How to make money in retirement: Ideas for bringing in a steady income

Entering retirement can be a triumphant end to long and potentially stressful workdays. But being retired doesn't mean you still can't generate income.

Working in retirement and bringing in passive investment income can help you fulfill long-term goals in your post-career life. The extra cash also can supplement your savings and Social Security benefits, which is especially important if you're worried about not having enough money to last throughout your retirement.

Exploring your options and getting creative with how to make money in retirement can help you continue to make headway toward your financial goals while taking advantage of the freedoms of this season of life.

Retirement can provide the time and space for you to explore new income-generating opportunities that provide personal fulfillment. You might want to earn income through a job that you previously passed up because of a better salary elsewhere or use your skills to help young professionals establish their way in the world.

Spend some time exploring what's meaningful to you and why. Here are some ideas to get started:

Many kinds of post-retirement jobs can be rewarding and impactful. You may be drawn to consulting, tutoring, pet-sitting, bookkeeping, substitute teaching or becoming a tour guide at your favorite local attraction.

With so many options out there, ask yourself these questions to help get a clearer picture of what work you'd like to pursue:

• What is something you always have wanted to pursue?
• What are your passions?
• Which jobs would enable you to leverage the skills you honed during your career?
• Do you want variable or steady hours?
• Do you want to work at home or in a place where you can interact with people?
• Would you prefer to spend your day with adults, kids or animals?
• How much money would you like or need to make at this new job?

Before retirement or in early retirement, many people decide to purchase a property, spruce it up and rent it out. Some rental income will have to go toward business expenses like repairs, insurance and taxes, but what remains after the expenses gives you additional income. While owning rental property offers varying rates of return, it can be a passion pursuit, particularly if you're handy around the house or enjoy hospitality.

Many extended families have one or more members who could use additional care at home and would be happy to pay for the help. It could be a young couple with childcare needs or a family member experiencing health issues who could use some light housekeeping and your good company. These kinds of paid caregiving services can be lifelines for those who need the help and opportunities for you to create deeper connections with your family or community.

If you're not looking to return to work or you just want your money to work a little harder than sitting in a savings account, consider what investing can do for you. With passive income, certain investment accounts and contracts with varying levels of risk can create an extra stream of cashflow. Some options include:

Bonds are debt contracts that obligate the issuer—typically corporations and governments—to repay the money they borrow from you plus interest. Bonds tend to be lower-risk investments that provide predictable income for two reasons: Their interest rate is generally fixed, and their interest payments usually are made at regular intervals until the bond matures.

Some stocks share profits with their shareholders in the form of dividends. The ones that offer the highest yields are known as high-dividend stocks. While dividend stocks can fluctuate in value, they tend to be less volatile than stocks that focus on aggressive growth. That's why dividends, which are generally paid quarterly, often are considered a reliable income source.

Mutual funds and ETFs let investors purchase a piece of a diversified portfolio of securities. It gives you instant diversification, and you can opt to invest in mutual funds and ETFs that specialize in more dependable income-producing instruments like dividend stocks or bonds.

Financial institutions issue CDs to raise capital for loans and other services to customers. When you buy a CD, you agree to leave your money in the account for a set term—anywhere from 3 months to 5 years—and it grows interest at a fixed rate. At the end of the term, you can access your principal and the accumulated interest earned on it and decide if you want to withdraw it, renew it with a new rate or term, or put it into a different investment. One upside to CDs is that they're often covered by FDIC insurance up to certain limits, which protects your money if something happens to the financial institution.

Many permanent life insurance contracts provide the opportunity to accumulate cash value. You can access this money for any purpose at any time the contract is in effect, although doing so will reduce your death benefit.¹ Whole life contracts offer guaranteed cash value growth. With other contracts, the cash value either earns a minimum guaranteed interest rate (universal life) or fluctuates due to market conditions (variable universal life). In addition, although it's never guaranteed, some types of permanent protection pay dividends.

Annuities are insurance contracts that can guarantee income, backed by the claims-paying ability of the company, for a set period of time or for the rest of your life. The income payouts can be paid at different intervals, like monthly or yearly. Some annuities are relatively low-risk and guarantee a steady growth rate. Others have a higher risk because their funds are tied to market performance, which can produce both gains and losses.

Learn more about the 4 basic types of annuities

Your monthly Social Security benefit—which is often a foundational source of funds in retirement—won't be affected by the passive income you generate from annuities, investments, interest or pensions or from other government benefits. However, if you collect Social Security benefits and have earned income, your benefit amount may be reduced.

A key factor is whether or not you have reached your full retirement age. For most people encountering this issue in 2024 or later, full retirement age is 67, but if you were born between 1955 and 1959, your full retirement age may be 66 plus a number of months.

The Social Security Administration may reduce your benefits if you are younger than full retirement age and you make more than the yearly earnings limit. Earnings that count toward this limit include wages or net profit plus other compensation, such as bonuses, commissions and vacation pay.

• If you're younger than your full retirement age during all of 2024, your benefit will be reduced by $1 for every $2 you earn beyond the annual limit of $22,320.
• If you reach your full retirement age in 2024, your benefit will be reduced by $1 for every $3 you earn beyond the limit of $59,520 until the month you reach full retirement age.

The month you reach full retirement age is an important point in time. From then on, you can earn any amount and your benefit will not be reduced. In addition, the Social Security Administration will recalculate your benefit amount when you reach full retirement age. It will give you credit for the months that benefits were reduced or withheld because of excess earnings.

You may have an extra charge added to your premiums for Medicare Part B and Medicare prescription drug coverage if your modified adjusted gross income (MAGI) in 2024 exceeds $103,000 (or $206,000 if you're married and file jointly). This income-related monthly adjustment amount (IRMAA) works on a sliding scale.

While the standard monthly Part B premium is $174.70 in 2024, earners that exceed the income thresholds may need to pay between $69.90 and $419.30 more each month.

Higher-income beneficiaries with Part D plans in 2024 may need to pay between $12.90 and $81 more each month on top of their plan's premiums. The surcharge also applies to Medicare Advantage Plans that include drug coverage.

The Social Security Administration will consider your income level on your most recent tax return to determine whether you must pay the extra amount. For 2024 adjustments, the agency will most likely reference the tax return you filed in 2023 for tax year 2022.