Retirement can be a precarious time even for those who are well prepared, but for the average individual, escaping the workplace can seem all but impossible. In particular, the loss of the traditional pension programs means that workers need to have started 401(k) accounts decades before considering retirement – and most of us weren’t prepared. The result is a generation or more that remains bound to the workplace. So how will we ever retire? The answer is passive income.
Pursuing Passive Income
In the workplace, our labor results in what’s considered “earned income,” even if you’re self-employed, but traditional work isn’t the only way to make money. With passive income, you can earn money via investment dividends, real estate, or product sales. Developing a passive income stream is the ideal way to retire early, or at least on time, and – most importantly – ensure that you’re financially secure after leaving the workplace.
Earn By Downsizing
Many passive income streams are based on activities you’re already doing or skills you already have, and it just takes a few tweaks to make these activities profitable: for example, downsizing. Older individuals regularly choose to move to a smaller home because the kids have left home or because they no longer wish to be responsible for the yard work and upkeep. Rather than just selling your home, though, consider putting your house on the market as a rental property.
As a rental property, your homes can act as a source of passive income, with one caveat – you need a property management company to help. Property management companies screen tenants, collect rent, and handle maintenance and upkeep so that you can enjoy your retirement. They take a fee and you collect the rest to support your retirement.
Stay In Your Space
If you’re not ready to downsize but you’ve found yourself living in a space that’s a little too big, another option is to rent your empty rooms on AirBnB or another sharing website. Though it can be a bit of an adjustment to have people in your home, you get to choose when to open your rooms to guest and when to step back. Plus, if you live near a college or event venue, you can earn a premium by renting space during peak days.
It may not seem like a source of income in the same way that renting real estate does, but one of the best ways to earn passive income during retirement is through your investments and not just interest on your 401(k). Rather, you should consider building a stock portfolio and collecting dividends, or just purchasing stocks and CDs to multiply your funds.
Build A Blog
Today’s retirees are an increasingly tech-savvy bunch, having come up in a workplace dominated by computers – and you can use that to your advantage. Build a website on a topic of interest so that you can join an affiliate program to earn money. Affiliate programs place relevant ads on your blog and when readers show through those links, you earn a commission. It’s a simple process, but you will need to continue working on the site and adding new posts throughout your retirement to keep it relevant and engaging.
Passive income is never entirely hands-off; as the saying goes, there’s no such thing as free lunch. By maintaining a rental property, a blog, or even a stock portfolio, though, a small amount of effort can support a more comfortable lifestyle. At a time when many of us are stuck in the rat race for years or even decades beyond when we’d like to retire, passive income can change the equation and let you enjoy your later years beyond the workplace.