A Boomers’ guide to income in retirement


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If you’re heading into retirement, the last thing you want to worry about is how you’ll continue to make money. Generating income without working can be complicated for older adults, but it’s not impossible. It’s essential to understand your options and be aware of potential scams. Unfortunately, older adults are the main target for financial scams.


Still, you can maintain smart spending in retirement and maximize your finances safely and successfully with the proper planning and strategies.

Surprising Facts About Retirement Income

  • The average retirement income is around $73,000, but the median retirement salary is $47,000.
  • Social Security payments to retirees average only $15,619 a year, roughly two-fifths of their earnings before retirement.
  • Half of all Americans age 65 or older have incomes of less than $24,224 a year.

Creating a Steady Income for Older Adults

Social Security, pensions and investments are common sources of income for older adults, but many additional possible income streams exist. From annuities and bond ladders to reverse mortgages, the options below may not fit every person but are an excellent place to start exploring what may be possible.


Get an understanding of multiple strategies for receiving a steady income, along with the pros and cons and why they’re important.

1. Retirement Annuities

An annuity is an insurance product that provides the buyer with a guaranteed income for life. When purchasing a retirement annuity, you can do so as an immediate or deferred option. For most older adults, immediate annuities are more popular because they start paying out within a month of being purchased.


To buy an immediate annuity, you pay one lump sum exchanged for a monthly cash flow. If you prefer to let your principal increase before receiving payouts, you opt for a deferred annuity.


Typically, those facing retirement will take money earned during their working years to purchase an immediate annuity. Annuities come in many shapes and sizes, so it’s best to research different annuity options before buying one.

Retirement annuities pros & cons

Why is Retirement Annuity Important?

Annuities work like Social Security and can supplement for individuals who do not receive enough benefits to cover daily bills and expenditures from other income streams. Annuities can provide a consistent payout for older adults looking for a stream of income with low risks and should be purchased if you do not need the total sum of money soon. At times, annuities can result in higher fees than other investment options. When exploring annuity options, it’s best to work with a financial advisor versus an annuity seller.


MoneyGeek Expert Tip: To determine the return on an immediate annuity, take the lump sum you purchased the annuity for and divide it by your life expectancy. For example, if you buy an annuity for $500,000 and your life expectancy is 20 years, you would receive $2,083 a month for the next 20 years.

2. Strategic Withdrawal

Money in the bank is ideal, but without a strategic withdrawal plan you could end up running out of your savings with many years left to live. Strategic withdrawal includes a method for withdrawing your money and using it as cash flow in addition to allowing what you still have in savings to continue to work for you. Older adults need a strategic withdrawal plan for anywhere that you’re storing money, including 401(k) plans, IRAs, mutual funds, bonds and bank accounts.

Retirement Strategic Withdrawal options

Why is Strategic Withdrawal Important?

Without a plan in place and some general knowledge of how much money you have and how long you need it to last, it’s easy to spend quickly. Strategic withdrawals provide a steady source of income without burning through your savings. While it’s a great way to provide regular income, it doesn’t take into consideration the tax implications of withdrawing from retirement accounts as well as any fund performance you’d receive from keeping the money in high-performing mutual bonds or retirement stocks.


MoneyGeek Expert Tip: Traditional withdrawal strategies include withdrawing from one account at a time but can result in higher tax implications. If you do not have significant taxable capital gains, a proportional strategy in taking cash across all accounts could lower the tax impact.

3. Using a Bond Ladder

Bonds are issued by companies or government entities but can be purchased as investments. Bond laddering is when you purchase a variety of bonds that all have differing mature dates. When a bond matures, it pays out an interest rate, typically twice a year. When you use a bond ladder, the maturity dates are staggered, leading to a steady stream of income. To build a bond ladder, you’d start with purchasing a bond. When the maturity date occurs, you then purchase a new bond. With each bond purchased, the maturity date is further in the future, which extends the ladder.

Pros & cons of bond ladders

Why is Bond Laddering Important?

Bond laddering is a popular source of predictable income because it is low risk and allows you to avoid the impact of increased tax rates. It’s a valuable strategy to add to your portfolio because you know what you’re getting. With bond laddering, you receive cash from the interest payments until the bond matures. By understanding the maturity date, you know exactly when you’ll receive your money. It’s essential in bond laddering to ensure you’re investing in high-quality bonds. Fidelity’s bond ladder tool can help you get started building a bond ladder.


MoneyGeek Expert Tip: If you buy four bonds today that have staggered maturities of 1% yield, 2% yield, 2.5% yield and 3% yield, you’d have an average yield of 2.215%. When the first bond matures in two years, you can take the proceeds and reinvest in a new bond to extend your ladder.

