It’s a fact that your retirement income probably won’t keep up with the inflation we’ve got in 2022. That makes it more important than ever to find ways to supplement retirement income.
Earning extra money is not always an easy task, but depending on your immediate financial needs and your financial situation, there are several ways to approach this problem.
If you need money immediately, then getting a job might be your best bet. If you have a large life insurance policy, consider selling part of it. I know one retiree who took out a reverse mortgage on his mortgage free home. A reverse mortgage might be a viable consideration.
How To Make Money In Retirement
There are two types of income you can have (according to the IRS). That’s active (or earned) income or passive (unearned) income. The difference is in how you get it and how it’s taxed.
Active income is money you earn by selling your labor. We’ve done that our entire working lives and I’ve done that on a part time basis.
The easiest way to supplement your retirement income is to simply keep working either full or part time. Assuming you’re physically and mentally able to keep working. Being mentally able is very important. If you’re not happy with your retirement job or you don’t like what you’re doing, it may have an adverse effect on your physical health.
Do an online search for “part time jobs for seniors” and you’ll get hundreds of pages of tips and jobs available. See my post “Jobs For Retirees – 4 Tips To Find The Perfect Job” for more information.
You can kinda see what I meant when I say making money depends on your immediate financial needs and your financial situation. Active or earned income can be done almost immediately, but passive income takes time to generate and usually takes some investment up front.
Everybody knows how to make money by actively working for it. That’s what a lot of retirees, including me, do either on a full or part time basis. I worked part time for about ten years in the same profession I retired from.
What I want to touch on is passive income. You have to put in some work up front to get it going but after it starts coming in you have to do very little except maintain it.
If you have a choice and are willing to put in some research, learning time and money, NOTHING BEATS PASSIVE INCOME. Once the cash starts coming in, you have to do very little to keep the it coming in.
How To Make Passive Income?
Passive income is that which you don’t exchange your labor for. This could include investments in stocks or bonds, residual income from intellectual property, affiliate income or rental income.
I’m sure there’s a lot of other sources of passive income, but these are the ones I’m most familiar with.
Passive income always takes a while to start coming in. As I mentioned, it depends a lot on your immediate financial circumstances and how quickly you need extra money. I’ve listed four sources of passive income but there’s probably many more, but these can give you something to think about.
Investment Income: People who have been invested in the stock market, either directly or through mutual funds, have made a ton of money between November 2016 and January 2022. But given recent market history, you might want to find ways of diversifying some of that additional money.
Investing in the stock market probably has the most financial risk involved done carefully, it can be the most lucrative. There are tons of information that might be useful to help make an informed decision about investing.
Personally, I would start by learning how to invest and then start with a small amount of money that I could lose and not worry about. It might be beneficial to do some mock stock market trades to learn how the process works.
Unfortunately, there’s always someone trying to take our retirement income and seniors are often the target of investment fraud. You need to know how to protect yourself and your money. The SEC has some great information senior investing on the investor.gov website. Download the Guide for Seniors at the bottom of the page and learn how to recognize and avoid investment fraud.
Affiliate Marketing: Building a profitable online business takes a long time and a lot of work. Every overnight success story you hear about comes after months or years of research, study and hard work. But if you have an idea for a service or product that can be done online it might be worth the effort to pursue. Think about Angie’s list, ebay or facebook.
Affiliate marketing requires the ability to develop a website and content that fits the niche. There are many online merchants from amazon to that offer affiliate programs. Do a search for a niche, products or services that you would consider. Look at google trends, amazon or ebay and find out if there is a long term market for your niche product.
Affiliate marketing is not easy. If you don’t put in the research and work for an online business to be profitable then it rapidly turns into a hobby.
Rental Income: If you have enough money to buy rental units, this may be the best way to supplement your retirement income and leave a legacy for your family. Do some research into multi-family housing, apartments or commercial properties and see what’s available in your area. I know a guy who in San Jose who took equity out of his home to buy a rental unit. It worked for him, but it’s an idea that might not work for everybody.
Don’t jump into being a landlord without learning how to be a landlord. There’s a lot more to it than just buying a property and renting it out.
If you decide to, do a search for information on buying rental units. Get a spreadsheet to plug in some numbers and see if properties you’re interested in will provide adequate income. Learn the tenant/landlord laws in your area and get the advice of a real estate professional that you trust.
In Conclusion
Deciding whether to use active or passive ways to supplement your retirement income is an important decision that should be based on your personal desires and current financial situation. But deciding how to supplement retirement income is something that most of us should look at to ensure that our financial future is secure during our retirement years.
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