Planning for retirement can be a challenge. The best you can do is estimate your financial needs, and then when you're finally in retirement and no longer earning a regular paycheck, you may realize you need more money than you thought you would. Extra income from nonjob sources can provide the funds you need if everyday expenses are higher than anticipated or you simply want to spend more on hobbies or traveling.
Whatever you imagine you would do with a little more income, the first step is to determine the best way to generate it. Here are four ideas for those already in retirement.
Image source: Getty Images.
1. Get paid for space you already own
It may sound unbelievable, but counting all the bits and bobs, the average American home contains around 300,000 items, according to one professional organizer. Although we love accumulating things, once they are in our homes, we often struggle to know where to put them. This helps explain why more than 52,000 self-storage facilities operate in the U.S. and 90% of worldwide self-storage inventory is located in the U.S.
Given that the average nonclimate-controlled 10-foot-by-10-foot unit cost $132 a month in 2024, it's easy to understand why people may wish they had another alternative. And that's where your extra space comes in.
Consider areas in and around your home where you may have space that can be rented to someone with more belongings than room. For example, it may be your:
- Garage
- Basement
- Attic
- Barn
- Shed
- Spare room
- Driveway
- Land
Sites like Neighbor.com bring those with space together with those who desperately need the extra room and are willing to pay for it.
Pros
- Once a person has moved their belonging into a room in your home or on your land, you have no responsibility other than ensuring that it's secure.
- It's extra income month to month.
Cons
- You'll need to check with your insurance agent about the need to add extra coverage to your homeowners insurance.
- You'll want to set up strict hours in which the renter can visit your property.
2. Consider peer-to-peer lending
Peer-to-peer lending platforms allow you to lend money to small businesses or individuals through online platforms. How much interest you earn depends on how much risk you take with a particular borrower. For example, one borrower may have a healthy credit rating, and while you'll certainly earn money by loaning them funds that they pay back, you'll earn a higher interest rate by loaning money to a borrower with less-than-perfect credit.
Pros
- You get to decide how much risk you're willing to take.
- You can mitigate risks by diversifying across multiple borrowers.
- Once you've made the loan, there's minimal effort on your part.
Cons
- Borrowers can default on their loans.
3. Investigate real estate crowdfunding
Have you always been interested in owning real estate, but don't want to deal with the hassle of being a landlord? Real estate crowdfunding may be just right for you. With real estate crowdfunding, investors pool their money to purchase real estate projects. Rather than buy a property outright, you can invest in commercial or residential real estate through a crowdfunding platform, often with a low minimum investment.
Pros
- Low entry cost
- Ability to diversify investments across multiple properties
Cons
- Market fluctuations
- Some real estate crowdfunding platforms are more reliable than others, so homework is necessary before signing on.
4. Put money in savings accounts, CDs, stocks, or bonds
The same income-producing investments you've made in the past can continue to be winners throughout retirement. For example:
High-yield savings accounts (HYSAs)
High-yield savings accounts have a lot going for them. Most are FDIC- or NCUA-insured. They typically carry a higher annual percentage yield than traditional savings accounts (sometimes, much higher), and funds are liquid and easy to access.
Certificates of deposit (CDs)
A CD is a low-risk savings option. It allows you to deposit money for a fixed period and earn a guaranteed rate of interest. CDs typically carry a higher interest rate than a regular savings account.
Dividend stocks
Dividend stocks are shares of companies that pay regular cash dividends. Dividends are not guaranteed -- a company can always reduce or eliminate the payment -- but it's possible to find companies set up to continue paying or increasing their dividend. As a shareholder, if you choose to reinvest your dividends, your returns may grow even more dramatically.
Bonds and bond funds
With bonds and bond funds, you lend money to the government, a corporation, or another entity in exchange for regular interest payments and the return on your original investment at maturity.
The difference between bonds and bond funds is simple. With bond funds, you invest in a mix of government, corporate, and municipal bonds instead of buying a single bond.
These investments are tried-and-true methods of growing your money through easy-to-understand investments. However, they're unlikely to earn as much as investments in the stock market which is, however, riskier.