4. Pension Plans

Pension plans are employee benefit plans that provide retirement income upon ending your career until the day you die. Typically, companies build pension plans by investing large sums of money into the stock market and bonds to ensure enough money to pay employees’ pensions once they retire. There are two types of pension plans, a defined benefit plan and a defined contribution plan. Both promise a specified amount of money at retirement, either in an exact dollar amount or based on a formula that includes salary and service.

Pension plans pros & cons

Why is a Pension Plan Important?


Finding a company that offers a pension plan can provide valuable comfort in retirement. Pension plans provide a steady income for the rest of your life without you having to do much. Sometimes you can even choose a pension plan that includes a beneficiary. While a pension plan is not as individually flexible as a 401(k), it provides a guaranteed source of income throughout the rest of your life, as long as the company continues to see success.


MoneyGeek Expert Tip: Pension plans are paid out on a specific amount, such as $500 a month, or based on salary plus service. For example, an individual could receive 1% of the average salary over the last five years with the company. If you were making $100,000, you’d receive $1,000 a month for the rest of your life.

5. Reverse Mortgages

A reverse mortgage allows you to take the equity in your home and turn it into cash. For older adults who own a large portion of their home, a reverse mortgage can be used as a source of retirement income without risking the roof over your head. To access a reverse mortgage, you must be 62 years or older and have enough equity in your home to borrow against it. You can choose your payouts from a reverse mortgage loan in a monthly payment, one large sum or as a line of credit. When you purchase a reverse mortgage, you don’t make any loan payments.

Reverse mortgage pros & cons

Why is a Reverse Mortgage Important?

Many individuals spend years paying off their homes and earning equity. A reverse mortgage can keep you in your home while providing monthly, quarterly, or yearly income. You can even take your loan in one lump sum. Reverse mortgages are a good option for retirement income because you can spend the money on anything you need. As long as you are committed to paying off your loan, you won’t go into more debt by pursuing a reverse mortgage. You can determine how much you may get from a reverse mortgage using a reverse mortgage calculator.


MoneyGeek Expert Tip: Reverse mortgage payouts are based on the value of your home and current loan rates. As of 2022, the max amount someone can get paid by a reverse mortgage is $822,375.

6. Social Security Benefits

Every paycheck you receive has a small amount taken out that goes into Social Security for most individuals. You also earn credits for the number of years you pay into Social Security. Once you’ve reached 40 credits, you qualify for Social Security benefits which are monthly cash payouts from the government to supplement income in retirement. You must be 62 years old to claim Social Security, and the amount you receive is based on your earnings record from your working years.

Advantages of Social Security

  • More than retirement: Social Security provides disability and life insurance benefits in addition to Social Security payouts.
  • Benefits are progressive: The higher your earnings, the more money in benefits you will make. Social Security benefits increase with the cost of inflation.
  • It’s widely offered: More than 97% of Americans receive Social Security benefits. It’s not need-based or limited by income or assets.
  • It’s secure: Social Security is collecting more than it pays out, making it a secure form of income for years to come.

Why is Social Security Important?

Social Security is the most widespread form of income for retired adults in America. It’s important to take advantage of Social Security because it’s money you’ve already worked to earn that you can finally claim. For individuals who have other income sources, you may need to pay taxes on your Social Security. The Social Security Administration makes it easy to calculate your potential benefits, apply, and manage your Social Security account.


MoneyGeek Expert Tip: If your last yearly income were $80,000 a year, you would receive $1,450 in Social Security benefits from age 62 to 67. According to the Social Security benefits calculator, that amount increases several hundred dollars at age 67 and again at age 70.

7. Government Resources and Public Assistances

When considering government assistance for those facing retirement, most people do not think beyond Social Security and Medicare, but there are a variety of additional offerings to aging adults. Income programs like the Supplemental Security Income (SSI) and Senior Community Service Employment (SCSE) programs can provide another income stream for individuals in retirement. There are also numerous tax assistance programs as well as resources for federal workers and retired military.


Learn about different avenues of income and government and public assistance in the resources below:

Managing Income Streams in Retirement

While the amount of money you have coming in changes in retirement, daily bills tend to stay the same. Managing income streams wisely in retirement is crucial to making your money last long as you need it. Older adults need to consider the sources of income, how much they have, what they need to spend each month, and how long it will last you. This can be solved with a strategy for your retirement paychecks.

Factors to Consider

Several risks can impact finances throughout our lives, and that does not change in retirement. When crafting strategies to manage income streams it’s important to understand different factors that will impact how you strategize your finances. These include things like tax efficiency, income, investment strategies, and others listed below.

