Where to invest for income

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I can't afford much risk. Is there anything better than what I have now?

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There is no free lunch.

Depending on your risk tolerance, you might consider putting some of the cash in blue chip stocks that have a history of increasing dividends. However, even the best stocks go up and down 30-50% in a 3 year period.

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I have $475,000 in a 5 year CD with 4 years to maturity. It earns 2.25% annually. The penalty for early withdrawal is 2 quarters of interest. I would like to have more income off of this amount of money. I have been waiting for interest rates on tax free municipal bonds to go up but it looks like that might not happen anytime soon. What do you smart investors suggest? I can't afford much risk. Is there anything better than what I have now?

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Or if you don't have to touch the principle for awhile, look at some solid dividend paying stocks.
Just depends. Can get income from rental properties, but may be some expenses to be incurred if you can't do routine maintenance yourself. Not to mention pain in arse. If you don't overpay for the properties, you get to depreciate them even if they gain value with time. Not hard to beat 2.25% especially after you pay income tax on it. Could look at tax free muni's and compare your after tax return against what you'd get.

That's a terrible rate of return. Two rental properties can give you that amount in dollars annually that you're getting off almost half a million dollars.

Buy turn key real estate if you don't want to manage.

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5 year CD

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FDIC insurance only covers $250K, if it's only with one bank. Go to a certified financial planner. You can spread it around in different stuff so you don't risk the whole thing in one investment.

Some examples are (other than dividend paying stocks): mutual funds, real estate income trusts, business development companies. A combination of all those things plus whatever else your CFP knows about would be best.

CDs don't make enough right now to make it worth keeping them. Neither do municipal bonds.

Keep in mind also that munis as an asset class aren't as safe as they traditionally were. Some are still okay but others have been bitten by the underfunded pension bug.