9 Ways to Generate Retirement Income 

Are you about to retire? Here are some income strategies that you can use to generate cash flow. 

Safe Investments

One such investment is the CD or Certificate of Deposit which you get from a bank. It is FDIC insured and you get a higher interest if its term is longer. 

Pros: your principal will be safe.

Cons: the income will not be much and it is not inflation-protected. To get a significant amount of income in retirement, you will have to invest a huge capital amount. 

Laddered Bonds

Just like a CD, a bond comes with a maturity date. There are several types of bonds such as corporate issued bonds which are higher yielding and government issued bonds which are safer. 

Pros: you will get more income from a bond than from a CD. Bond maturities can also be matched with your cash flow needs. Some bonds offer tax-free income.

Cons: the income is not inflation-protected and you have to invest a huge amount of capital for a significant amount of income. 

Stock Dividend Income

With some stocks, the dividends increase every year. 

Pros: your capital will grow, if history is anything to go by. Companies usually increase dividends gradually. Your income, therefore, increases with inflation. 

Cons: it is volatile. When times are tough, dividends may reduce. 

High-Yield Investments

Some investments such as master-limited partnerships, yield high returns. But the higher the return, the higher the risk. 

Pros: high initial income.

Cons: the value of your principal will fluctuate. You may not receive any income when times are tough. 

Systematic Withdrawals from a Balanced Portfolio

A balanced portfolio is one that includes both bonds and stocks. 

Pros: when you do this right, you will get a consistent lifetime income that is inflation-adjusted. The bond part promotes stability while the stocks part gives long-term growth. 

Cons: the value of your principal will fluctuate. Even when things are thick, you have to stick to your strategy. Sometimes, you will be forced to withdraw less. 

Immediate Annuities

Annuities are contracts issued by insurance companies. 

Pros: you are assured of a lifetime income—regardless of how long you live. 

Cons: unless your annuity is inflation-adjusted, your income won’t keep up with inflation. For the highest payout, you can’t access your principal.

Income for Life Model

This approach aims to find a balance between growth-oriented investments and safe investments. 

Pros: it is an easy to understand model and can give good results. 

Cons: this strategy involves taking an investment risk. 

Variable Annuity with a Guaranteed Income Feature

This is an annuity that allows you to choose a portfolio of investments (market-based). 

Pros: if the market continues to rise, you are guaranteed a lifetime inflation-adjusted income. 

Cons: the fees will most likely be higher.

Holistic Retirement Asset Allocation Plan

The goal of this approach is to maximize income and not maximize returns. 

Pros: combining several ideas could create the perfect flow of income for your needs. 

Cons: putting everything together takes a lot of work.