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Footing the Bill

Max Chi

MANY RETIREES ARE looking for ways to supplement their income. Others would like something interesting to occupy their time and allow them to stay productive and engaged—and, if it brings in a few dollars, all the better.

We’re fortunate to live in the internet age, with the opportunities that it offers. Previously, retirement-income sources consisted mainly of pensions, stocks, bonds, rental real estate and part-time work. Today, there are many other choices, including a few you may not have heard about. Here’s a look at possible retirement-income sources, starting with the more familiar ones. 

Pensions. Although pensions have mostly been replaced by 401(k)s, about a fifth of workers still participate in defined-benefit plans. Pensions are most common among government employees, while just 11% of private-sector workers participate in such plans. The median annual pension benefit in 2021 was $26,734 for federal government retirees, $22,860 for state and local government retirees, and $10,606 for private-sector retirees.

Income annuities. Think of buying income annuities as buying your own pension. These are contracts with an insurance company, and typically involve handing over a lump sum in return for regular income payments that are guaranteed for life.

Stocks and bonds. Dividend-paying stocks, bonds and income-mutual funds are another way to generate income in retirement.

With any luck, the dividends from your stocks and stock funds will deliver a reliable income stream, even as stock prices bounce up and down. Still, those dividends aren’t guaranteed. During the pandemic, 42 companies in the S&P 500 suspended their dividends because of economic uncertainty. These included previously reliable dividend payers such as Walt Disney, Ford Motor and Darden Restaurants.

Bonds and bond mutual funds are another way to receive passive income. While government bonds are considered safe, investors in corporate bonds may lose money to defaults, especially those who invest in high-yield bonds.

Keep in mind that collecting dividends and interest isn’t the only way to get income from an investment portfolio. Instead of focusing on yield, you could strive for a healthy total return and then periodically sell part of your portfolio holdings—an approach many financial experts recommend.

Rental real estate. This is another popular source of income. In addition, if you manage the properties yourself rather than hiring a property manager, you can boost your after-cost rental income and the work involved may provide you with a sense of purpose.

Rental real estate can also be a good way to diversify an investment portfolio. Real estate performance has a low correlation with stock and bond returns. Even if your stocks and bonds are struggling, the income from your rental properties may compensate.

Micro-investing platforms. What if you want to invest in real estate but can’t or don’t want to put $500,000 or more into a rental property? Real estate investment trusts (REITs) and micro-investing platforms such as Arrived and Cityfunds allow you to benefit from property price appreciation and rental income without making a hefty upfront investment.

You can micro-invest in real estate with as little as $100. There are liquidity issues, however. Many platforms expect you to hold your shares for at least five years.

What about other investment asset classes? Today, there are micro-investing platforms for almost any investment you can think of. Do you want to dabble in cryptocurrencies? You have many choices, including Cash App and Juno. Would you like to own shares of a valuable work of art? Check out Masterworks. How about collectibles, such as sports trading cards, autographed jerseys, comic books and luxury cars? Collectable and Rally might suit you. Want to invest in fine wines? Vinovest can help. And if you want a variety of alternative investments on one platform, Yieldstreet has you covered.

Will these micro-investing platforms turn out to be a good investment? The jury is still out, so even daring investors should keep their bets small—and most folks ought to steer clear, instead sticking with stocks and bonds.

Side gigs. What if you want to channel your energy, skill and free time into creating an income stream without commuting to work several days each week? Many income options are available today that didn’t even exist 10 or 20 years ago. Consulting, bookkeeping and teaching are popular part-time jobs for retirees with specialized skills, and these days you can do them online from home.

If you want to teach but don’t want the commitment of a regular teaching schedule, you could create a course with a platform such as Udemy and set your own fee. Alternatively, you can create and upload educational videos or blog posts. I still earn income from videos I created years ago. I’m sure every HumbleDollar reader has skills and knowledge they can draw on to create content that’ll have value for others.

Videos and blogs can be lucrative—assuming there’s sufficient interest. One amateur gardener makes thousands of dollars each month with his backyard gardening YouTube channel. The income comes from ad revenue, sponsored videos, Amazon affiliate links at the bottom of each video and plant sales. A woman makes similar amounts from her gray-hair blog. Another woman lives in Mexico as an expat, and made more than $200,000 in 2022 from her Mexico vacation advice blog and from her travel-blogging business.

There are also more exotic ways to make money online. User Interviews pays people to participate in marketing interviews. Sites such as Swagbucks pay people to shop online and complete surveys.

Are you overweight? HealthyWage will pay you to lose weight. How about teaching people how to be mermaids? Believe it or not, you can even make money selling pictures of your feet online—though I’m not sure anybody would pay for pictures of my feet.

Max Chi retired in 2022 after a career as an IT specialist. He also has a background in physical science and digital marketing, and a strong interest in personal finance. Max enjoys traveling, sightseeing and freelancing. He and his wife live in Texas. Max’s previous articles were Anti-Social Behavior and Be Careful Out There.

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