Passive income streams can be powerful additions to your retirement nest egg.
If done right, these sources of income don’t require much maintenance and can help you deal with rising expenses. Some of the more savvy retirees use these low-income options to fund their lifestyles. Learn how to do it, too.
Types of income
There are many ways to generate income. Here are four to consider:
1. Dividends and fees
Dividends and dividends are reliable, easy ways to generate income. You can buy shares of these companies or funds and receive regular payments. Companies that pay mature dividends (also known as income stocks) are often able to achieve moderate growth as well.
Some dividend investors accumulate stocks before retirement and receive income from dividend reinvestment. This investment model allows you to reinvest the dividend money back into the market, buying more shares, which can increase your passive income every quarter. Just remember that dividend-paying companies don’t offer the same growth potential as riskier stocks. And benefits are not guaranteed: Companies can reduce or cut them entirely if they choose.
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2. Real Estate crowdfunding
Real estate is great for cash flow, but it can also be very expensive for many investors – and a nightmare to manage. No one wants to spend their golden years getting calls in the middle of the night that their employer has a plumbing problem.
That’s why some retirees are turning to real estate crowdfunding, which involves pooling your money with other investors to buy real estate without having to manage the property yourself. Real Estate crowdfunding platforms give you the ability to invest while being informal, and get regular income.
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3. Creating digital products
You can also use your skills to make money by creating and selling digital products. Some retirees create eBooks, templates and online courses related to their past jobs or hobbies that can be sold online.
Creating and selling digital products requires some upfront work, but it can change over time. You can also manage this income stream as a part-time job if you’re looking for extra work to keep you busy during retirement.
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4. Annuities
Annuities are another resource for retirees looking for an alternative source of income. These financial products turn your money (either in lump sum or premiums) into regular payments.
Depending on the annuity, these products can provide tax-deferred growth and can be a great way to weather market volatility.
