One of the most important questions you can ask yourself about retirement is “How will I replace my paycheck?"
These days very few people can afford to retire when and how they want on their savings alone. You need a consistent stream of income – often more than one – to meet expenses, live your desired lifestyle, check items off your bucket list, and ensure your money lasts a lifetime. The good news is there are many potential wells to draw from. Here are four examples.
Social Security. This is the obvious one. Social Security is a key source of income, but its important you take steps to maximize your benefits. If you need help with this, I’d be happy to send you more information.
Dividends. Some companies pay out a regular dividend – essentially, a percentage of their profits – to their shareholders. Here’s a quick example of how they work. Say you own 1,000 shares in a company that pays a quarterly dividend of $0.25 a share. Multiply the dividend by the number of shares you own, and you receive a payment of $250 every quarter. Now, this doesn’t mean that dividend-paying stocks are perfect…just that they are worth looking into.
Annuities. An annuity provides guaranteed payments to the owner as long as they live. However, be aware that annuities can come with a lot of fine print and expenses. So, while they can be a good source of retirement income, always exercise caution before choosing to purchase one.
Bonds. Because bond holders receive regular interest payments, they can be a fairly reliable form of investment income. Investors in higher tax brackets can also benefits from the fact that some bonds provide tax-free income. That said, bonds have risks. They can experience price volatility just like the stock market can. Always do your due diligence before investing.
These are just a few examples. The important thing is that you start thinking about where your income will come from…and, since you are unique and so should be your Plan, let me know if you need help choosing the right option(s) for you.