Retirement Preparation: for most of us, it will be very important to have multiple income streams available to us during retirement, especially if we want to enjoy our retirement years.
Social Security is the first source that comes to mind. If you are one of the lucky ones, you may have also earned a defined benefit plan or pension.
This second source of income will help you with retirement income needs.
The third form of income, which is becoming more relevant will need to come from your personal savings and investments. It is extremely important to ensure that the assets or investments that you have can produce an income stream for you down the road.
Some investments can generate income that’s not guaranteed, while others are guaranteed.
A Couple Examples:
Dividends from stocks or interest from bonds is a possible source of income. But, once again, this income is not guaranteed. Corporate boards can choose to lower and even eliminate dividends. Interest from bonds is usually safer but not guaranteed. You have to decide if guaranteed income options down the road are important to you.
Rental property has many benefits to the owner, including capital appreciation, tax benefits, and income. However, remember that if the property is vacant, there is no income.
Many brokers and clients try to create a diversified portfolio of stocks and bonds using a cash-flow approach. Meaning, their future income will come from possible dividends and interest, but sadly in today’s market much of your income will come from your principal. Again, dividends are not guaranteed and remember the value you invested originally in each investment can diminish and in this uncertain market you could easily run out of money.
If your desire or wish is to be able to create guaranteed income streams during your retirement that you can never outlive, please give us a call. As a Retirement Advisor and a Certified Senior Advisor of fifteen years I have learned that for most clients absolute certainty in their planning allows a level of peace of mind that is priceless.