Many people look forward to giving up the nine to five daily grind and living life at a slower pace in retirement. However, what you may not consider is how you’ll finance that slower pace. Without a job, obtaining a comfortable regular income may seem challenging.
However, there are many different ways to fund your new lifestyle, many of which retirement income planning experts can assist with. Before you’re ready to retire in earnest, consider whether these income sources below are suitable for you.
Contribution Plans
Contribution plans, also known as employer-sponsored retirement plans, are contributions that you and your employer make over your working life, such as a 401K. Once you retire, you have a nest egg to rely on for everyday living, alongside your social security benefit.
Ask a retirement planner about moving some of your retirement plan funds to a Rollover Individual Retirement Account (IRA). Doing so may allow you to avoid paying taxes on your money until you decide to withdraw it.
Stocks
While many everyday Americans never consider stocks as a valid source of retirement income, they can be. Many stocks pay dividends, and when you choose sound options, you may end up with a predictable, growing dividend income that serves you well during your retirement years.
If you’re unsure how to get started, you can request the services of investment experts to walk you through the stock selection process.
Annuities
Annuities are insurance contracts that allow you to earn income over your lifetime of a specific amount, rather than one lump sum. The benefits of annuity investments are that you may receive a lifetime income, have principal protection, and may also be able to leave money behind for your loved ones.
Essentially, annuities turn a lump-sum premium into a regular income that you can’t outlive. This retirement income option may suit those who don’t feel their other income like social security and employment schemes is enough to live on comfortably.
Bucket Strategy
The bucket strategy is something a retirement income planner can help you learn more about. It involves distributing your retirement income into three buckets, including emergency funds, three to 10-year use, and 10+ years.
The first bucket of money can be kept in a high-yield savings account, the second in bonds, certificates of deposit, or fixed annuities, and the third in stocks and assets, which have the most significant growth potential.
Social Security
Social security is a United States federal program for people who require a replacement income, such as retired and disabled people. You can start receiving a Social Security retirement benefit from the age of 62.
Social Security provides retirees with up to 40% of their pre-retirement income, which means it should be just one of several income streams during your retirement years.
Reverse Mortgage
Reverse mortgages are not the most preferred or recommended way to earn retirement income, but they are an option nonetheless. Reverse mortgages allow you to receive a monthly income stream from your home, which you don’t need to pay back until you sell the property or die.
This option may impact your heirs, but it’s worth discussing with your retirement planner while weighing up other options like annuities and stocks.
Thinking about your retirement can be daunting, especially if you haven’t yet got a financial plan in place above and beyond social security. Now might be the right time to contact retirement income planning experts like Wall Street Financial Group to discuss your options.
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