Many people end up getting stressed out financially during retirement. You expect your expenses to largely go down, but some might increase in a surprising way.

You may end up spending more on healthcare because aging tends to bring about issues. And also, your Medicare costs may be higher than what you paid when you worked and had private insurance. Plus, you may end up spending more on entertainment in retirement because you have more hours in your week to fill.

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The average senior on Social Security today collects about $23,000 a year. So if you want more wiggle room in your budget, you’ll probably need to supplement those benefits somehow.

Now it’s possible to hold down a job while receiving Social Security. But working as a retiree isn’t your only option for generating income. You can earn income passively during retirement by turning to these three sources.

1. Municipal bonds

Municipal bonds are an optimal choice for people who want guaranteed income. Granted, bond issuers can technically default on their interest payments. But in the world of municipal bonds, that’s very rare. So for the most part, when you buy these bonds, you can look forward to predictable interest payments during the year.

Plus, municipal bonds are an extremely friendly investment from a tax perspective. The interest they pay is always exempt from federal taxes. And bonds issued by your state of residence give you the benefit of tax-free interest earnings at the state and local levels as well.

2. Dividend stocks

Dividend stocks aren’t as predictable a passive income source as municipal bonds. Bond contracts obligate issuers to pay interest on a predetermined basis. Companies aren’t obligated to pay dividends the same way, and they can opt out even after years of steady payments and increases to shareholders.

But it’s common for companies with a long history of paying dividends to uphold that practice. So dividend stocks have the potential to serve as a steady retirement income source for you as well. One thing it pays to do, though, is diversify your portfolio of dividends stocks so you’re invested across a range of industries.

3. REITs

Buying a rental property could be a great way to generate income in retirement. But that requires you to do the work of a landlord, which you may not have the stomach for.

REITs, or real estate investment trusts, make it possible to invest in real estate without having to own actual property. You can buy and sell REITs like dividend stocks, only the nice thing about REITs is that they’re required to pay out at least 90% of their taxable income as dividends to shareholders. This gives you more predictability, which you may need for your peace of mind.

Like dividend stocks, it pays to diversify your REITs. You could buy some that maintain portfolios of residential properties, some data center REITs, and some hospitality REITs, as a few examples, to mix things up nicely.

Working in some capacity during retirement is a great way to boost your senior income. But if you hustled your entire career and feel that you’re done holding down a job, you can look to these passive income sources as viable alternatives.

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