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!
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THOUGHTS ON CONSTRUCTING, CAPTURING, AND CULTIVATING YOUR SOURCES OF INCOME
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 setup, 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), A PRIMARY SOURCE OF INCOME
Start here, we are all most-likely facing an opportunity to make some great strides to creating some cashflow 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 and 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.
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 for 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 SOURCES 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 home as a wedding gift. The home was one that this individual had purchased and re-finished over time 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-in to this benefit.
Without diving into politics, the reason I mention this as a source of cashflow is that it is still something to keep in mind. The Social Security program is a political one and it will likely evolve overtime 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.
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