Top Strategies for Supplemental Income for Retirees
Your retirement should be about freedom—not financial fear. Whether it’s to cover that dream vacation, help the grandkids, or simply sleep better at night knowing you’re secure, finding supplemental income for retirees can transform your retirement experience.
The good news? You have more options than ever. This guide cuts through the overwhelm to bring you the most effective and retiree-friendly strategies. These strategies can help you achieve your financial goals and retirement plans. We’ve organized them from the most passive to the most active, so you can easily find the perfect fit for your energy, goals, and lifestyle. Let’s find the right way for you to boost your budget and your peace of mind.
Quick Facts
- Max out Social Security Benefits; delay until 70 and have at least 35 years of work history and you’ll get a lot more retirement income.
- Consider pensions as a source of supplemental income for retirees, providing additional financial security alongside Social Security.
- Rent out property or spare space to generate more income and improve financial stability; but good property management is key to profitability.
- Wages from part-time work can supplement retirement income and may impact your Social Security benefits.
- Pay attention to expected returns and market trends, as they can affect your retirement income strategies and financial planning.
- Maximize your savings by using high-yield savings accounts or CDs to increase interest earnings and grow your retirement funds.
- Invest in dividend stocks, CDs and annuities to get stable income along with your other investments.
How to Choose the Right Income Stream for You
Before diving in, remember that retirees need to decide which income stream best fits their needs. Several factors, such as your desired level of involvement, risk tolerance, and how soon you need the income, will influence your choice. Other factors, like your health or family situation, may also affect your decision. Common concerns include eligibility requirements, income limits, and how your choice might impact Social Security or other benefits.
Ask yourself these three questions. The answers will point you to the best section of this guide for your life.
How hands-on do you want to be?
- Passive: You want income without a daily time commitment. (Look at Investment Income and Rental Income).
- Active: You enjoy staying busy and interacting with people. (Look at Active & Earned Income).
What’s your risk tolerance?
- Low Risk: Safety of your principal is most important. (Prioritize CDs, Bonds, and Annuities).
- Moderate Risk: You’re comfortable with market fluctuations for higher potential returns. (Consider Dividend Stocks and REITs).
How quickly do you need the income?
- Immediately: You need cash flow in the next few months. (Focus on Part-Time Jobs, Consulting, or Notary work).
- Long-Term: You’re building income for years down the road. (Maximizing Social Security and long-term investments are key)
Maximizing Social Security for Retirement Income
Social Security benefits are key to financial security for retirees. Delaying until 70 can increase monthly benefits due to delayed retirement credits if you’ve paid enough social security taxes. Claiming early means a permanent reduction in benefits, so timing is everything.
The Social Security Administration is in charge of these benefits and has resources for retirees. The Social Security program and the SSI program are both programs administered by the Social Security Administration, but they have different eligibility requirements. The SSI program is a separate program administered to provide support to older adults and people with disabilities who have limited income and assets. A person may qualify for SSI benefits based on age, disability, or blindness, and assets and other resources are considered in the eligibility process. Social Security benefits are based on work history and paid Social Security taxes, while SSI benefits offer financial support to those who qualify based on financial need.
Working 35 years can increase Social Security benefits by averaging higher lifetime earnings. Working after claiming can replace lower earnings in the calculation and increase benefits. If you claimed early, you may see an increase at full retirement age if your post-claim earnings are high enough.
Spousal benefits can also increase Social Security income, especially if you were married before January 2, 1954. Annual cost-of-living adjustments (COLA) keep Social Security benefits up with inflation.
Maximizing Social Security benefits is key to financial stability in retirement.
Generating Rental Income for Retirees
Renting is a popular way for retirees to generate supplemental income. Renting out: can be a steady stream of passive income, especially for those on a limited income. Your first step: Look around your home. Do you have a spare room, garage, or even a parking space? List it on a platform like Airbnb or Neighbor to test the demand.
- basements
- attics
- garages
- offices
- storage sheds
- driveways
Retirees can also rent out properties they own. Budgeting for unexpected repairs and maintenance is key. Property management software can automate listings, tenant screening, lease signing, rent collection, maintenance, and accounting, making the process easier.
Keep in mind that rental income, along with other resources such as savings or property, may affect eligibility for certain benefits like SSI.
Doing your due diligence when investing in rental properties will ensure you’re aligned with your financial goals and risk tolerance. Real estate is a great hedge against inflation as rental income tends to go up with living costs. Self-managing rentals can be time-consuming, so hiring property managers can take the stress away and let retirees enjoy the extra income.
Dividend Stocks for Supplemental Retirement Income
Dividend stocks are a great way to create supplemental income for retirees. Your first step: Open a brokerage account on a user-friendly platform like M1 Finance and research one ‘Dividend Aristocrat’—a company with a long history of increasing payouts. Dividend stocks give you regular dividends, which act as a hedge against inflation and help maintain purchasing power. Companies that pay dividends can give you higher yields than bonds and potential for increasing payouts.
Focusing on stable companies with a history of raising dividends is a good strategy for picking dividend stocks. This ensures you invest in financially stable companies that can sustain payouts even during economic downturns. You can invest directly in dividend stocks or through a mutual fund or exchange-traded fund (ETF) focused on dividend stocks, which pools investors’ money to create a diversified portfolio of dividend-paying companies.
Dividend stock funds like ETFs help diversify your investments and reduce risk. Dividend income is a steady cash flow source for retirees who need regular income. But companies can reduce or eliminate dividend payments, so diversification is key.
Utilizing Certificates of Deposit (CDs)
CDs are a popular savings option for consumers seeking predictable returns. They are a safe and predictable way for retirees to lock in their funds and earn interest. High rates allow retirees to lock in those rates before they go down.
