How to make passive income in retirement

Passive income can come from investments or business interests that require an initial effort but not continual effort. Passive income is ideal for retirement when people still need financial resources to afford their lifestyle, but are not working anymore. Passive income can be generated from investments, property, assets, and a person's skills or knowledge.

Keep in mind that passive income has tax implications. Make sure you know what they are before you commit to a strategy to earn a passive income.

Passive Income

Types of passive income for retirees

(A) Real-estate

    1. Rental Income

    Renting out a second property is a tried and trusted retirement income strategy. Those who manage to get a reliable income from real estate investment treat it like a business, obtaining a solid investment property and being careful about tenants. Keep in mind that as a landlord you will be responsible for the upkeep of the place, so buy a property that is situated nearby so you can keep an eye on it. You could of course hire a property management company.

    2. Use your property to earn money

    •     Extend your home with a rental apartment or a second dwelling on your plot.

    You can convert your basement, or garage, or add an additional room, which you can rent out, or you can build a free-standing structure if your land is big enough and the local regulations allow it.

    This is a very good option for retirees who are right there on the premises to keep an eye on the property and the tenants.

    • Airbnb a room or all of your house

    If you live in a desirable area near a college or university, a hospital, or a popular tourist destination you can become an Airbnb host and rent out a room in your house for short periods. You might even be able to rent it out on a long-term basis in areas where rental properties are scarce.

    If you have access to affordable alternative accommodation, you could consider renting your whole property over the holiday season when it's possible to ask premium prices.

    • Rent out storage space

    There is a huge demand for storage space, especially in cities. People often have an extra vehicle that they want to park safely or simply belongings that they don't want to get rid of but don't have room for.

    For anyone with an extra garage or room to build on an extra structure, this is a golden opportunity to earn a regular income with very little effort.

    • Rent out parking space

    There is a dearth of parking options in most urban environments. Renting out the extra parking space in your garage or driveway is a great way to generate a passive income that doesn't require much effort.

    (B) Investments that generate passive income

    1. Peer-to-peer lending

    With P2P lending, you lend money for profit online. Through an online platform, you lend money to borrowers and accrue interest. To keep the risk low, start with a small amount, and choose a trustworthy platform with a simple interface, automated investment options, income statements, and a decent portfolio overview. Depending on the platform, you can earn between 10.3% and 13.35% APY.

    There are risks involved, and experts advise lenders to keep an eye on their investments and up to date with factors that could influence the investment.

    All profitable investments basically provide passive income. You can earn a monthly income from the following investment opportunities.

    2. Fixed annuities

    Fixed annuities are often used as a retirement plan. When you buy a fixed annuity, you enter into an agreement with an insurance company that promises to pay you a fixed amount for the rest of your life in return for your lump sum payment.

    You can pay for a fixed annuity with a lump sum of money or you can make several payments over time. For this investment, the insurance company guarantees a certain rate of interest on the investment.

    3. Dividend Stocks

    Dividend stocks can be a great way to generate a regular income. Stocks represent ownership in a public company. Public companies can decide to pay some of their profits in the form of dividends to their stockholders.

    Investors usually receive dividends in the form of cash payments each quarter and can decide to take the money or reinvest it.

    As a retirement plan, it's best to invest in well-established companies with a long history of paying dividends – that means companies that have paid out substantial dividends for at least 25 years.

    4. Bonds

    Bonds are a low-risk retirement investment. Bonds are a way for governments, government agencies, and large corporations to raise funds by issuing bonds that investors can buy. In return, investors receive regular interest payments.

    Bonds can offer an ideal income stream for retirees, especially if the maturity dates are laddered so that a continuous stream of income is created.

    (C) Earn money with your expertise

    • Rent out parking space

    After many years of working in your field, you have become an expert at what you do. You can make money from that by creating an online course and selling it on a platform like Teachable.

    If your field of knowledge covers subject matter that will remain relevant for many years, it is material for evergreen content that won't date. You can put in the time and effort to create a unique course once, and then set up various systems like automated course marketing and selling to enable you to keep on earning from your content.

    • Write an ebook

    Writing one or more ebooks is a great passive income strategy. Like online courses, once you've created an ebook, it keeps on earning you money provided you market it properly. If you have evergreen content that you present professionally, there's no reason why you wouldn't earn decent money from your creation.

    There are many publishing and distribution platforms to help writers get their work out and sold. The most well-known and biggest is Amazon where it's possible to earn as much as $1000 a month.

    Final thoughts

    With the right strategy, it's possible to create a stream of passive income for your retirement. Some like investment options need to be implemented as early as possible in life; others like renting out a room or parking space and be implemented as and when needed.

    - Article By Entrepreneurs Tutor 

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