Retirement planning can be a tricky thing. Between the variability of investment returns over the years and the uncertainty of human lifespans, it’s entirely possible that your nest egg won’t be as sizable as you’ll need during your retirement years.
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Fortunately, there are numerous ways that seniors can earn extra income without necessitating a full-time return to the workplace.
Here are six ideas for retirees to boost their financial security.
Earning passive income doesn’t need to be difficult. You can start this week.
Rent Out Extra Rooms
One of the best ways to boost your income after you retire is to take advantage of the assets you already own. If you own your own home, for example, you may find that you’re an empty nester and simply don’t need all that space. Those extra rooms are assets that can generate income.
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Depending on where you live, you might find success renting one or more of them out, either on a long-term basis or via a shorter-term service like Airbnb. If you’re socially minded, this also gives you a chance to meet and spend time with other people.
However, you can also partition your house to give both you and your guests extra privacy. Either way, you could likely earn hundreds to thousands of dollars per month.
Turn a Hobby Into Cash
If you enjoy doing something, see if there’s a way you can turn it into an income stream.
“I’ve seen retirees turn hobbies into successful small businesses, earning $300 to $500 per month,” said John Crist, the founder of Prestizia Insurance. “My father started an eBay shop selling woodworking collectibles in retirement for extra income and purpose.”
Invest Your Idle Cash
While you shouldn’t liquidate important financial accounts like your emergency fund, if you have too much idle cash lying around, you aren’t maximizing your retirement income.
Imagine, for example, that you have two full years of income in a savings account as your emergency fund. Most experts suggest that three to six months is adequate, or perhaps one full year’s worth. Anything beyond that should be invested to generate extra income.
You don’t have to be aggressive with this money, but even buying CDs or Treasury bills gives you hundreds or thousands of dollars of extra income per year.
Make Changes to Your Investment Portfolio
In your lifelong efforts to build your nest egg, you likely had at least some type of growth investments in your accounts, like stocks. Once you’ve retired, however, you might consider reallocating some of your growth-oriented investments into income-paying ones.
“One of the most effective ways retirees can boost their financial security is by reviewing and updating their retirement portfolio” said Mafe Aclado, the general manager of Coupon Snake. “The fact is investments such as real estate investment trusts, mutual funds, stocks and bonds could be negatively affected by market volatility, and it is only by regular review and adjustment that retirees can ensure that they position themselves where the market always works in their favor.”
For example, if you have a $300,000 nest egg that’s 100% in stocks, converting even 50% of that portfolio into CDs, bonds or other income-generating investments may boost your income by $7,500 or more per year.
Note that you should likely still keep some growth components in your portfolio even after you retire, but the specific amount varies from investor to investor. Speak with your financial advisor about what the appropriate asset allocation should be for your specific portfolio.
Downsize
Downsizing requires a bit of paperwork, but it’s likely the most profitable step you can take in terms of generating extra income. Instead of renting out the extra rooms or garage space you have in your home, simply selling it and moving to a smaller, more right-sized home or apartment could quickly translate to tens or even hundreds of thousands of dollars in your pocket.
“Downsizing or relocating to a smaller dwelling or more affordable area can yield significant savings by selling a larger, high-maintenance property,” said Yosef Adde, the owner of I Buy LA. “This approach releases capital that can be used for investment purposes.”
This could eliminate your retirement income shortfall in one fell swoop. Just be sure to consult with your tax and financial advisors to make sure you don’t trigger any unnecessary taxes or other financial problems.
Arbitrage Your Location
If you live in an expensive area, you can essentially give your retirement income a boost by moving somewhere more affordable. This is particularly true if you are renting. If you can find an apartment that rents for $1,000 per month instead of $2,000, for example, you can live off an additional $12,000 per year.
If you don’t have a reason to stay in a more expensive city — say, if you recently retired from a job that made you relocate in the first place — then this can be a great move. If you’re feeling more adventurous, you can check out costs in another state or even another country. While you wouldn’t be earning extra income, you’d be spending less money, which would effectively amount to the same thing.
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This article originally appeared on GOBankingRates.com: Retired but Want To Make Passive Income? 6 Ideas for Retirees To Boost Financial Security
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