5 Ways To Earn Income in Retirement Without a Side Gig
Written by
John Csiszar
Edited by
Jenna Klaverweiden
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One of the greatest fears seniors have as they movie into retirement is that they will outlive their money. While some plan on working side gigs to generate income, many people who have reached full retirement age would rather ride off into the sunset than having to become a dog walker or social media influencer.
If you think you might come up a bit short in terms of funding your retirement — but you’re not eager to take on additional work — you have some options in terms of generating extra income. Here are a few ideas.
Turn Your Property Into Passive Income
Already own a rental property? That’s great! A steady stream of rental income can boost your retirement savings and even fund a more comfortable lifestyle — essentially turning your real estate into a small business. And if you’d rather not handle the day-to-day responsibilities, a property management company can take care of everything for you. You’ll trade a bit of income for peace of mind and free time.
But even if you don’t own a separate rental property, you might still tap into the rental market to earn passive income. This is especially helpful for covering rising interest rates or everyday expenses.
Many retirees find themselves with more house than they need. If your kids have moved out or you’re now living alone, that extra space could be put to work. Renting out a spare bedroom or two can bring in extra income without the commitment of a full-time job.
Additionally, if you have an accessory dwelling unit (ADU) that’s sitting empty, that’s an even better opportunity. You could also rent out unused garage spaces as monthly parking spots, generating easy revenue with little effort.
In short: if you have space you’re not using, there’s a good chance it could be earning money for you.
File for Social Security Appropriately
Social Security was never meant to entirely fund a senior’s retirement, but it’s definitely the bedrock on which the American retirement system is built. Choosing when you file could have huge ramifications for your quality of life in retirement. Although you can claim benefits as early as age 62, by waiting until full retirement age — or even as late as age 70 — your payout will be permanently increased.
Don’t forget to take your spouse’s benefit into account, as well. Even a nonworking spouse can qualify for a spousal benefit worth as much as 50% of the primary worker’s payout.
Draw From Your Pensions and Retirement Funds
Pensions aren’t nearly as common as they used to be, but if you’ve worked a long time at an old-line company, you may still have one. If so, congrats! Pensions are among the most stable sources of retirement income. Best of all, you likely didn’t have to contribute much to its funding, if anything at all. Your pension will typically last as long as you live, so that alleviates the fear of outliving your money.
Without a pension, you’ve likely saved at least something in a 401(k), IRA or other type of retirement plan. Now that you’re retired, it’s time to implement your withdrawal strategy. The key is to balance your retirement plan withdrawals with your Social Security payouts, pension income, rental income or other outside source of funds.
Be mindful of tax consequences of retirement plan withdrawals, as they might boost your income to the level that makes your Social Security benefits taxable, for example. You’ll also want to make sure you are depleting your funds at a rate that will last for your entire retirement.
Tap Into Your Home’s Equity
According to Construction Coverage, about 63% of homeowners aged 65 and up have fully paid off their mortgages. If that’s you, you’re sitting on a powerful financial asset: home equity. With the right strategy, you can turn it into cash to help fund your retirement.
One common option is a home equity loan, which lets you borrow up to 80% of your home’s value as a lump sum. You’ll repay it monthly with interest, but it could give you access to hundreds of thousands of dollars.
Alternatively, a home equity line of credit (HELOC) works like a credit card backed by your home. You can borrow as needed, repay on your own schedule, and draw again later. It’s ideal for handling unexpected expenses without dipping into your retirement savings.
Keep in mind: not all equity solutions are equal. Reverse mortgages, for example, are complex and often come with downsides. Before making a move, consult a trusted financial or tax advisor to weigh the pros and cons.
Geographic Arbitrage
A unique way to boost your cash flow in retirement is simply to move to a more affordable area. This practice, sometimes dubbed “geographic arbitrage,” allows you to live the same type of lifestyle for less money. That makes it a good way to stretch your retirement dollars. But if you prefer to live a more lavish retirement, it can also provide you with that for the same amount of money you were spending before.
This strategy works particularly well if you move from a high-cost state like California to a lower-cost state like Texas or Mississippi. If you’re willing to relocate abroad, there are ample opportunities. Central and South America, along with Southeast Asia, are popular options, but even parts of Europe can run considerably cheaper than pricier spots in the U.S.
Caitlyn Moorhead contributed to the reporting for this article.
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