10 Ways to Generate Retirement Income

In How to Retire on $1 Million or Less we discussed the 4% rule and whether or not it is a worthwhile guide for withdrawing assets in retirement.

I also noted that people who have other sources of retirement income don’t need to rely on drawing down assets as much as those who don’t.

What are those potential sources? I’m glad you asked! 🙂

In this post I’ll detail ten of the most popular ways to generate retirement income including my thoughts on the value of each.

I’ve divided them into two groups — ones that I either use or most likely will use and ones that I’m aware of but not that interested in.

My Personal Favorites

Here are the five retirement income options I use/like…

Real Estate

How could I not start with real estate? My real estate holdings make up the majority of my retirement income. For $600k invested I generate $60k in income a year. Not bad, right?

Though the properties are 1,200 miles from where I now live, they are a cinch to manage. I spend maybe two hours a month reviewing the financials. The reason things are so smooth is that I have a professional management firm handling all the details. Easy peasy for sure.

Of course I bought at the right time and had a great mentor help me, so things worked out well. So well in fact that I’m building up cash now because eventually the market will cool off and there will be another buying opportunity — and I might want more places. 🙂

I realize that owning real estate is not for everyone, but I would say it’s suitable for more than are giving it a shot. That said, many drawbacks keep people away: the “hassle factor”, lack of knowledge, owning illiquid assets, potential time issues, and more. I get it. I deal with the same challenges. That’s why I may not buy any more places and instead consider a close alternative…

Real Estate Crowdfunding

Similar to peer-to-peer investing (which we’ll get to in a minute), real estate crowdfunding matches borrowers (people with real estate projects) and lenders/investors (people who want to invest in real estate for the income but don’t want to own places) for a win-win combination.

I’ve been watching several other bloggers experiment in this area and I may take the plunge myself. The returns seem good (in the 10% range) so what’s not to love?

Obviously this would be a generally risky investment but could also be a decent income producer. So I’m interested for sure but just not ready to take the plunge yet. I’ll keep you posted if I make an investment.

Anyone else trying real estate crowdfunding? I’d be interested in hearing your perspective.

Peer-to-Peer Lending

I have had a love/hate up/down relationship with peer-to-peer lending. Things started out great, then tanked with Lending Club’s problems, and now appear to have leveled off at an acceptable range (around 7% return).

At this point my plan is to draw down Lending Club’s investments to $50k and pump up Prosper’s to $50k, so I have $100k invested between the two of them. Once I get there, I think I’ll be happy with both the amount invested as well as the returns.

For me, this is a good source of income that adds another revenue stream and gives me some income diversification. It’s not going to make or break my finances, but an extra $7,000 for $100k invested is not bad.

BTW, I do like both Lending Club and Prosper and overall have had good experiences with each.

FYI, Lending Club is currently offering a couple promotions similar to ones I have taken advantage of in the past. Some options:


There’s a wide range of options for making money from dividends. Here are a few I’ve considered/used:

  • Dividend investing. This is simply buying individual stocks that have appreciation potential but also churn off a decent dividend (like 3% to 4%). I’ve considered this option in the past but 1) I’m not an individual stock buyer and 2) managing a boatload of stocks sounds like a nightmare (been there, done that).
  • Dividend funds. I’ve thought about moving some of my Vanguard assets into dividend funds. I could get about 3% here but would be giving up some growth. I think there’s a better option…
  • Dividends from growth assets. Right now I’m invested heavily in a Vanguard total US index fund. It’s mostly a growth fund but also churns off almost 2% in dividends. This earns me an extra $10k per year (just from my taxable account — I get nothing from my retirement accounts) which is a nice amount for me.

Side Hustle or Business Owner

I like this option better than getting a part-time job (see below) because 1) it’s more flexible (at least often it is), 2) there’s a larger upside potential, and 3) it’s more interesting to me.

The idea here is that you create or buy a business that makes money, as simple as that. You could develop your own business or buy into an existing one (as a minority partner most likely). I’ve thought of both and may eventually do the latter since returns can be pretty good, but for now I’m focused on building this blog as my side hustle. It’s fun, challenging, and has the potential to provide a good amount of extra income. Plus, if I’m successful I can sell a ton of “How to Make a Fortune at Blogging” eBooks. 🙂

Of course success does not come overnight so I’m going to have to stick with it for some time.

But in the meantime I enjoy it and it doesn’t take me too much time, so why not give it a try?

Other Viable Options

This section has some additional ideas for making retirement income. I’m not too fond of any of them, but some reading might appreciate them. Either way, they at least deserve to be in the conversation.


Real estate investment trusts (REITs) are mutual funds that buy real estate. Vanguard’s main REIT currently yields 2%-4%. I’m not a big fan of REITs as I think they are more susceptible to market swings than owning individual places. I know that seems counter-intuitive, but as long as you have a decent number of units, I’d prefer direct ownership or crowdfunding when it comes to real estate.


I personally don’t like CDs these days as they lock you in for basically no return (a five-year CD may earn you 2%).

I keep my cash in a “high-yield” savings account which gets me 1%. It’s not great but it’s better than nothing and gives me complete access to the money whenever needed.


I have bonds in my portfolio as a hedge against a downturn, but I’m not too hip on them as an income investment. My main concern is that interest rates will go up at some point and kill bonds.

Sure, I could do a bond ladder which protects against that mostly, but they just don’t excite me. So I’ll take a pass.

Part-time Job

Many people work in retirement and hopefully find a job that they enjoy as well as pays some bills. For instance, you may only need half of what you previously made so instead of working at soul-sucking XYZ Corp you can work at your favorite non-profit and earn a decent enough income while also doing something you feel good about.

I don’t think I could pull it off after being retired this long. I’d have to get up and be somewhere at a specific time. Oh the horror!!!!

Plus the hourly pay for something like this is usually pretty low so I can’t see it being worth the trade-off for me. Thankfully, I have the options above.


Are annuities a good or bad idea? I’ll admit that I don’t know much about them other than: 1) they are very complicated, 2) they can be very expensive, and 3) if you don’t know what you are doing, you can get killed with one.

Look at those three again. Do you want to be part of an investment that has that baggage? I know I don’t.

Ok, so that’s my list. Any comments on it? Or perhaps something to add?

P.S. For those who prefer a video version of this post, see the ESI Money YouTube channel.


Originally posted at https://esimoney.com/10-ways-generate-retirement-income/

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