3 Ways Boomers Can Still Earn Passive Income During Retirement
If you’re a boomer in or near retirement, your nest egg and Social Security might not be enough to finance your lifestyle and provide generational wealth to hand down. If you want to ensure you don’t outlive your savings and you aren’t interested in returning to work, passive income is the name of the game.
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Here are a few of your best options for money without labor.
Dividend Stocks — Cash Every Quarter Without a Single Share Sold
As the founder of Teens Mean Business, John Andrew is on the other side of the age spectrum from boomers in retirement. But as an entrepreneur and small-business writer who founded a retail clothing company in 2008 and grew it to three locations before selling it in 2015, he knows a thing or two about earning money — and his recommendation of dividend stocks might be the most effortless kind of income you’ll find.
“Nothing beats the feeling of watching those quarterly dividend payments hit your account, knowing your money is working hard for you even when you’re not,” Andrew said.
Dividends provide a steady, predictable income without having to sell any shares. Instead of shrinking their retirement fund every time they need cash, dividend investors have a golden goose that lays bigger and bigger eggs as its shares appreciate over time.
“I like to look for mature, stable companies that have paid dividends reliably for years,” Andrew said. “It gives me peace of mind. Of course, you still need to diversify — no stock is completely risk-free.”
Modern dividend investors can diversify with a single ETF. For example, NOBL tracks the dividend aristocrats, the S&P 500 companies that have increased their payout for at least 25 consecutive years.
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Real Estate — The Hands-Off Way
Real estate can be a reliable source of income, but purchasing, owning and renting physical property is anything but passive. Luckily, boomers in retirement can reap the rewards without getting their hands dirty.
REITs Allow Anyone To Profit From Property
The simplest way to earn a steady income from real estate is through REITs, which are as accessible to the common investor as dividend stocks.
“You can invest in real estate investment trusts through your stock brokerage account,” said Kim Tucker, director of the Mid-America Association of Real Estate Investors. “And there are a lot of these that are being recommended right now by stock analysts.”
According to Investor.gov, “Real estate investment trusts allow individuals to invest in large-scale, income-producing real estate… These may include office buildings, shopping malls, apartments, hotels, resorts, self-storage facilities, warehouses, and mortgages or loans.”
By law, REITs must pay out at least 90% of their taxable income to investors as dividends, although many pay 100%.
According to Forbes, the top REITs have low balance sheets, fair prices and forward dividend yields between 8% and 10.8%.
Syndications: Higher Barriers to Entry Buy Higher Yields
Boomers with bigger nest eggs should consider real estate syndications, which are partnerships that use pooled money to fund large investments.
“Some are more income-oriented, others are more profit-oriented upon the sale of the property,” said Brian Davis, real estate investor and founder of Spark Rental. “But most pay passive income in the form of distributions.”
And those distributions can be significant.
“For more income-oriented syndications, investors might earn an 8%-12% yield, although they may not participate in much — if any — upside upon the sale of the property,” Davis said. “For more profit-oriented syndications, the yield may look more like 4%-8%, but the total annualized returns upon sale often amount to 15%-30%.”
Davis said that in addition to hefty returns, investors get excellent tax benefits, including depreciation in the first few years — even as you collect passive income, you still show a loss on your tax return. The downside is that syndications want big-money investors — the minimum buy-in is usually $50,000 to $100,000.
Become a Micro-Lender Through Real Estate Crowdfunding
Crowdfunding can be as accessible as REITS for hands-off real estate investing, but it’s typically a higher-risk, higher-reward way to profit from property.
“There are quite a few investing platforms in the real estate space where, for as little as $10 in some cases, you can invest in either a loan to a real estate investor or a fund,” said Tucker, who cited Groundfloor, RoofStock and RealtyMogul as examples. “I am currently investing very cautiously on Groundfloor and have been earning around 11% on average over the past two years. I also have three out of 10 loans in default. I have had two other loans that have gone into default get paid off and I still made my 11%.”
Boomers Have Wisdom and Experience To Share — Or Sell
Investing isn’t the only way retirees can generate income they don’t have to work for. The more creatively inclined can leverage their accumulated knowledge for continuous cash flow.
Write an e-Book
If you’ve got a story to tell and a penchant for prose, Amazon, Google Play Books, Barnes & Noble, Apple iBooks and other platforms are ready to publish your work, which could pay you royalties for the rest of your life.
“The wisdom and experiences gathered over a lifetime are valuable assets,” said Sumeet Kumar, a certified financial education instructor, founder of MoneyFromSideHustle and author of “How To Choose the Right Side Hustle.” “By penning a book or e-book, retirees can transform these insights into a tangible product. Whether it’s a memoir, a how-to guide or a novel, this literary journey can lead to a consistent stream of income through sales. Moreover, publishing one’s thoughts and stories is not only financially rewarding but also serves as a lasting legacy.”
Earn While You Educate
Retirees can also put their decades of knowledge and experience to work by creating video-based or written lessons and courses that help employees upskill or work toward certifications.
“Leveraging their expertise, they can create content ranging from career guides to hobbies, financial planning, wellness and more,” said Baruch Silvermann, CEO of The Smart Investor.
“The online nature of these courses ensures flexibility, allowing baby boomers to work on their own schedule. Once the course is developed and uploaded, it can reach a global audience, providing a consistent income stream without geographical limitations. Moreover, the initial effort invested in course creation pays off in the long run as courses can be sold repeatedly without significant ongoing input.”
Silvermann suggested user-friendly platforms like Udemy, Teachable and Coursera, which make hosting, marketing and payment processing feasible even for those with limited technical skills.
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