  1. Your age: Perhaps the biggest factor to consider is how old you are and what your life expectancy is. This will provide a basis for creating a strategy that allows your money to outlive you.
  2. Types of assets: Knowing where your money is will impact where you withdraw it from. Some funds, like 401(k)s, require withdrawal at a certain age. Some income streams will continue to work for you while others are worth withdrawing from as soon as possible.
  3. Tax implications: Withdrawing from a 401(k) too soon or taking large sums of money from other suggested income streams can result in large tax implications. When planning your strategy, understand any taxes you’ll have to pay from receiving or withdrawing income.
  4. Your financial knowledge: Some individuals are well-versed in money management. If you’re not confident making your investments or strategies, seek a professional to assist you.

Retirement Strategies to Maximize Income

It’s never too soon to start implementing strategies that maximize your income. Even if retirement feels a long way away, there are things you can start doing today to improve your finances so that you’re secure down the road.

  • Meet your employers’ match: If your employer offers a 401(k), you should be contributing as much as you can early on and at the very least meeting your employers’ match. The max you can contribute to a 401(k) is $19,500, and the earlier you can start contributing, the more you’ll gain from compounded interest over the years.
  • Diversify your portfolio: Explore the multiple streams of income that we mentioned earlier. You can start working towards many of these long before you retire, like purchasing bonds and annuities.
  • Use catch-up contributions: For individuals aged 50 that haven’t been contributing the max amount to your 401(k) or IRAs, you qualify for catch-up contributions that enable you to invest beyond the typical limits.
  • Have a goal: Knowing the amount of money you’re working towards saving for retirement and receiving monthly upon retirement can help you achieve success. Start with a goal and put a plan in place to reach milestones throughout your life.

Avoiding Common Mistakes

Even if you’ve been managing your finances for several decades, there are a variety of hiccups and mistakes that can impede your financial success as you age. A few wrong moves could leave you without enough money in retirement, from ignoring inflation to relying on the wrong income streams. When planning and managing your retirement paycheck, avoid making these common mistakes.

  • Lending out money: You’ve worked hard to save up your cash, and when you retire, it’s your right to spend your hard owned money on yourself. It can be easy to feel obligated or desire to give money to loved ones who may be struggling, but it’s important not to become relied upon as a source of income for others. Set boundaries with your finances and how much you’re willing to lend out.
  • Not saving enough: It can be challenging to know how much to save without knowing the exact age you will retire or what inflation will look like when you do. You also need to consider how long you may live. There are numerous life expectancy calculators you can use, like the Society of Actuaries longevity illustrator. You also need to consider various types of insurance as an older adult, potential health issues and having to leave your home.
  • Relying on the market: Investing in the stock market can have significant gains, but it can also have big losses. Trying to beat the market or rely on outperforming the market can put your finances at risk. It’s better to work with a professional investor to ensure you’re utilizing the stock market to your benefit.
  • Depending on Social Security: We work most of our lives to collect Social Security once we retire, but the amount may not be what you’re expecting. It is also not likely enough money to pay all of your bills in retirement. In 2021, the average Social Security amount was $1,543 a month. You can use this Social Security calculator to determine the monthly amount you’ll receive.
  • Keeping all money in cash: Keeping all of your money in cash means that you aren’t benefiting from making money on your cash, and you don’t stay up-to-date with inflation. Things like health care are rising more rapidly than the cost of living, so it’s crucial to have your money diversified in ways that are easily accessible in cash and through other investments, like real estate, retirement funds and similar outlets.
  • Ignoring inflation: The cost of living is continuously increasing. That means the amount of money you have now will not be worth the same amount in five, 10, or 15 years. A big mistake in money management is not factoring inflation into your planning. An inflation calculator can help predict inflation on consumer goods and services.
  • Creating a written plan: Aging adults can work with a financial advisor or wealth manager to create a written plan for managing and spending income in retirement. The best-laid plans can go astray if not written down. Having your retirement plan in writing makes it easier to navigate the minute details of finances at different stages in life.

How to Stay Safe from Money Scams

Aging adults are the center of money scams because they’re often polite, trusting, and believed to have a lot of money. Lottery, tech support, government impersonation and several other scams target older adults every year. Scammers will build relationships with their targets via email or telephone, and over 90% of the time, the scammer is a family member.