The CD ladder strategy, with multiple CDs with staggered maturities, gives you access to cash and minimizes risk by balancing liquidity with security. For conservative retirees looking for stability, CDs are the way to go.
Annuities for Stable Income
Annuities give retirees a stable monthly supplemental income and can also make monthly payments, so you can plan financially. Options are fixed, variable, immediate, and deferred annuities, each for different financial needs and risk tolerance.
Annuities have a “death benefit,” which can add value by allowing income to be passed on to a spouse. Annuities give you a predictable income stream, so they’re great for stability. But higher costs and rules to understand before you invest. Do your research and consult with a financial advisor to make informed decisions about adding annuities to your strategy.
Bond Investments
Bonds are the go-to for risk-averse retirees because of their stability and predictable returns. There are federal government, corporate, state, and municipal bonds, each with different risk and return levels. US Treasury bonds, for example, have lower returns than corporate bonds but are safer.
Bond funds are diversified portfolios that eliminate the need to pick individual bonds, making them easier to buy and sell. Treasury Inflation-Protected Securities (TIPS) adjust their value based on inflation, so the purchasing power of your investments is maintained.
Stable value funds in retirement plans protect your capital while delivering steady returns through quality fixed income investments. Diversifying your bond investments helps retirees balance risk and return so you have a stable supplemental income source in retirement.
Part-Time Jobs for Earning Income in Retirement
Part-time jobs and side hustles allow retirees to stay active and earn extra cash. Your first step: Update your LinkedIn profile with a headline like ‘Retired [Your Profession] | Open to Part-Time & Flexible Roles’. Flexible part-time job opportunities are popping up everywhere, especially in small and medium-sized companies. Administrative assistant and customer service jobs often have part-time or remote work options.
Earning extra income in retirement relieves financial pressure and enhances lifestyle. Home health aide jobs are growing for those with caregiving experience and offer flexibility. Real estate offers flexibility once you get the necessary licensing, and you can set your own schedule. Many retirees also consider starting a side business or entrepreneurial venture, leveraging their professional experience to create additional income streams and stay engaged.
Retirees can find part-time jobs as tutors, especially in high-demand subjects like math and English. Pet-related jobs like grooming and walking are for animal lovers. Security guard jobs also appeal to retirees because of varied shifts and working hours. Whether you choose a job or start a business, focus on opportunities that align with your personal interests. These diverse options allow retirees to earn extra income while pursuing their passions.
Leveraging Real Estate Investment Trusts (REITs)
REITs give retirees the chance to invest in income-producing commercial real estate without the hassle of property management. REITs provide a steady stream of high dividends, perfect for those who want regular income.
Some REITs focus on properties in specific regions, such as the district of Columbia, offering unique investment opportunities tied to local real estate markets.
Types of REITs include equity REITs, which manage properties, and mortgage REITs, which invest in mortgages. You can buy publicly traded REITs through a brokerage account; non-traded REITs may offer higher yields but less liquidity.
REITs are affected by interest rates and real estate market trends.
Online Courses and Consulting
Creating online courses allows retirees to earn money by sharing their knowledge. Your first step: Grab a notebook and write down three skills you’ve used in your career or hobbies that others might pay to learn. These courses can be created for any niche, tapping into the retiree’s areas of expertise. Online course platforms have built-in marketing tools to help you reach your target audience.
Retirees can leverage their professional experience to offer consulting services, often earning more than part-time work. Consulting can be tailored to fit the retiree’s schedule, work, and play.
Freelance consulting gives retirees flexibility, remote work, and high earnings.
Becoming a Notary Public for Extra Income After Retirement
Becoming a notary public is a flexible and potentially lucrative option for retirees. Applicants must be at least 18 and a legal resident of their state to be eligible for online notary services. Some states require specific training courses or tests before obtaining a remote online notary license.
Becoming a notary requires minimal training and a couple of hundred dollars for commissioning. Online notaries can potentially earn up to five figures monthly, depending on skills and client base. The average salary for an online notary public is approximately $44,366 annually.
E-notaries can work remotely using digital tools for document verification, making the notarization process more efficient. Notaries may need to secure a surety bond to protect clients from errors or misconduct.
Summary of Retirement Income Strategies
In short, there are lots of ways to supplement your income and be secure. From maximizing Social Security to investing in dividend stocks, rental income, and part-time jobs, you have options. Each has its own advantages and can be tailored to your financial goals and risk tolerance.
Go ahead and explore these and make informed decisions to increase your retirement income and enjoy your retirement more.
Frequently Asked Questions
How to maximize Social Security?
Maximize Social Security by waiting until 70, working 35 years, and claiming spousal benefits. Working 35 years and paying social security taxes will increase your total benefit. These will increase your total benefit.
How do retirees make rental income?
Retirees can make rental income by renting out spare spaces in their homes, like basements or attics, and using property management software to make it easy. Budgeting for repairs and hiring property managers will make their rental experience even better.
What are the benefits of dividend stocks?
Dividend stocks give you regular income, a hedge against inflation, and higher yields than bonds. Focusing on stable companies with a history of increasing dividends will help your investment strategy.
How do Certificates of Deposit (CDs) help retirees?
CDs help retirees with safe and predictable returns, and the CD ladder strategy allows for regular access to cash without sacrificing high interest rates. This balances income generation with liquidity.
What are the benefits of being a notary public?
Being a notary public gives you flexibility, high earnings, and remote work, all with minimal training and initial investment. Like Supplemental Security Income (SSI), being a notary public can be an additional income source for retirees with limited resources. This is very rewarding in many ways.
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