Planning for retirement can be daunting! In this post, we will explore 5 Sources of Income for Retirement. Think about what works for you in your current situation, where you want to be, and then execute your plan!
This post may contain affiliate links. See my disclosure policy here.
Sources of Income for Retirement: Construction, Capturing, and Cultivating
Table of Contents
- 1 Sources of Income for Retirement: Construction, Capturing, and Cultivating
- 1.1 1 of 5: Professional Career Retirement Plans – 401(K) as a Primary Source of Income
- 1.2 2 of 5: Side-Gigs as a Source of Income
- 1.3 3 of 5: Personal Retirement Accounts: IRA/ Roth IRA as a Future Source of Income
- 1.4 4 of 5: Getting into Real Estate – Investment Properties as a Source of Income
- 1.5 5 of 5: Social Security as a Source of Income
- 2 5 Sources of Income During Retirement – Parting Thoughts
With all the busy bustle in life, it can be overwhelming to try and dream up, construct, and capture the cashflows encountered. At least for me, some days are so crazy just getting home and getting the kids fed and in bed is a max-effort, “calling all reinforcements” kind of finish. Let alone sorting out the realm of money!
Think about these 5 cashflows as Sources of Income for Retirement. Keep them in the back of your mind as you do life; feed them as you do what you do. Get them set up, organized, and operating at little at a time. Get acquainted as some of these are likely already happening for you. This is a quick-hitter for you that will help get the creative juices flowing so you can uncover and employ what works for you and your family.
The application of Mêtis in your money matters, at least in this particular post, is several things. With these 5 sources of income firing away over time, you’ll be ready for retirement; you’ll be harnessing the best of your skills, using what is already in front of you, working for yourself (at least a little), and hedging yourself against the risk of having only one (or two) sources of income.
1 of 5: Professional Career Retirement Plans – 401(K) as a Primary Source of Income
Start here, we are all most likely facing an opportunity to make some great strides to create some cash flow in the short-term and long term. If you have a job, you most likely have a regular paycheck and could have access to company-sponsored retirement plans.
401(k) plans are increasingly more commonplace and are very powerful tools. If you haven’t set one of these up for yourself, check with HR and see if there is one available. If you do have one going, consider things like rebalancing, fee schedules, and upping the contribution rate on an annual basis (like when you get your next raise). Or, if you don’t have one and one isn’t available, check-in with item #3.
Also, depending on where you are in your career and what your requirements are, think about moving on. Getting a new job (or new employer doing relatively the same job) could get you a nice raise that you wouldn’t otherwise get.
2 of 5: Side-Gigs as a Source of Income
Find something you love and are truly passionate about. Now, ask yourself how you can turn that into a part-time job on the side? It could be a little hobby, tutoring, or specialization that you have in one form or another. Or, maybe you have a full-time desk job and want to do something more physically intensive? However it works for you, think about that side-gig.
Some examples I’ve encountered are teaching a musical instrument, tutoring, public speaking engagements, starting your own business, launching a blog, professional sports (note, this quickly becomes a “professional career” item and not so much of a side-gig), and opening a gym (of the HIIT variety that shall remain unnamed). The point is to have a 2nd source of cash.
If you don’t immediately have something that comes to mind, just start thinking about it in general so when you stumble across that “ah-HA” moment you’ll know what to do with it.
Check out my review of one of the best books I’ve read on the topic!
3 of 5: Personal Retirement Accounts: IRA/ Roth IRA as a Future Source of Income
I’ll start by saying I don’t recommend this one right away; not without carefully considering where you are financially, and knowing specifically if you need this tool. This could be a great benefit but be careful to make sure your dollars are being employed in the most effective way you can. If you are already fully taking advantage of your employer’s retirement plan, have a well-established emergency fund, HSA, etc., then maybe this is a good place to drop some of that extra cash.
Maybe you find yourself in a situation where the employer-sponsored retirement plan is really not that great (or you don’t have one at all)? This could be a great way to offset or remedy that problem. IRAs are generally not very difficult to set up and once they are done you should be able to automate your contributions so you won’t have to worry about forgetting.
At the end of the day, for this particular item, make sure you take inventory and see what your financial plan really requires.
