If you started investing for retirement early enough and followed sound advice on building out your retirement plan, you’ll likely have no need to produce additional income after you’ve retired. However, that’s not always the case.
Even if you’ve done everything right, life happens. Unexpected costs pop up here and there. Or, maybe your goals change – and you want to live a more comfortable (or perhaps lavish) retirement lifestyle. Whatever the case, investing for income in retirement is a hot topic. And today, we’ll take a deep dive into the best income-generating investments for retirement.
Generating retirement income doesn’t necessarily mean you have to get another job. If you have enough cash saved up, you can put it to work for you. From trading in the stock market to investing in real estate, there are quite a few possibilities – each with its own unique pros and cons. But by the end of this article, you’ll feel more confident in generating retirement income after 60. First – let’s talk about why this is something that may be worth looking into even if you don’t feel that you need the extra income.
Why You May Need Income-Generating Investments for Retirement
There could be a few reasons you’re here reading this article. Maybe you waited too long to start investing in your retirement, and you’re going to run out sooner than anticipated. Or, perhaps your goals have changed and you need extra income to support your new lifestyle. Maybe you just feel bored with retirement – and you want to keep doing a bit of work on the side – without having to get a job.
Below, we’ll cover a few key reasons why you may need to start generating income during retirement:
- To supplement your existing retirement income: Even if you have a solid retirement plan in place, there’s always the potential for unexpected costs. Perhaps you need long-term care or face high healthcare costs. Or maybe you want to travel more than you originally planned. Whatever the case – additional income can help cover these costs without depleting your savings.
- You want to leave a legacy: Some retirees choose to reinvest their money so they can leave a financial legacy for their children or grandchildren.
- You simply enjoy working: If you’re bored and looking for something to do in retirement, investing for income can give you the opportunity to continue growing your wealth – without having to get a job.
Now that we’ve covered some key reasons why you may need income-generating investments for retirement, let’s move on to discussing what those are.
What are the Best Income Generating Investments for Retirement?
There is no one-size-fits-all answer when it comes to the best income-generating investments for retirement. It depends on things like your age, how much money you have saved, your goals, and your risk tolerance. However, there are a few investment strategies that tend to work well for retirees.
Below, we’ll cover four of the best income-generating investments for retirement. We’ll also provide a brief overview of each one so you can get a better understanding of how they work.
Invest in the Stock Market
Perhaps the best way to go about investing for income in retirement is in the stock market. The reason we like this income-producing investment for retirement is that you are in complete control of how much time you spend on it. You can take it seriously and earn a full-time income with just 2-4 hours a day at most. Or, put it in cruise control and make a bit of supplemental income with a few hours a week.
Dividend stocks, in particular, are stocks that pay out regular dividends to shareholders. These dividend payments can provide a source of income during retirement – especially if you reinvest them back into the stock. You can automate this process so you kick back, relax, and let your portfolio work for you.
Or, you could consider taking a more active approach to invest in the stock market – by learning swing trading. When comparing swing trading vs investing long term, you will definitely spend a bit more time managing your investments and uncovering new opportunities. But, you also have the potential for high swing trading profits.
Now – if you want to take things even a step further, you can consider day trading or another more active style. This is far more time-consuming, but a great choice if you want something to keep you busy daily – while earning you investment income along the way. In comparing day trading vs swing trading, you’ll definitely work more – but you may find that the fast-paced nature keeps you youthful and restores your sense of excitement.
You can even consider less traditional stock trading strategies, like learning how to short ETFs. The possibilities are endless. And the truth is, investing in the stock market doesn’t have to be complicated. By setting yourself up for success with the right tools and resources, you can enjoy a high rate of success with minimal work and even less stress. We’ll talk about this more later on. First, let’s discuss another income-producing retirement investment: bonds.
Bonds are another popular option for retirees – as they typically offer stability and predictable interest payments. When investing in bonds, you’re essentially lending money to a government or corporation in exchange for periodic interest payments. And, there are two different types you can choose from:
- Government Bonds: Backed by the full faith and credit of the issuing government, these are regarded as some of the safest investments available. Because of their safety and stability, government bonds are a popular choice for retirees looking for income-producing investments. They offer relatively low-risk returns, and many governments also offer tax breaks on interest payments from government bonds.
- Corporate Bonds: On the other hand, these are issued by private companies and carry a higher risk than government bonds. However, they also offer the potential for higher returns. Corporate bonds can be a good choice for retirees who are willing to take on a bit more risk in order to potentially earn higher returns.
