The cost of living continues to rise after retirement, which is why a lot of people look for ways to earn extra money, often just a couple of years after retiring. Other people are bored by a life of complete leisure and need new challenges to take on. The fresh income source is a nice bonus. Here are some common ways to earn extra money in retirement.
Consulting. Many careers can be converted into part-time or seasonal consulting arrangements in retirement. For example, let’s say that you worked in marketing and sales during your career. You may be able to work as a consultant for other businesses engaged in the same field. Or if you managed a restaurant, you may be able to become a consultant for another restaurant or even a small restaurant chain. The idea is to take the experience you accumulated during your working years and consolidate it into a program where you can sell your expertise for a fee. The compensation could be a flat charge or an hourly arrangement.
Freelancing. Create a list of skills you have. This can include expertise acquired through your career or from a hobby or area of interest. If you can figure out how to sell those skills to businesses or individuals, then you can make money freelancing. If you were a teacher during your working life, you may be able to become a tutor. Avid golfers could sell their services as a golf pro at a golf club or offer instruction to other golfers. Making money from your hobbies can be a fun way to improve your retirement finances.
Start a part-time business. Your venture might involve providing a service or selling a product. Under ideal circumstances, it will be a business idea you are enthusiastic about. Identify what kind of business you would like to go into, and then do some research about the industry, including investigating some local businesses in the same field. Figure out what you can offer, such as a better product or service, a more efficient delivery or a lower price, and then start to build your business around it. An even faster way to do this, if you have the money, is to buy out an existing business. This is generally less risky than starting a business from the ground up, since the business will already be running and have a cash flow. You might be able to achieve the powerful combination of a business idea you are passionate about and the necessity of continuing to earn an income. Some business ideas can blend neatly into retirement, in a way that a full-time job can’t.
Create passive income sources. Passive income sources generate revenue with minimal effort from you. That doesn’t mean that they require no effort at all. Typically, you’ll invest a considerable amount of time, effort and often money in getting a passive income stream started. But once it’s up and running, it’s one of the best income sources you can have.
There are a large number of potential passive income sources. For example, you could start a blog or website or create videos on which you can earn ongoing advertising revenues. Or you can start a website in which you sell other people’s products through affiliate arrangements, earning a percentage of the sales as a commission. Another idea is to invest in real estate, either directly or through real estate investment trusts. Rental properties in popular areas could provide you with extra monthly income, especially if you can take care of repairs yourself or have the resources to outsource maintenance to a management company.
Watch out for pyramid schemes. In your search to find ways to earn extra money in retirement, it’s almost inevitable that you will come across one or more pyramid schemes. Make an effort to avoid these types of entanglements.
If you can picture a pyramid, it has a large base that becomes progressively smaller until you reach the very peak of the pyramid, which comes to a point. This is a perfect metaphor for the organizational structure of this kind of scheme. At the bottom is the largest number of people in the organization. At the top is the smallest number. But everything being generated by the large number of people at the bottom is flowing up to the top, so that only the very small number of people at the top are actually making any money.
Pyramid schemes are usually led by unusually friendly people who try to convince you to attend a seminar. The seminar is a deliriously happy event, lead by one or more incredibly charismatic and persuasive individuals. The speakers confidently promise untold riches, and you can’t help but get caught up in the excitement. Your questions about exactly what product or service the scheme is offering might be dodged or ignored completely.
You must pay an entry fee to join, which is “only” a few hundred dollars. You are also encouraged to persuade family members and friends to join you as associates, who will also need to pay an entry fee. You will get a small cut of the entry fees of anyone that you bring into the program. The rest goes up the pyramid, to the people who brought you in, but mostly to the people at the very top. You are not required to sell the core product or service, just the memberships, though they may also convince you to pay for upfront inventory. In some cases, the speakers might even declare that the venture is not a pyramid scheme, but this does not necessarily make it true.
The lure is easy money, but the reality can leave you with an empty bank account. If you have doubts about a business scheme, check out the Federal Trade Commission guidelines on multi-level marketing before committing to a program.
Jeff Rose is a certified financial planner, U.S. combat veteran and the founder of GoodFinancialCents.com.
More from U.S. News
10 Ways to Make Extra Money in Retirement
10 Best Places to Retire on Less Than $100 a Day
How to Earn Extra Money in Retirement originally appeared on usnews.com
