Thursday, February 23, 2012

How to Increase Your Retirement Income

Interest and Dividend Income have
been discouraging in recent years.
If you are disappointed in your interest on savings, you are not alone.  Although many people love the low interest rates that are currently available for mortgages and auto loans, they hate the low rate of interest income they are getting on their savings.

For people who are retired, or near retirement age, this is an especially serious problem.  Until a few years ago, many people could get 6%, more or less, on a long term money market account or Certificate of Deposit.  However, today those rates of interest on savings are a thing of the past.  For retirees who were dependent on that income to meet their monthly expenses, this decrease in their retirement income has been devastating.  What are some steps you can take now to at least get the maximum interest rate possible?

Find Higher Interest on Savings from a Credit Union

Many people who have had a long relationship with a bank continue to keep their savings in that bank, without shopping around for a better deal.  However, if you have a bank savings account that is earning around 1% or less, you should be able to do much better by moving your money to a credit union.  Anyone living on a fixed income owes it to themselves to make sure they are getting the highest interest rate possible in order to avoid pulling money out of your principal in order to survive.

According to information about interest rates available to the public on, you can earn as much as 1.40% on some CDs.  Although these rates are still low, they are higher than most banks are currently paying their account holders. 

You can find more out about credit unions that you can join in your area at  You may also want to ask a friend or relative if they belong to a credit union.  All you need is an invitation from a current member in order to join many credit unions!

Be Careful When Purchasing Bonds and Bond Funds

According to an article entitled "The War on Savers" in the February/March 2012 AARP Magazine, current interest rates on shorter-term Treasury bonds are ridiculously low.  In addition, when you buy bonds, the value of the bonds will decrease when interest rates eventually increase.  Consequently, any income you currently earn from the bonds could be lost when interest rates rise and the bond price drops.  Junk bonds pay a higher rate than Treasuries or high quality corporate bonds, but are much riskier. These types of high risk investments are not a good idea for most retirees or people nearing retirement.

Put Some Assets in Dividend Paying Stocks

In addition to putting your savings in a credit union, another suggestion by the author of "The War on Savers" is to invest a portion of your savings in high quality dividend paying stocks.  You can either use the dividends for current income or, if you don't need the income yet, you can use a DRIP (Dividend Reinvestment Plan) to build up the size of your portfolio.

As you diversify and work to increase the income from your current assets, you may see your retirement savings begin to grow again.

The important issue here is to not just sit back and assume there is nothing you can do to increase the income from your savings.  There are actions you can take to assure yourself of a more comfortable income from the savings you have put aside.

If you are interested in other ways to improve the quality of your retirement, use the tabs or pull down menu at the top of this page for links to hundreds of additional articles on affordable places to retire, medical issues to consider, changing family relationships, financial planning and more.

You are reading from the blog:

Photo courtesy of


  1. Wonderful financial tips. It's so good of you to share your knowledge!

  2. With bank interest rates so low, we all have to pay especially careful attention to how we can maximize our income from assets. By going from a rate of 0.5 to a rate of 1.5, you can actually triple your income from your assets!

  3. This is great information that you are sharing. People need to figure out the best way to keep their retirement dollars.

  4. Start small and work to help it grow. That's what I want to do and I'm using to help me get going. I hope to be well ready by the time I do retire.


Thank you for leaving a comment. Your thoughts and insights about retirement are always appreciated. However, comments that include links to other sites will usually not be published.