Understand Your Options for Retirement Income
There are a few different options for generating income during retirement. The most common are pensions, social security, annuities, and savings. However, we’re in a rapidly changing world, so we’ll share some unconventional retirement income planning strategies, too.
Pensions: A pension is a regular payment that an employer makes to an employee after they retire. The pension amount usually depends on your ending salary and length of employment.
Social Security: Social Security is a government-provided benefit that pays out monthly to retired workers. The amount of the benefit is based on your earnings history and other factors. Knowing what to expect from Social Security is a pillar of many retirement planning strategies.
Annuities: An annuity is an insurance product that provides regular payments in retirement. Annuities can be either fixed or variable, and you can choose to receive payments.
Retirement Savings: One of the most common sources of retirement income is savings. This can include money saved in a 401(k), 403(b), IRA, or other retirement savings accounts. Once you have your sources identified you’ll also gain an idea of how long your savings will last.
Rental Income: Another option for generating retirement income is renting out your own property, like a vacation home or investment property. Retirement hack: People are embracing the sharing economy and are renting their homes while they travel, offsetting one expense with another.
Business Income: If you’re self-employed or have a small business, that can be another source of retirement income. Semi-retirement is often done by choice due to a love of an industry or a sense of control, and it can be a great way to slowly ease into retirement. As people live longer, a natural progression for a business owner may be a slow retirement.
Passive Income: If you’re looking for more creative ways to generate retirement income, consider passive income streams. These are typically investments or business endeavors that require little to no work on your part after they’re created but still generate income. For example, you might invest in a rental property and hire a property manager, or you might start a blog and sell advertising space or receive royalties for creative endeavors.
Making sure you have a comfortable retirement requires planning and effort. But if you start now and make use of the resources and tips available, you can increase your chances of enjoying a comfortable retirement.
One of the best ways to ensure you’re on track to reach your retirement goals is to utilize the services of a financial advisor. The right financial advisor can help create the right retirement plan for your unique situation.
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