3 Unexpected Sources of Retirement Income | Smart Change: Personal Finance

But those aren’t the only ways to fund your retirement. Here are three lesser-known sources of retirement income you may want to add to your financial plan.

Certain stocks pay dividends to shareholders periodically, usually once per quarter. You may only get a few dollars per share that you own, but if you have a large investment portfolio, these dividends can add up over time.

If you have a $500,000 portfolio that has a 3% overall dividend yield, that means you’ll earn about $15,000 per year in dividends alone. That can go a long way toward covering your retirement expenses, and it may help you stretch your personal savings even further.

You can invest in individual dividend-paying stocks if you’d like. But it might be easier to look for a dividend index fund. These give you instant ownership in many dividend stocks. Spreading your money between multiple companies like this is smart because if a few of your stocks have to cut their dividends during difficult times, you’ll have others to pick up the slack.

You can stash savings in a health savings account (HSA) if you have a high-deductible health insurance plan. That’s one with a deductible of $1,400 or more for an individual or $2,800 or more for a family. Your HSA contributions reduce your taxable income for the year, just like traditional IRA contributions, and you won’t owe taxes on these funds at all if you spend them on medical expenses.

But if you’re hoping to use your HSA for retirement savings, try to avoid early withdrawals whenever possible. Look for a provider that will enable you to invest your HSA funds and leave them to grow until you turn at least 65. After this age, you can make nonmedical withdrawals, though you’ll owe taxes on these. And if you make a nonmedical withdrawal when you’re under 65, you’ll face a 20% penalty on top of taxes.

Individuals may contribute up to $3,650 to an HSA in 2022, while families can contribute up to $7,300. If you’re 55 or older, you can add an extra $1,000 to these limits. Those planning to make an HSA part of their retirement plan should keep an eye on these limits over time. They may be able to set aside more money in future years.

There are several ways you can use your house to make money in retirement. If you often travel or have a spare room, you might consider renting this out to guests, either on a short- or long-term basis. There are plenty of online home rental sites that can help you advertise your rental and collect payment easily.

Another option is a reverse mortgage. This is only available to adults 62 and older who have significant equity in their home. Essentially, it enables you to borrow against the equity in your home and use the money for whatever you’d like. You don’t have to make any payments as long as you’re living in the home, but if you die or move out, you or your estate must pay the balance of the loan, plus interest.

These loans can be complex and have associated fees, so they’re not for everyone. But they’re an option worth considering for seniors who find themselves running short on savings in retirement.

This isn’t an exhaustive list of all the ways you can fund your retirement, but hopefully it gets you thinking about some more out-of-the-box ideas. See if you can brainstorm any other sources of retirement income, and then look over your list and decide which you’d like to incorporate into your retirement plan.

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