Use the following steps to avoid the most common types of scams to protect yourself and your finances:

  1. Understand common scams: It can be challenging to identify scams if you don’t know what to watch for. The most common scams that target aging adults include romance, tech support, grandparent, government impersonation, sweepstakes/charity, home repair, TV/radio, family/caregiver scams. You can learn more about each of these through the FBI’s scam and safety breakdown for older adults.
  2. Don’t disclose identifiable information: Unless you’re certain of who is asking for it, never disclose identifiable information like your Social Security number, credit card numbers, driver’s license or similar.
  3. Be cautious of what you download: Many scams will come through a computer, informing you that your hard drive needs to be reset or that it has a virus. Most of the time, these are scams looking for your credit card. Never download unsolicited information from a pop-up on your computer.
  4. Search for contact information: Before you provide any personal information or money to someone over the phone, email, or online, search for their contact information to identify that they are who they say they are.
  5. Take your time: Most scammers will pressure you to act quickly. Do not give in to the sense of urgency and take the time to assure that the person asking for your information or assets is not a scammer.
  6. Shut down your personal info if you’re hacked: Should someone gain access to your personal information via your computer or mobile device, immediately call your financial institutions and credit card companies to notify them of the infiltration.


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originally appeared on 
MoneyGeek.com and was
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When you die, what happens to your debt?


Do you know what will happen to your debt when you die? Some debts are forgiven while others may be passed down to heirs. Read on for the answers to some of the most frequently asked questions related to death and debt.


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In order to accurately answer this question, we need to examine the most common types of debt people accumulate. In other words: Not all debt is equal. The type of debt you have and when you accumulated the debt will determine how and if your debt is passed on to others when you die.

The Most Common Types Of Debt




If you die with credit card debt, there are two things that may happen:

  1. Your debt may be forgiven and written off by the credit card company
  2. The debt will be passed on and the responsibility of a survivor




If you are the sole owner of the debt when you die, (not married or a cosigner) the credit card companies will be involved in the probate process. The money left in your estate, any retirement accounts, or other items worth money will be sold and the outstanding debts will be paid.

If there is not enough money in your estate to pay off the remaining credit card balance, your children or beneficiaries will not be required to pay the remaining balance. The outstanding debt will be “forgiven” by the credit card company.


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If the credit card is a joint account with a living spouse or a cosigner, the other account holder will be responsible for the debt. If you have authorized users on the account but they are not the account owner, the users will not be responsible for the debt.


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This is one of those myths that continues to live on. Credit card debt does not go away after seven years. The confusion with the seven-year time frame comes from the credit report time requirement.

After seven years, old debts begin to fall off of your credit report. Your debt, however, is still very much alive and owed. Lenders can and will continue to pursue the amount owed until it is paid, settled, or charged off. Do not be fooled into thinking your credit card debt will go away after seven years.


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The quick answer? It depends. There are several factors that determine if a deceased spouse’s credit card debt will be passed along to the surviving spouse. If the credit card debt was incurred before marriage and the deceased spouse was the sole owner of the account, in most cases, the debt will not be the responsibility of the surviving spouse.

If the credit card debt was incurred after marriage and the deceased spouse was the sole owner of the account, the state you live in determines the surviving spouse’s responsibility. If you live in one of these community property states and the debt was incurred after marriage, the surviving spouse is responsible for the credit card debt of their spouse regardless of the account ownership:

  • Arizona
  • California
  • Idaho
  • Louisiana
  • Nevada
  • New Mexico
  • Texas
  • Washington
  • Wisconsin

If you do not live in one of these states, generally the surviving spouse will not be responsible for the credit card debt if they were not a joint owner of the account. If you are a joint owner on the account, you are now solely responsible for the debt.




Again, where you live determines what can happen to your medical bills when you die. Generally speaking, children and heirs will not be required to pay back the outstanding medical bills of their parents. With that being said, there are a couple of instances where a child could be responsible for the medical debt of their parents.




When a child cosigns admission paperwork acknowledging financial responsibility if the adult is unable to pay their bills, this debt may be passed down to the child.


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There are 26 states that have filial responsibility laws that state a child may be responsible for a deceased parent’s medical debt in certain situations. The states that have filial responsibility laws are:

  • Alaska
  • Kentucky
  • New Jersey
  • Tennessee
  • Arkansas
  • Louisiana
  • North Carolina
  • Utah
  • Indiana
  • Nevada
  • California
  • Maryland
  • North Dakota
  • Vermont
  • Connecticut
  • Massachusetts
  • Ohio
  • Virginia
  • Iowa
  • New Hampshire
  • Delaware
  • Mississippi
  • Oregon
  • West Virginia
  • Georgia
  • Montana
  • Pennsylvania
  • South Dakota
  • Rhode Island

Now, before you become overly concerned about living in one of these states, understand that the enforcement of filial responsibility laws is extremely rare. If you have significant medical debt, consult with an attorney in your state to see exactly what responsibility your adult children may be required to pay back.


