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    Kim Borwick

    Kim Borwick

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    Kim Borwick is a writer and editor who studies financial literacy and retirement annuities. She has extensive experience with editing educational content and financial topics for

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  • Updated: December 19, 2022
  • 5 min read time
  • This page features 8 Cited Research Articles
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APA Borwick, K. (2022, December 19). Passive Income Streams. Retrieved January 30, 2023, from

MLA Borwick, Kim. "Passive Income Streams.", 19 Dec 2022,

Chicago Borwick, Kim. "Passive Income Streams." Last modified December 19, 2022.

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The two things that always seem to be in short supply are time and money. And in the current economic climate, it’s only getting worse.

According to the St. Louis Federal Reserve, nearly 5% of employed Americans had multiple jobs in 2022. That equates to about 16 million Americans.

Dual-earner households have also become more prominent in recent decades, accounting for 49% to 52% of married couple households in 2021.

The current state of retirement plan offerings — specifically the shift from defined benefit plans to defined contribution plans — has contributed significantly to the increasing number of dual-earner households.

Considering the data, it’s safe to say that a passive income stream could not only boost your income, but it could also save your sanity.

What Is Passive Income?

Passive income is revenue generated from an activity that requires little to no management or participation on your part. Passive income, in the broadest sense of the term, includes rent collected from owned property, dividends and capital gains from investments, royalties from book sales and commissions from affiliate marketing.

However, not all of these activities are considered passive activities in the eyes of the IRS, so it’s important to refer to developments and revisions to Publication 925 when figuring your allowable losses from a passive income source as defined by the IRS.

Are Annuities a Form of Passive Income?

Among the financial strategies for generating passive income, annuities are the most reliable and best suited to creating income for later in life.

As with all forms of passive income, annuities require an investment upfront — in this case, a financial investment. You must be able to part with a lump sum of cash now to secure the income payments in retirement.

But once you’ve purchased your annuity contract, no active participation is necessary on your part. You will begin receiving income when the annuitization period begins.

Compared with stocks, bonds, CDs, and mutual funds, annuities offer benefits beyond the income they generate. These include tax-deferral, premium protection and customization through riders and other contract provisions.

How to Diversify Your Portfolio

What Are the Benefits of Passive Income Streams?

For people who are not struggling to make ends meet, the opportunity to build wealth without sacrificing time with family and friends can be a game changer. For them, a “side hustle” can offer financial security, personal growth or a higher quality of life in retirement.

Whether by choice or necessity, Americans of all ages seek the benefits of alternative income streams. For many people, there’s little time — or energy — to spare in the pursuit of additional income, but with a little ingenuity, you can enjoy the fruits of your negligible labor.

Overcoming ‘Shocks’

Financial shocks are a fact of life, and these events can be crippling.

Tyagi explains that for a two-earner family, the shock of divorce is devastating because “there’s no way to bring in new income since [both spouses are] already working.”

Illness is another shock that can derail a two-income family. In previous decades, families had the safety net of a non-working spouse being available to provide care for a sick member.

“But today, with both parents in the workforce 100 percent of the time, there’s just no way to care for somebody on the side — either somebody has to take time off work or somebody has to pay someone to provide that care,” Tyagi said.

A passive income stream can mitigate the effects of financial shocks, especially for people in retirement who are on a fixed income.


Most passive income sources offer a lot of flexibility once you’ve laid the groundwork. You may have limited time or capital, but if you can create a plan and invest the resources to get the venture off the ground, you’ll have the luxury of setting your own hours and structuring the business or activity in a way that allows for optimum flexibility.

Even investment portfolios and annuities offer flexibility in the form of allowing you to invest your cash resources in a way that doesn’t limit your options. For example, diversification lets investors achieve two goals simultaneously: increase their rate of return and reduce risk.

Similarly, laddering can eliminate the rigidity of an annuity contract, allowing you to take advantage of rising interest rates.

Stress Relief

The stress of balancing your professional life and your personal life can have detrimental effects on your well-being. Working two jobs exacerbates these effects, as does the lack of quality family time and personal connection common among dual-earner households.

Passive income streams can relieve much of this pressure. These income sources can allow you to save for retirement or meet current financial obligations without sacrificing your physical and mental health.

Other Ideas for Generating Passive Income Streams

So what can you do to bring in some extra cash when you have neither the time nor the inclination to put in another 25 hours every workweek? That depends on your particular skills and knowledge base. And because each passive income activity requires specific resources, some may be less viable than others for you.

Index funds or dividend stocks
What you’ll need: Cash, investment knowledge, a fund manager or stock broker
Real estate
What you’ll need: Cash, real estate market knowledge, a property management company
Website or blog affiliate marketing
What you’ll need: Time, content marketing knowledge, content creators, traffic
High-yield savings accounts
What you’ll need: Cash
Investing in a business
What you’ll need: Cash, business knowledge
What you’ll need: Time, subject matter knowledge, writing and communication skills
What you’ll need: A home
Credit card rewards
What you’ll need: Good credit, financial discipline
Storage space
What you’ll need: Extra storage space
Please seek the advice of a qualified professional before making financial decisions.
Last Modified: December 19, 2022

8 Cited Research Articles writers adhere to strict sourcing guidelines and use only credible sources of information, including authoritative financial publications, academic organizations, peer-reviewed journals, highly regarded nonprofit organizations, government reports, court records and interviews with qualified experts. You can read more about our commitment to accuracy, fairness and transparency in our editorial guidelines.

  1. Economic Policy Institute. (2020, February 7). Nominal Wage Tracker. Retrieved from
  2. Internal Revenue Service. (2020, April 23). About Publication 925, Passive Activity and At-Risk Rules. Retrieved from
  3. Leonce, T.E. (2020). The Inevitable Rise in Dual Income Households and the Intertemporal Effects on Labor Markets. Retrieved from
  4. Plumer, B. (2004, November 8). The Two-Income Trap. Retrieved from
  5. St. Louis Federal Reserve. (2021, May 4). COVID-19’s Effects on Dual-Earner Households. Retrieved from
  6. St. Louis Federal Reserve. (2022, September 2). Multiple Job Holders as a Percent of Employed. Retrieved from
  7. U.S. Bureau of Labor Statistics. (2020, April 21). Employment Characteristics of Families Survey. Retrieved from
  8. U.S. Bureau of Labor Statistics. (2020, August 7). Table A-16. Persons not in the labor force and multiple jobholders by sex, not seasonally adjusted. Retrieved from