guaranteed – no responsibility is assumed for omissions or errors.  This blog aims to expose you to ideas and financial vehicles that may help you work towards your financial goals. No promises or guarantees are made that you will accomplish such goals.

Past performance is no guarantee of future results, and any expected returns or hypothetical projections may not reflect actual future performance or outcomes. All investments involve risk and may lose money. Nothing in this document should be construed as investment, tax, financial, accounting, or legal advice. Each prospective investor must evaluate and investigate any investments considered or any investment strategies or recommendations described herein (including the risks and merits thereof), seek professional advice for their particular circumstances, and inform themselves about the tax or other consequences of any investments or services considered. 

Investment advisory services are offered through Liberty Wealth Management, LLC (“LWM”), DBA Liberty Group, an SEC-registered investment adviser.  For additional information on LWM or its investment professionals, please visit  or contact us directly at 411 30th Street, 2nd Floor, Oakland, CA  94609, T: 510-658-1880, F: 510-658-1886, Registration with the U.S. Securities and Exchange Commission or any state securities authority does not imply a certain level of skill or training.


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Baker, Brian. (March 24, 2022). Dividend stocks: What they are and how to invest in them. Bankrate.

Fernando, Jason. (May 18, 2022). What Is A Certificate of Deposit (CD)? Investopedia.

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