WSJ: Beyond the Tried-and-True: Generating Cash in Later Life


These days trying to find high-quality income-producing stocks or bonds—ones yielding better than a measly 2% or 3%—can be as frustrating as trying to tie your shoelaces with one hand.

Don't despair: There are ways to boost income in retirement that go beyond the usual suspects—sometimes way beyond.

Here are five ideas:

1. Grow Trees

If you live in an area where people routinely burn wood to heat their homes, you might consider buying some woodland. Not only can you use the wood to heat your home, you can sell logs to others.

"An awful lot of people in the Northeast use wood for fuel because they can't afford anything else," says Robert Maloney at Squam Lakes Financial Advisors LLC in Holderness, N.H.

The usual quip, however, is that wood will heat you twice: once when you cut it and once when you burn it. That's also a way of saying that this method of earning extra income can be hard work.

The labor starts with weeding out trees for harvesting. (Trees can take decades to reach maturity, so you don't want to cut them all down at once.) The thinning lets the remaining trees grow bigger and provides room for saplings. The felled trees then must be left to dry, which can take more than a year. Finally, the trees need to be cut into logs before they can be sold.

The returns you generate will depend in part on how much of the labor you are willing and able to do yourself and how much you pay for the land, says Theodore E. Howard, professor of forestry economics at the University of New Hampshire in Durham, N.H.

Woodland in New Hampshire is going for around $1,500 an acre, and a cord of wood commands about $115 once it has been cut, according to the New Hampshire Timberland Owners Association in Concord, N.H. A sustainable level of production is about a cord an acre a year.

If you determine firewood doesn't offer a big enough return, there are other possibilities for woodland income. These include leasing the land to hunters, leasing out maple-syrup taps (if you live in a Northern state) and selling timber.

2. Make Loans

You're probably getting less than 1% on your bank deposits—but your bank, using your money, can get as much as 15% for an unsecured loan. Suddenly lending seems appealing.

If you have ever co-signed a loan for a friend or family member, you have come close to being a lender. As a co-signer, you're on the hook for the money if the primary borrower doesn't make the loan payments. The difference is, you don't get any interest.

If the person who needs the loan co-signed has decent credit, it might make sense to make the loan directly. Before doing so, draw up a contract that could potentially be used in a court of law, says Farnoosh Torabi, personal-finance expert and author of "Psych Yourself Rich."

If the idea of lending to family gives you hives, consider lending via a peer-to-peer network such as That website boasts returns of more than 10%. If you do so, make a variety of loans to different people of different credit quality to help diversify risk, Ms. Torabi says.

3. Rent Out a Room

If your kids have left the nest, you might have a spare room. Instead of downsizing to a smaller home in a weak housing market, consider renting out a room to a lodger. This might be especially suitable for those living in university towns. Graduate students—those whose partying days are behind them—could make great paying houseguests.

There are a few things to consider, however.

"You need to check out local zoning laws," says Chip Addis, co-founder and president of financial-planning firm Addis & Hill Financial Advisors in Wayne, Pa. Not every town has liberal policies, he says.

Then there are questions of safety and privacy. You might want to run a background check on a potential lodger, and you will need to decide which part of your house you are willing to share. Says Mr. Addis: "There are a lot of practical issues, such as the use of the washer/dryer and parking."

Dana Pingenot, president of Dallas-based Lee Financial Corp., says she had an exchange student live with her family for a year, mainly for the experience. "When she goes home, we'll think about renting the room out," says Ms. Pingenot, who expects to charge somewhere between $200 to $400 a month for the room.

Note: Rental income may be taxable, so talk to a tax specialist.

4. Tutor Students

Anyone who has reached retirement age should have amassed a wealth of knowledge on a variety of topics, all of which could provide the basis for a part-time career.

For instance, if you have been an engineer for 30 years, you clearly have some math skills. Perhaps that could be parlayed into a part-time gig tutoring school kids?

"As long as you are a patient person and have a gift for making complex concepts clear and simple, perhaps you could be a very good tutor," says Linda Abraham, founder of, a college-admissions consulting firm in Los Angeles. Pay for tutors can vary widely. Some people can command as much as $200 an hour, but around $75 to $100 is more typical, she says.

There are other avenues to pursue on the teaching front. New York native Andrew McKeon parlayed a career at Goldman Sachs Group Inc. into tutoring students for the GMAT business-school entrance test. He did that through education firm Kaplan Inc., but cautions that the selection process was rigorous.

In addition to financial rewards, these sorts of jobs have the added benefit of social interaction. For many in retirement, that can be a blessing.

5. Buy Preferred Stock

Don't forget about preferred stock. The high yields offered by these hybrid securities—often more than 6%—could put a big smile on your face.

Preferred stocks are like bonds in that they have a fixed percentage payout. They are, however, lower down on the food chain than bonds in terms of claims on bankrupt companies, so while the returns tend to be higher, preferred stock carries more risk.

"It is still equity and not debt in terms of claims," says Vinny Catalano, president of New York-based Blue Marble Research. "If the company goes south, you would likely not receive very much money."

So which preferred stock do you pick? You can always buy an exchange-traded fund full of them. PowerShares Financial Preferred yields a hefty 6.9%, while PowerShares Preferred yields around 6%. Those two funds are heavily invested in securities of financial companies, which typically offer higher yields.

"I think that financials are out of the death-row woods, but they are still in a very difficult spot," says Mr. Catalano. So if banks deteriorate, these picks may not pay off.

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