4 of 5: Getting into Real Estate – Investment Properties as a Source of Income
This takes lots of work and is something that my wife and have been doing research on and will continue to do more until we find the right one for our situation. I recommend this one, but only with caution of making sure you know what you are getting into.
Keep in mind that owning property, while lucrative, can be expensive in terms of operating costs, upkeep, and drain on the brain if you have bad tenants. That is not to say you shouldn’t give this serious thought and consideration. Do some digging on this and research! It could be a great fit for you and mold nicely with item #2.
I had the pleasure of meeting someone who had worked very hard and was very handy and was proud to tell me that they had recently given their daughter a new house as a wedding gift. The home was one that this individual had purchased and re-finished on his own, rented, and managed over the years. Maybe this is you! Just make sure you’re handy and patient.
5 of 5: Social Security as a Source of Income
Yes, it is an annoying large piece of your paycheck that, depending on your age, may or may not be paid back to you at a later point as it was intended. At the end of the day, we can’t immediately control the requirement that we pay into this benefit.
Without diving into politics, the reason I mention this as a source of cash flow is that it is still something to keep in mind. The Social Security program is a political one and it will likely evolve over time to adapt as needed to support the next generation going through retirement. While that can feel like a long-time way for some, it may be right next door for others.
Just keep it in mind and don’t assume social security benefits are all the same for everyone. I highly recommend checking with your advisor on this to determine the right time to start drawing your benefits will be which could make a big impact on the amount you receive.
5 Sources of Income During Retirement – Parting Thoughts
My friend, I hope this post serves you well as a way to generally categorize and plan for your streams of retirement income. This is not exhaustive, and everyone’s situation will be different. Common among all plans is the theme of doing your research, consulting with a trusted financial advisor, and taking full advantage of the time value of money. Compounding interest is very powerful! Generally speaking, it is good to delay consumption as long as possible. Give those investments as much time to grow as you can!
Update: If I could add 1 more! (6 Sources of Retirement Income)
Recently, in the day and age of cryptocurrency, there is another avenue that I strongly recommend people look at. In my humble opinion, Bitcoin has a place in a portfolio. As a way to store your wealth, as a hedge against inflation, and a way to protect an inheritance for the next generation, Bitcoin could help support those goals. If you are new to cryptocurrency and considering it: please, hear me when I say, be careful, do your research, and guard your private keys (never give them out). I have found Mr. Kratter‘s work to be an excellent, treasured source of information on Bitcoin. For more on getting started with Bitcoin, here’s my review of his book.
Best of luck with your financial journey, my friend! Looking forward to continuing the discussion in the comments, below.
Madi Dearson says
This is such an important topic and one that I have sadly neglected for a long time, not giving it enough thought. I have just dealt with it a few weeks ago with a professional who helped me navigate my options, and I feel so much better for it. Thank you for breaking it down and explaining it.
Tim MBA, ALMI, ASRI says
I’m so glad to be able to shine a light on a common challenge we all face, thanks! Congratulations on the big step you’ve taken to seek professional advice and get started. That first step is often the most difficult 🙂 You’re on the way up, keep after it!
This is very informative! Thank you so much! I’ve been thinking about opening a Roth IRA recently, great advice to make sure all my ducks are in order before diving in.
Tim MBA, ALMI, ASRI says
The Roth IRA is a wonderful way to attack the retirement challenge! Good luck in your financial endeavors.
One of the things I miss most about being on staff at a company is have access to a 401K!
Tim MBA, ALMI, ASRI says
Thanks for your comment! The 401(k) is truly impressive! Hopefully, people think to take advantage of it when it is available. Not to worry for those who don’t have access to one: there are other powerful savings tools as well such as an IRA.
Great ideas to help me think about how I can retire early!
Tim MBA, ALMI, ASRI says
Thank you! Best of luck with your financial journey 🙂
I love this! I wish I started planning for retirement in my 20s, because once I started I couldn’t believe how much my investments grew! These are great ideas to get the wheels turning.
Tim MBA, ALMI, ASRI says
Thanks, I’m glad to hear this is encouraging! Keep up the hard work, my friend!