These Tax-Free Bonds Are a Great Supplement to Your Social Security

"Now there are several different ways you can supplement your Social Security income in retirement. One option is to set up a CD ladder with guaranteed interest payments. However, this strategy only works well when interest rates are strong. Another option is to maintain a portfolio of growth and dividend stocks."

"If you're looking for a great way to supplement your Social Security benefits without taking on a huge amount of risk or increasing your federal tax bill, then it pays to look at municipal bonds. Municipal bonds are issued by states, cities, and other public entities. They're generally used to fund public projects, like schools and roadways. Some municipal bonds are tied to a specific revenue stream that's used to repay bondholders. If municipal bonds are issued to build a bridge,"

Social Security alone often provides only modest monthly income, so retirees commonly seek supplemental income. CD ladders offer guaranteed interest but perform well only when rates are high. Stock portfolios can provide growth and dividends but introduce market risk and taxable income. Municipal bonds are issued by states, cities, and public entities to fund projects and sometimes link repayment to specific revenue streams. Interest from municipal bonds is federally tax-exempt and may also be exempt from state and local tax for in-state purchasers. Municipal bonds typically yield less than corporate bonds but can suit retirees seeking tax-advantaged, lower-risk income.

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