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Student loan debt may or may not be passed on to survivors when the borrower dies. What happens to the loan depends on what type of loan was taken out and when it was established.


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If you have federal student loans, they will be forgiven upon death. Federal student loans do not pass on to others as long as a death certificate is presented to the lender. Federal student loans that fall into this category are:

  • Direct Subsidized Loans
  • Direct Consolidation Loans
  • Direct Unsubsidized Loans
  • Federal Perkins Loans


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On Nov. 20, 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act was amended. The added section releases cosigners of a private student loan from financial responsibility if the primary borrower dies. Due to this, all new private student loans with cosigners are not required to repay the loan upon the student’s death.

However, student loans with cosigners taken out before Nov. 20, 2018, may still require the cosigner to be held responsible for the debt.




Federal Direct PLUS Loans are also forgiven upon the student’s death. In the past, the parent who signed for the PLUS loan was required to bear the burden of the tax responsibility and file the forgiveness as “income” after a child’s death.

Currently, The Tax Cuts and Jobs Act of 2017, is in effect and releases parents from this tax responsibility. This tax stipulation remains in effect until the year 2025.


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There is several different scenarios involving vehicle loan debt upon the borrower’s death. If the auto loan has a cosigner or the vehicle was purchased in a community property state after a couple was married, the cosigner or spouse is responsible to repay the auto loan.

If the loan was obtained before marriage and is only in the deceased spouse’s name, generally the surviving spouse is not held responsible for the debt. The bank will take possession of the vehicle to settle the outstanding debt or the surviving spouse can pay off the vehicle loan.

If the borrower is not married, the survivors can either pay off the vehicle loan and keep the vehicle, sell the vehicle and pay off the loan or return the vehicle to the bank. Heirs do not inherit vehicle loan debt.




Payday loan debt is very similar to credit card debt when you die. If there was not a cosigner or someone else listed as jointly responsible for the loan, then the company writes off the debt as a loss. Payday loan debt is not transferred to heirs but may be the responsibility of a surviving spouse if the debt was incurred after marriage in a community property state.


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In probate, the home must be paid off with the funds from the estate or the mortgage company must agree to let someone else inherit the loan. If you still owe money on your home, your spouse or heirs usually have three separate options:

Option 1: Sell the home to pay off the outstanding mortgage. The executor of the will can initiate a home sale to fulfill the outstanding debt obligations. If the home is not worth what is owed, additional money from the estate will be used to pay off the mortgage. If additional money is still required, the bank can take possession of the property.

Option 2: If there is enough money in your estate, your heirs can use that money to pay off the mortgage. Or the beneficiaries can use their own money to pay off the loan in full.

Option 3: If there is not enough money in the estate to pay off the loan, an heir may elect to contact the lender in an attempt to take over the loan. The loan would need to be transferred into the new borrower’s name which would require the heir to meet the credit obligations for a loan.


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Lenders can force the sale of a property to fulfill the outstanding equity loan balance if the estate does not have enough capital to pay it off. This is another scenario where the heir may be able to apply with the lender to take over the payments.





If you have federal tax debt when you die, the IRS gets the first chance at your estate. Legally, the executor of the state is unable to pay any other debt or obligation until the federal tax debt is settled.

If a substantial amount is owed, the IRS will quickly put a lien on any property owned by the deceased in an attempt to satisfy the debt. The federal government will get their money one way or another – but the heirs will not personally be liable for the outstanding tax debt.


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There is not an automatic notification process when a person dies. The next of kin or executor of the state is required to contact the bank and provide a copy of the descendant’s death certificate.

When the death certificate is presented, the financial institution will freeze all of the associated accounts until the probate process is completed. If money is not owed to other lenders, the beneficiaries will be given access to any monies left in the deceased person’s accounts.


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Even though most debts will not be passed on to your heirs when you die, you may not want them to deal with the hassle of paying off all your debt with your estate – only to be left with nothing.

If you have struggled with debt your entire life, a cheap term life insurance policy may be an option to leave a small inheritance to your heirs. Most life insurance policies are dispersed tax-free and are not accessible to creditors.




Leaving debt behind is a fear many seniors face. On the bright side, your heirs will usually not be personally responsible for paying off your outstanding debts. However, the sooner you can clean up your own financial mess, the better.

Do your best to start paying off your debt so your executor is not faced with a long probate process. If you need help getting started, check out this related post The Debt Payoff Playbook.

This article originally appeared on Arrest Your Debt and was syndicated by MediaFeed.org.


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