The 5 Best Places For A Retiree To Source A Stellar Retirement Income

As your strategy to leave the workforce comes together, you'll pass through a few key phases of planning. Nearing the end of your working journey, your thoughts may begin to focus on the social aspects of the transition. However, the bulk of many individuals' retirement preparation has a decidedly financial tilt. The ideal time to start saving for retirement is around 25, after all. Putting money aside is the first step here, but there are many different ways you can spread funds out with a comfortable retirement in mind. The Federal Reserve Bank of St. Louis reported that the average annual expenditures for retired people in 2024 came out to $59,616, or $4,968 per month. While this may sound like a fairly straightforward figure to plan around, sustainably generating roughly $5,000 in monthly retirement income will take some strategy.

Social Security checks will offset some of this burden, but some might consider an annuity to bridge the gap. Others may pour salaried income into employer-match-eligible accounts to gain access to free, additional money. A reverse mortgage can also deliver a one-time payout or stable monthly cash flow support, while a dividend-investment strategy offers a straightforward capital preservation approach.

Social Security is an essential component to the financial resources of seniors across the country. Workers pay into this program's trust fund throughout their working life, and then draw out what amounts to pension checks after they reach their 60s. You can initiate Social Security payments once you turn 62, but they'll come with a 30% reduction if you choose to claim benefits as soon as you're eligible. Whenever you decide to start drawing benefits, they'll continue to flow into your bank account for the rest of your life, offering a significant pillar of stability to your cash flow considerations. The Social Security Administration reports the average benefit check was $2,071 in January 2026. While that's less than half of the monthly amount the average retiree spends, it still makes for a significant boost to many individuals' incomes — even if there are concerns over how the government will keep the Social Security trust fund solvent so benefits can stay at their full capacity in the future.

21% of Americans believe that Social Security will provide enough financial weight to support their needs on its own, according to a 2024 Allianz Life study. Similarly, just 39% of Americans have created a plan to fit Social Security income into their retirement finances. However, it's equally important to highlight that, while Social Security benefits are one valuable income stream for retirees, this tool remains just one part of a more complex strategy.

Purchasing an annuity is another solid option if you're looking to set yourself up to have a comfortable income once you stop working. Annuity policies operate on a contract basis, meaning you'll go into the investment with exact terms that guide the experience. Every policy is unique, but the basic structure is easy to follow: You'll pay into a policy either over a long period of time while you're still working, or all at once in a lump-sum contribution. You could even draw funds from other investments and use the capital to finance this alternative.

Once your annuity is funded, it will pay out regular income. Since your annuity contract stipulates the cost as well as the payout figure, you can tailor the tool to your specific needs. Subtracting the average Social Security check from the average retiree's monthly expenditure leaves a figure of $2,897 in monthly retirement expenses. According to a Bankrate calculator, putting roughly $300,000 toward an annuity with an 8% return rate could fund a 15-year payout at roughly this pace. Opting for an inflation-protected annuity (IPA) could make this math even simpler: IPAs adjust payout rates based on wider economic conditions in a similar way to how the cost-of-living adjustment alters Social Security benefits. So, both tools will grow over time in an effort to keep pace with the national inflation rate. Of course, not everyone has hundreds of thousands of dollars around to buy an annuity, but there are other ways to supplement your retirement income as well.

Workers seeking opportunities to maximize their savings capabilities should look no further than the venerable 401(k). This is typically a retirement account available through your workplace, but self-employed individuals and freelancers can open their own 401(k) to get in on the magic, too. Most Americans have access to employer-sponsored retirement benefit options, and Economic Innovation Group reported that roughly 50% of full-time employees are able to utilize employer match perks as of 2025. If you fall into that population, taking advantage of 401(k) matching is one of the most straightforward ways to pad your retirement income.

Front loading your retirement investment dollars in a 401(k) account that's underpinned by employer matching gifts you free money, largely without a catch. The only thing to keep in mind is that, if you're using a Roth account, the matched funds are deposited into a separate, traditional 401(k) and are taxed when you withdraw the capital instead of in advance of your deposit. In a 2025 study, Vanguard found that the average 401(k) match amounted to 4.6% of employee salary figures. For those contributing enough to take advantage of the full match amount offered, that comes out to $460 in free cash for every $10,000 earned from a regular salary. If you're looking to bolster your retirement account's value in a hurry ahead of leaving the workforce, utilizing employer match benefits is an aggressive way to achieve this goal without actually having to actively save more and sacrifice elsewhere in the budget.

A reverse mortgage can deliver up to 60% of your home's appraised value in cash while still allowing you to live in the property. If you move out of a reverse mortgage home or spend most of the year elsewhere, you'll need to repay it. But if you plan on staying in one place for the rest of your life, a reverse mortgage is not inheritable in the same way a standard mortgage on a home is. This allows you to offer a means of extracting cash from your home without the threat of passing on the repayment obligation to loved ones: A beneficiary can simply sell the home if there's some value to be gained or allow the lender to take the property. This tool also doesn't require you to make any payments on the loan until the balance comes due, eliminating most of the maintenance headaches that come with traditional lending products.

This financial tool can be leveraged either as a lump sum payout or in monthly installments. Those who want a simplified experience might opt for the monthly payment, while an investor trying to leverage their home value for expanded financial mobility may consider a one-time drawdown. In most cases, you need to be at least 62 to take out a reverse mortgage, but the funding you get from it can be used for any purpose. So, if you're a homeowner who wants to bolster their investment accounts or simply needs more cash on hand, a reverse mortgage may be a viable solution.

While there are many strategies to consider in managing your portfolio, two common, long-term approaches involve utilizing either dividend-focused assets or growth-oriented investments. Growth stocks produce little to no dividend payouts, and instead reinvest excess cash back into the business to drive continued expansion. Meanwhile, dividend producers pay shareholders with accumulated cash on a regular basis, and a healthy set of investments in these assets can be a major source of retirement income.

A dividend producer may see a slight dip in share price around the dividend payment date, which can result in high-yielding stocks growing at a slower pace than others. That could be a problem in some investors' eyes, but these assets could prove a consistent source of cash for a retiree without forcing them to sell their underlying investment. A robust dividend-investing strategy can therefore deliver income without requiring any selling or complex drawdown strategies aimed at preserving your principal. 

One thing to keep in mind, though, is that average payout rates vary across sectors: Finance brands offer roughly 4.17% on average, while Dividend.com reports technology brands produce an average yield of 3.2%. A diversified portfolio is essential to weathering storms that may temporarily reduce rates, and so simply chasing after the highest dividends offered on the market might not be the best approach. You'll also want to investigate the dividend payout ratio. Generally speaking, a company paying more than 50% of its earnings in dividends is likely overstretched and might be producing at an unsustainable level.