Set up These 6 Things in Your 50s and You Could Generate Income in Retirement

If you're already investing, your 50s are a critical time to start shaping those assets into reliable income streams. The next decade isn't just about saving more. It's about preparing your money to work for you once the paychecks stop.

Here's how you can set yourself up for retirement by adding smart, income-focused strategies to your portfolio.

Consider bonds for stability and predictable payouts

There's nothing flashy about bonds, and that's exactly why they matter. When you buy one, you're lending money to a company or government in exchange for interest payments, which are steady and predictable.

Bonds can help smooth out the ups and downs of your portfolio. Stocks can be volatile; bonds tend to be steadier. As you move through your 50s, it often makes sense to increase your exposure to short- and intermediate-term bonds. They're less affected by rising interest rates and give you more flexibility if you need to adjust later.

You don't have to pick individual bonds yourself, either. Many investors use bond funds or ETFs to spread out the risk across hundreds of issuers. The point isn't to chase the highest yield. It's to add a layer of calm, predictable income to your financial picture.

Look at dividend-paying stocks for consistent growth

Dividend-paying stocks give you something few investments do: regular cash flow and the chance for long-term growth. These are usually well-established companies that share part of their profits with investors, often every quarter.

When you're still working, reinvesting those dividends can be powerful. They buy more shares, which then earn more dividends, creating a compounding effect. Later, when you're ready to slow down, you can simply take those payouts as income.

Some investors focus on "Dividend Aristocrats," companies that have raised their dividends year after year, even through recessions. They're not immune to market swings, but the steady payments can make them easier to hold onto when things get bumpy. It's income that grows with you, and that's hard to beat.

Explore annuities for guaranteed lifetime income

Annuities can be a bit confusing, and not every type will fit your situation. But in essence, they let you trade a chunk of your savings for guaranteed income over time. You pay an insurance company now, and in return, they send you monthly or annual payments, sometimes for the rest of your life.

If the idea of outliving your savings keeps you up at night, an annuity could bring peace of mind. Fixed annuities offer predictable payments, while indexed or variable annuities tie potential returns to the market (though with added complexity and fees).

You don't have to put all your money in one. Many retirees use annuities to cover essential expenses and leave the rest of their investments for flexibility and growth. The key is shopping carefully and understanding exactly what you're signing up for before you lock in.

Use high-yield savings or CDs for safe, accessible returns

Sometimes the best income source is the simplest one. High-yield savings accounts and certificates of deposit (CDs) don't make headlines, but they serve a crucial purpose. They keep part of your money liquid and protected, while still earning a bit more than a traditional savings account.

High-yield accounts are great for short-term needs, like travel plans, home repairs, or a rainy-day fund. CDs, on the other hand, reward you for leaving your money untouched for a set period. They're insured, low-risk, and offer peace of mind when you don't want to gamble with market timing.

In retirement planning, these accounts aren't just for safety. They're for stability. Having a cushion of cash that's earning steady interest lets you weather down markets without selling your investments at the wrong time.

Consider real estate or rental properties for tangible income

Real estate can be one of the most tangible ways to create income. A rental property can deliver monthly cash flow, and over time, it may appreciate in value. There's something satisfying about having a physical asset that works for you.

Of course, being a landlord isn't passive. You'll deal with tenants, maintenance, and unexpected costs. If that doesn't sound appealing, you can still tap into the real estate market through Real Estate Investment Trusts, or REITs. These are publicly traded companies that own income-producing properties (such as apartments, warehouses, and medical centers) and pay out most of their profits to investors as dividends.

Both routes can help you diversify beyond stocks and bonds. And since rents and property values often rise with inflation, real estate can act as a natural hedge against rising costs in retirement.

Build a "bucket strategy" to time your withdrawals

Once you have several income sources, you'll need a plan for how and when to use them. That's where the "bucket strategy" comes in. It's a simple framework that divides your money by time horizon.

Your first bucket holds cash and short-term investments, enough to cover one to three years of expenses. The second holds medium-term assets like dividend stocks and bond funds. The third is your long-term growth bucket, typically invested in equities that can outpace inflation over time.

When the market dips, you pull income from your first bucket and give the others time to recover. When the market's strong, you refill the cash bucket from your gains. It's a practical way to create balance between security and growth without constantly reacting to headlines.

Bottom line

By your 50s, it's time to shift from just growing your portfolio to creating income streams that can support your lifestyle in retirement. Bonds, dividend stocks, annuities, high-yield accounts, and real estate are all tools that can help diversify your income and reduce reliance on retirement accounts alone.

Don't forget to run a detailed retirement checkup. By using a calculator or financial advisor to see how your retirement savings stack up, you can identify gaps in your retirement plan and make adjustments now, giving you more confidence and flexibility in the years ahead.