
Most individuals and couples cannot live on only their social security income. It would require a drastic change of lifestyle as social security will replace about 40% of average retirement income. Since most of us want to maintain a lifestyle at least close to what we are used to living, we start searching for ways to add supplemental income.
Annuities are popular and one way to add income. However, they are not the only way. There are some cons to annuities such as high fees.
Alternative ways to supplement social security income include:

Bond Laddering
A well-known con of bonds is that they pay low-interest rates. Bond laddering can help you get income when you need it while allowing you to boost future income if rates happen to rise.

Dividends
Investing in stocks can be another way to supplement retirement income. There are dividend growth stocks which have a solid history of increasing dividend payments. This kind of stock may pay more than you can get from some intermediate-term investment-grade bonds. Another option if you aren’t ready to select individual stocks is to invest in a diverse assortment of these companies through Exchanged Traded Funds (ETFs) and mutual funds.

Own your own business
It’s another viable way to supplement your income. A retired couple can buy, start or invest in a small business. While it adds revenue to your life and helps you maintain a desired lifestyle, it can also help you stay active and avoid boredom. Owning your own business is not without cons because of risk, time commitment and the demands of the work.

Real Estate
Real estate investing is another way to supplement retirement income. It can also increase your net worth. With mortgages, you don’t have to have a lot of money to begin investing in real estate. As with any of these alternative ways to supplement retirement income, these are not without cons. Cons can include the risk involved, vacancies, damage to property, unexpected maintenance.

Reverse Mortgages
A Reverse Mortgage means the bank makes payments to you in exchange for your equity. A homeowner sixty-two years of age or older must own enough equity in their home for this to make sense. Interest accumulates on the outstanding balance, but you never have to pay back the reverse mortgage unless you sell your home. Reverse Mortgages are paid off when the house is sold after death or during your lifetime. While a reverse mortgage is not without cons, it could be a way to supplement retirement income that makes sense for your situation.

What Alternative Method Works For Your Retirement Situation?
Discovering which one is the right choice for you depends on several factors including your commitment level, risk level and time you wish to participate actively. These are merely some thoughts that might help you realize there are other choices in addition to or beside annuities and fixed-income options.