Income solves many things, and generating it during retirement is, if necessary, essential to prevent yourself from outliving your financial resources. You can use a combination of income sources, including Social Security, investment withdrawal, and part-time work.

Personalize your strategy by combining different tactics, such as dividend stocks for potential growth and annuities for guaranteed income. It’s all about foundational, guaranteed income and investing.

Foundational and Guaranteed Income

Foundational and guaranteed income are streams of income that are steady and consistent. They are the cornerstones of any retirement plan. However, understanding when and how they are used is essential.

Social Security is not only foundational: it’s guaranteed for life. But what percentage it is of your overall retirement income depends on when you start collecting benefits.

It’s important to run the numbers. The IRS dangles a higher payout if you wait until full retirement age (FRA), 67 for those born after 1960, and will add 8 percent to your benefit each year you delay beyond FRA until age 70. But do you win in the end?

According to the Journal of Accountancy, the rule of thumb is that delaying payments by 12–14 years results in receiving the same amount of dollars as if you had started claiming at age 63. That puts the break-even point at approximately 75. If you wait until 70, your break-even point is approximately 86.

Because Social Security for most Americans is a main component of any retirement strategy, knowing what break-even point you’re comfortable with is a determining factor as to when you start collecting it.

Annuities for Guaranteed Income

Many people have mixed views about annuities. According to Gainbridge, annuities can outlive your savings. And even though some aren’t guaranteed for life, you can purchase an optional rider that gives you a lifetime benefit.

It allows you to customize based on your retirement needs and offers principal protection. Many come with downside protection or minimum guaranteed returns. A tax-deferred annuity means you only pay taxes when the accumulation phase ends and you start receiving payouts.

But you have limited liquidity, and your funds are locked up for years before you start receiving payoffs. There are surrender charges from the insurance company. There are also charges due to the IRS if you pull money out before you’re 59 1/2.

Annuities have fees and commissions, and are often complex and not straightforward.

Investment Income

Instead of relying solely on Social Security checks and savings, consider building a diversified portfolio of income streams. By diversifying, you will mitigate risk, have multiple streams, and protect yourself against underperforming investments.

Bond Ladders

Bond ladders involve purchasing bonds with various maturities. Once the principal of a bond matures, you reinvest it into a new bond at the long end of the ladder.

This provides regular income through interest payments. It also mitigates risk by spreading out maturity dates. Bond ladders reduce interest rate risk compared to holding bonds with a single maturing date.

But the downside is that interest payments may lose purchasing power if inflation rises.

Dividend Stocks

Investing in a dividend-paying stock provides regular income. Dividends provide cash flow without requiring the sale of investments. This allows your portfolio to continue to grow and benefit from capital appreciation.

Some companies have a history of annual dividend increases, which can help hedge against inflation.

The downside is that stock prices fluctuate, and a company may reduce or eliminate dividends during economic downturns. Do the research and choose companies that have a long history of paying dividends.

Real Estate Investing

Two ways you can enter the real estate market are through self-management or real estate investment trusts (REITs).

With self-management, you purchase a rental property or lease out property you currently own. Renting provides you with a steady income stream and potential tax benefits. The real estate may increase in value over time, which will add to your net worth.

But the downside is you’ll be handling tenant issues and property upkeep. Although it will cut into your income, using a management company may help avoid headaches. You also must contend with vacancies and varying market fluctuations.

REITs offer a hands-off way to participate in the real estate market. A REIT is a fund that buys real estate for investors. It’s a passive way to own real estate without buying or selling properties.

REITs act like mutual funds. They raise a pool of money from investors and then buy and run income-producing properties. The investor then receives a portion from the rental and property sales as dividends.

Before investing in a REIT, research its historical returns for the past few years and compare it to other REITs. Check the fund’s credit rating and debt for stability. Too much debt could be a sign that the REIT is overextended.

Use Investing, Foundational, and Guaranteed Income

The overall goal is to generate alternative streams of income. Purchase dividend-paying stocks, annuities, or invest in a REIT. Run the numbers as to when you should start collecting Social Security benefits. And ensure that you create revenue streams that will outlive you.

The Epoch Times copyright © 2025. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.