Earning retirement income during uncertain economic times requires some creativity and optimism. With stock market volatility, a “set it and forget it” approach to retirement strategy likely won’t result in much extra income.

Every investor is different and the right strategy for you reflects on your investment goals and interests.  A blended approach can be effective as well as interesting, so we’ve put together five sources of retirement income from traditional investments. As a bonus, we’ll throw in a few unconventional ideas at the end, too.  

5 Sources of Retirement Income

High Yield Bonds

As the name indicates, high yield bonds provide more yield than government or investment=grade bonds. As you might expect, they also have a higher risk of default, so be sure to research your options carefully.

Stock Options

Investors can generate option premium income by selling call options. Covered calls are popular as a relatively safe strategy, yet investors should be sure to understand how different types of call strategies can increase risk. Snider Advisors offers free courses to get you started in the right direction.  

Dividend Stocks

Even in recessionary times, some blue chip and other stocks still generate dividend income for investors interested in a long stock position where you buy and hold the stock for some time. Researching and tracking a portfolio can be time-consuming. Luckily, many online resources are available to help investors, such as tracking tools like TrackYourDividends. 

Real Estate 

Real estate is a time-honored way to generate rental income, provided the local market dynamics and location are favorable. Investment properties require oversight, overhead, and tenant management. If the idea of maintaining a rental property and dealing with tenants during retirement doesn’t appeal to you, check out local property management companies and REITs to distance yourself from the management responsibilities.

Energy MLPs  

Energy Master Limited Partnerships, or MLPs, are pass-through entities that can avoid corporate income tax at state and federal levels because of their partnership classification. Pipeline operators are midstream MLPs that charge energy companies a fee for distribution and pass on almost all of those gains to shareholders. MLPs may be attractive to retirement investors because their valuations do not reflect the fuel price volatility of the underlying fuels themselves or the risk of exploration and development.

Alternative Ideas for Retirement Income in 2022

Additional options to generate retirement income outside of your stock portfolio include part-time employment), a reverse mortgage, and earning income from sharing economy business models

Part-Time Employment

Retirement doesn’t mean you need to completely stop working. Part-time retirement work offers many benefits to retirees.  Beyond just income, it can keep you connected to others and the business world.  It will occupy a portion of your time giving you fulfillment and purpose.  Finally, it could be the perfect time to work in an area you are truly passionate about.  Fewer hours and less stress can make part-time employment a perfect transition into retirement. 

Reverse Mortgage

If you are at least 62 years old, own your home outright, or have significant equity, a reverse mortgage may be an option. Essentially, a reverse mortgage is a reverse loan where the lender makes payments to you instead of you paying the lender.

While you typically can’t borrow against the full value of your home, a reverse mortgage allows you to convert part of the equity in your home into cash without having to sell your home or pay additional monthly bills. Reverse mortgages aren’t a silver bullet.  They can be complex and you’ll have to pay fees, but in the right situation, they may be a reliable source of retirement income. Homes are often a retiree’s largest financial asset.  For this reason, reverse mortgages require consideration when looking for retirement income sources. 

Sharing Economy Options for Retirement Income

Leveraging sharing business models like UBER or AirBnB can pad your monthly take with part-time income. If you live in a popular area and have been planning some long trips during retirement, renting your home on Airbnb could significantly underwrite your expenses. If you choose to live for a few months in a less expensive country while you rent out your home in the US, you might even come out ahead. 

The Bottom Line

Investors can take advantage of many options to create a custom approach to earning retirement income in 2022. One powerful part of the mix is to generate income from an existing long stock portfolio using covered call options. 

If you are new to options, the Snider Investment Method provides a time-tested way to find and execute these trades. Inquire about our asset management services for a hands-off approach.