Your specific risk tolerance & income goals will dictate whether or not bonds fit into your strategy – along with the ratio at which you’ll invest in government vs corporate bonds. Speaking of safe, secure investments, though, let’s get into one of the most lucrative: real estate.
Real estate can be a great way to generate income in retirement – especially if you’re investing in rental properties. With rental properties, you can collect regular rental payments from tenants. With just 2-3 rental properties you can earn anywhere from $500-1000 a month profit, after paying the mortgage on each location. And if you’ve already paid off the properties, that figure can be as high as $2-5k depending on the type of property and location.
And, if you’re investing in the right property, there’s also the potential for appreciation over time. That means a few years into your retirement, you may be able to justify selling your properties altogether and living off the lump sum you earn. Or, you can continue to let the income produced from these investments feed you and your family after you’re gone. Leaving real estate investments behind to children or grandchildren creates generational wealth – and goes back to a point we touched on earlier: leaving a legacy.
Now, it’s important to note that buying real estate properties isn’t always the most feasible way to go about investing for income in retirement. You need a lump sum on hand, and you will need to work hard to find the right opportunities.
In this case, you can look into REITs as a more accessible income-generating investment for retirement. These are trusts that you can buy and sell in the same manner you would stocks. As a result, your investments remain liquid. Should a real-life issue arise that requires the need for you to pull cash out – like a health complication – you won’t have to jump through the hurdles that come with selling a property.
Additional Tips for Investing for Income in Retirement
Now – we’ve shared what we deem to be the best income-producing investments for retirement. However, it’s important to understand how these fit into your unique, existing retirement plan.
You don’t want to just start putting your money into these various investments and hoping for the best. That’s a surefire way to watch your retirement account dwindle, without the extra income coming in. While you may think reaching out to a financial advisor is the right approach, it’s actually not. We recently wrote a blog post discussing why you don’t need a financial advisor. The short version is, they don’t deliver enough value compared to their fees. You can do everything they do yourself – it just takes a bit of research and the right tools.
So, with that said, here are some additional tips for investing for income in retirement:
- Understand what you need: Before investing in anything, make sure you understand precisely how much income you need to generate monthly to support your desired lifestyle – and feel comfortable. This number will be different for everyone and is contingent on things like your lifestyle and current expenses. Once you know how much additional income you need to generate, it’s just a matter of allocating your capital accordingly.
- Consider all your options: There are a lot of income-generating investments out there. We’ve only just scratched the surface with stocks, bonds, and real estate. Do some research on other options as well to see if they fit into your retirement strategy.
- Use the right tools: When it comes to investing for income in retirement, you need the right tools at your disposal. VectorVest is a great software that helps you effortlessly invest in the stock market. No need to waste your time filtering through various charts or tracking countless technical indicators. Instead, our software simplifies the process to the point where you can get a clear buy, sell, or hold recommendation for any publicly traded asset. We’ll talk more about how it works and why you need it below…
How VectorVest Helps You With Generating Retirement Income
The VectorVest stock market analysis software has changed the game forever. It relies on a simple, tried-and-true form of stock analysis that will help you win more trades with less work and less stress. With just three simple ratings (relative value, relative safety, and relative timing), you can discover everything you need to know about a particular stock and determine if it’s the right opportunity for you based on your unique investment strategy.
And, you don’t have to deal with any uncertainty when you invest in a VectorVest subscription. The software gives you a clear buy, sell, or hold recommendation for any asset at any time. This means you never have to play the guessing game or let emotions influence your decision-making. If you simply trust the system, you’ll be rewarded.
The best part? VectorVest brings opportunities to you on autopilot. Our pre-built searches feature the top stocks at any given time. We have these searches broken down into categories that are especially relevant to those seeking the best income-producing investments for retirement, such as the top dividend stocks or the safest stocks. If you decide you want to make some more money with swing trading strategies, we have stock picks for that, too.
With either a desktop or mobile stock advisory, you can gain these insights and start generating retirement income in your sleep. See how it works yourself by analyzing stock free today!
Final Thoughts on Income Producing Investments for Retirement
If you came up short in your retirement planning, and find that you need help investing for income in retirement, you should now feel more confident in doing so. Whether you experienced more health complications or other costs, or you simply want to live a more adventurous/comfortable retirement lifestyle – generating retirement income is easier than you may have previously thought.
And while you have a few great options at your fingertips, the ratio of work to income produced by investing in the stock market works is likely your best option. You should take the time to learn more about how the stock market works first, though. But with the help of VectorVest, you can start bringing in extra monthly income without having to spend hours in front of your computer analyzing and validating stocks. You’ve worked hard enough to get this far in retirement – let VectorVest do the heavy lifting for you!