8 Ways to Make Extra Income in Retirement

Conventional wisdom holds that U.S. retirees tend to shut their wallets once they’ve left their professional careers and are living on a fixed income. That’s not necessarily true.

Money management specialists expect retirees to spend about 70% to 80% of their preretirement income during their golden years.

That’s a lot of cash, especially given that so many Americans have not saved enough for retirement.

Whether landing a part-time job, opening your own side-hustle business or simply rearranging your investment strategy to generate more post-retirement cash, figuring out a way to earn extra dollars in your golden years can relieve financial pressures and offer a lifestyle boost.

Which incomes, passive or otherwise, fit the bill best? Here are the most effective and realistic income-generating streams in retirement for seniors without a huge investment account.

Interest rates are expected to go down later in 2024, so locking in higher yields through certificates of deposit and other bank savings vehicles makes sense for retirees right now.

“Risk tolerance and high rates make CDs a good deal versus stocks right now,” said Gabe Krajicek, chief executive officer at Kasasa, a financial technology firm in Austin, Texas, in an email. “Over the long haul, stocks historically beat CD returns. But CDs are federally insured and returns are guaranteed.”

Krajicek advises focusing on bank savings accounts with the highest rates. “With CDs, there aren’t many differentiating features,” he said. “For most people, high-yield checking accounts are attractive. In today’s environment, they’re paying 5% to 6% and are totally liquid.”

Just know that your money is tied up while it’s in the CD, and there are typically fees for liquidating the CD early. “That’s why the higher yields and liquid access to funds at all times offered by high-yield checking are a better option for most consumers,” Krajicek said.

Retirees can earn passive income by investing in dividend stocks. These publicly traded companies offer shareholders regular earnings distribution through cash or stock reinvestment.

“By investing in stable companies that pay out dividends regularly, you can build a portfolio that throws off quarterly income on autopilot,” said Andrew Gosselin, a Princeton, New Jersey-based certified public accountant, in an email. “The key is focusing on companies with long track records of raising dividends yearly.”

Aim for dividend stocks that trade for a moderate price. For example, take Hercules Capital Inc. (ticker: HTGC) and Apollo Commercial Real Estate Finance Inc. (ARI), which trade for less than $25 but offer a sturdy regular forward dividend yield of over 10%.

“Bonds are a compelling investment right now, especially U.S. Treasury bonds, municipal bonds and investment grade corporate debt,” said Daniel Dusina, chief investment officer at Blue Chip Partners in Farmington Hills, Michigan, in an email.

Retirees can lock in great rates on a broad spectrum of short-term bond offerings. Even two-year Treasurys have cleared 5% returns in 2024, as investors flee the stock market due to high inflation and a frozen U.S. residential real estate market. Some short-term corporate bonds also yield over 5%, giving retirees another avenue to high fixed-income yields.

While longer-term Treasurys and corporate bonds offer even higher yields, know that locking up your money in 10-year (or higher) bonds can work against you when the economy improves and the stock market soars. In that scenario, a 5% return on a long-term bond is not so robust.

Whether you invest in new ones or rent out the ones you already own, renting out property is a way to earn extra money in retirement because it provides a passive income stream.

“It doesn’t require much work to generate cash flow,” said Ryan Barone, co-founder and CEO of RentRedi, a New York-based property management software company in New York, in an email. “Additionally, with property management software that can do most of the work for you by automating processes such as listings, tenant screening, lease signing, rent collection, maintenance management and accounting, being a landlord is even less work.”

If you aren’t in a financial position to invest in new properties for rental purposes, you can rent out properties you already own, or even portions of your properties. “If you’re downsizing, for instance, instead of trading in your current home for a smaller space, consider keeping it and renting it out,” Barone said. “You can also rent out spaces such as basements, attics, garages, offices, storage sheds and driveways to people who need extra storage, parking or work spaces.”

For retirees who don’t have enough cash to buy houses and rent them out, real estate investment trusts, known as REITs, can be a useful income option.

“REITs are a great way to earn passive income before and during retirement,” said Abby McCarthy, senior vice president of investment affairs at Nareit, a REIT-based real estate investment services firm in the District of Columbia, in an email.

REITs own, operate or finance income-producing commercial real estate across a range of property sectors, from traditional real estate like apartments and retail to more modern-day real estate that powers the economy, like data centers and cell towers. “Most REITs trade on major stock exchanges, and they offer an excellent opportunity for retirement savers and retirees to generate passive income because they offer the opportunity to invest in and benefit from real estate without having to buy, manage or finance property,” McCarthy said.

REITs can provide a steady stream of high dividends for cash-needy retirees. “That’s important for retirement savers and retirees who require a passive, continuing income stream to meet their living expenses or who want an additional income stream,” McCarthy added.

Working part-time in retirement and even recasting your career in another industry can also yield some extra cash in your 60s, 70s and beyond.

“A part-time, work-from-home job that pays well and works for a senior’s schedule is being an online notary,” said Pat Kinsel, chief executive officer at Proof, a Boston-based digital notary document platform, in an email. “It’s very attainable to become a notary, you just need to be commissioned by your state and undergo a small amount of training. It costs just a couple hundred dollars to get commissioned.”

Much like a ride-sharing driver, an online notary can set their own hours and work from home. “It requires basic technology skills, and you just need a computer and a webcam to get started,” Kinsel said.

Good online notaries can make up to five figures a month, depending on how many hours they work. “It’s an amazing part-time job for seniors because it’s flexible, has little-to-no physical demands and can be done from anywhere,” Kinsel added. “For many seniors who want to still interact with others without having a ton of physical demands, it’s an amazing retirement income-generating option.”

After they retire, ex-career professionals undoubtedly have a lot of wisdom to share, so why not leverage that expertise for cash in retirement?

“One side hustle I see among seniors is taking up freelance consulting in their respective fields,” said Rebecca Awram, mortgage advisor at Seniors Lending Centre in Maple Ridge, British Columbia, in an email. Younger seniors who’ve recently retired from their respective fields are great resources for those just getting started in the industry, noted Awram.

“There’s an entrepreneurial aspect to this side hustle as you have to set up a medium to meet clients, but a major pro is that you can do it remotely,” she said. “It’s flexible and highly lucrative as there are no overhead fees, and you are your own boss. Depending on the industry, you set the rate for your services, which can usually start at $25 per hour.”

Getting started as a professional consultant is challenging; new retirees should know that. “Seniors can start by leaning into their robust networks of previous colleagues and clients to help get their business off the ground,” Awram said.

Focusing on what you love doing in your side gig matters.

“When you enjoy your activities, your excitement shows,” said James Watts, founder of the Dubai-based education technology platform Teach.io, in an email. “Your natural enthusiasm will attract others who share your interests, and they’ll stay engaged. Authenticity is everything. This can lead to better connections and a stable income stream.”

One way to spend time doing what you love and getting paid for it is to create online courses in your career specialty, Watts added.

“Creating online courses is one of my top recommendations for retirees,” Watts said. “This pastime makes the most of your extensive experience and know-how. The great thing about creating courses is that you can keep making money long after they’re made. They’re scalable without needing much more work.”