Planning for retirement is most often overlooked. For some people it’s a complete afterthought. Oddly enough, most people simply think they can rely on Social Security (SS) to get them by in their retirement. To me this a very scary proposition. Why in the world would anyone think that SS is going to allow them to live the type of lifestyle they are accustomed to when they actually do stop working? It doesn’t make much sense to me, so I hope it at least raises the same question for you.
So when you do retire, how exactly are you going continue to support yourself? I sure hope you have some additional income streams that can allow you to live the type of lifestyle at least close to where you are today. In all reality you should at least have three or four different income sources to keep you afloat. Some of which should be continually earning more money, even while you are drawing down on the account.
So let’s look at a few ideas for these income sources:
1. Social Security. Yes, we already mentioned this one and it should be a source of income for your retirement (assuming you had been paying into the system).
2. Savings account. Hopefully you have a healthy savings account built up, if not start working on that now. This account won’t give you hardly anything in return at the current interest rates, but it is liquid cash that you absolutely need to have at your disposal.
3. Personal retirement account (IRA/401K). If you haven’t already started at least one of these accounts, you need to think about starting one as soon as possible. Research the tax implications/benefits of each type of account and decide what is best for you. Generally speaking, you either pay taxes on the money going into the account up front or later when it is withdrawn. Both account types are great for building wealth long-term.
4. Personal brokerage account (taxable account). Open a brokerage account with a reputable online broker, such as Ameritrade, E*Trade, Scottrade, etc. Buy stocks, bonds, mutual funds, etc. Pay taxes on capital gains and build wealth through dividend reinvesting with good solid dividend paying companies.
5. Real estate / rental properties: Create a consistent income stream through rental properties. Build equity in real estate properties and have your renters pay down your mortgage. Hopefully by retirement time there is no mortgage, so the rental income is pure profit.
There are obviously many more ways to create income sources, but these are 5 simple things that you do to start planning for your retirement right now. If you manage to secure all five of these income sources successfully, you will have nice income streams to keep you afloat during retirement. Of course, it’s all about how much you spend that really dictates your success long-term. Analyze your spending habits closely, especially going into retirement. If you haven’t done so already, eliminate all debt and roll-on into your glory years without any liabilities.
I also found an interesting article from MarketWatch called with 5 tips to help you retire early. These are some simple tips that can help you reach your goals in retirement, that also reiterate many of the past blog topics we have covered on Middle Class Success.com. Spend wisely, save relentlessly, and build wealth.