Looking to boost your retirement with extra passive income? Try this!

Just an extra $100 of additional passive income a week could make a big difference during your retirement years.

Of course, $200 or $300 a week would be even more welcome.

That could open the door to extra travels in your golden years. Or you may choose to spend some on gifts for your partner, or your kids or grandkids. Or perhaps just spoil yourself.

However you may choose to put the extra funds to use, here’s how I’d go about securing that passive income stream today.

Building passive income for retirement

I think ASX dividend shares offer one of the best means for Aussies to secure potentially life-changing passive income in their retirement.

One of the advantages offered by many leading ASX dividend shares is that they come with franking credits. That’s something you won’t get on most international exchanges, including in the United States.

With 100% franking, you’ll get the full credit for the 30% corporate tax the company has already paid, which could reduce your own tax burden. That can be an extra big bonus for self-funded retirees with a low annual income, who can receive franking credits as cash refunds.

Another thing to keep in mind when building your retirement-enhancing passive income stream is that the sooner you get started, the larger that extra income pool is likely to be.

For example, let’s say you invest $5,000 a year and achieve 5% capital gains and 5% dividend yields for a 10% average annual gain.

After 10 years, you’ll have invested $50,000, and your ASX portfolio will be worth $92,656.

But if you keep at it for 30 years, you’ll have invested $150,000, and your ASX portfolio will have grown to $909,717.

At that point, you could stop investing and begin drawing out your weekly passive income.

From the 5% dividend yield alone, that would equate to $45,856 a year or some $875 a week.

Finally, when looking for retirement-boosting ASX passive income stocks, you’ll want to invest in a diverse range of companies operating in various sectors and, ideally, across different geographic locations.

That will help reduce the risk of your overall portfolio taking a big hit if any one company or sector hits some turbulence.

One ASX dividend share with instant diversity

I think it’s worth finding a range of top ASX dividend gems to buy and hold in your passive income portfolio.

But one simpler way to get rolling is to invest in the BetaShares Australian Dividend Harvester Fund (ASX: HVST).

The ASX exchange traded fund (ETF) holds anywhere from 40 to 60 blue-chip ASX dividend shares at any given time, offering instant diversity.

The ASX ETF’s top four holdings at the time of writing are Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), CSL Ltd (ASX: CSL) and Rio Tinto Ltd (ASX: RIO).

On the passive income front, the ETF makes convenient monthly payments.

As at 28 June, HVST had a 12-month gross dividend yield of 8.4%. The gross yield incorporates the 78.5% in franking credits.

As of the same date, the BetaShares Australian Dividend Harvester Fund had delivered 14.0% in gross returns after fees over 12 months.

The post Looking to boost your retirement with extra passive income? Try this! appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.