Income Strategies for Retirement

Let’s talk a little bit about income strategies for retirement. A major fear for retirees is running out of money too soon. I’ve heard it said by a few individuals, well, my goals is to bounce the check to the funeral home. I don’t know if that’s where you are but you might want to leave a little money behind for family possibly. But that’s a risk that some may be willing to take. But retirement, I think of it this way, can be like 20 to 30 years of unemployment. And so how do you want to solve for this income? I’ll walk you through a number of different things that you should be considering when building your retirement income plan. Starting off with just simply looking at your retirement income needs. What are you spending money on and what does that look like from a regular monthly perspective but then take into consideration what are some of those other areas such as travel and what comes into replacing the roof on the house and those other expenses. So what’s your shortfall? So, try and plan for that shortfall. Second thing, maybe simply talking to a professional. You’re retiring. This is hopefully the one time that you’re going to be retiring. Maybe it’s an opportunity to sit down with someone or a team of advisors that have been through this process before for hopefully hundreds of other families that are retiring and how they could help you essentially plan to retire well. Number three, consider an annuity. Perhaps you want to look to insurance companies to see, okay how could I structure some type of known income source. So, there’s a lot of different types of annuities out there and again that can get very confusing. So I would encourage you to speak to a qualified professional that can help define what those are and how they may or may not fit in to your overall plan. Another area is leverage higher interest rates. So we find ourselves in an environment right now where interest rates have risen and so you’re seeing that within the banking world, within the government, different treasury bonds and what not, you’re seeing it within insurance companies with different fixed annuity rates. So rates have come up so that’s become a little bit more attractive for sort of your lower risk types of money. What about considering dividend paying stocks? This is where the yield may fluctuate but you’re going to want to try and find companies that have been around a long time, have a known history of paying a strong dividend to their investors and you’re going to see though that the share value or stock value is going to fluctuate up and down. So that’s something that you would want to be cautious of or be aware of before going into that type of structure. Another, that probably doesn’t come up as very often but is a reverse mortgage. This is where if you get in a situation where you’re later in life and maybe you’ve spent down some of the other assets but you have your house completely paid for, this is where you could have the option to stay in your home, where you don’t have to sell it and realize that equity. But you could stay in the home and ultimately generate some additional income or cash flow through a reverse mortgage. Again, one of those areas you’d want to talk to a qualified professional. Number seven, maximize Social Security. You can begin anywhere between the ages of 62 to 70. Obviously, the longer you wait, the higher that benefit will be. And number eight, manage your expenses. Be realistic with what your expenses look like in retirement. It’s not just going to come down to those normal fixed costs. I know a lot of times I talk to folks, they come in and, well, we only have, you know, our utility bill and our property tax, those are our only expenses. Well, what about food and gas and do you like to travel on occasion or do you have some of those bigger ticket items that you want? So that’s where, if you’re looking at buying an RV or a boat or a second home or a condo or something like that, take that into consideration. And as always, don’t forget to factor in inflation into your retirement income plan. That’s so vital. You need to capture some growth on the portfolio to try and keep up with inflation. And so, again, if you are in a position where you’re questioning, okay what do I do next, I encourage you to check out our YouTube channel where you can like and subscribe and share information there and get a lot of valuable tips on how you can plan to retire well.