Diversified sources of income can provide retirement security
News Enterprise (Elizabethtown, KY)
If you're planning to retire and wondering if your post-work income will be enough, there are a number of possible sources of additional cash — some of which may surprise you.
The Investopedia website recommends retirees have several income streams, if possible. Cash flow from a combination of sources, which may include pensions, Social Security, inheritance, real estate or other revenue-generating investments, provides the best opportunity for financial stability.
Investment portfolios usually contain a collection of assets such as stocks, bonds, mutual funds and/or exchange-traded funds. Another possibility is an annuity, sometimes referred to as a single payment immediate annuity, according to Nerdwallet.com.
SPIA is an insurance contract funded by a lump sum payment from savings or other available capital and can help bridge the gap between leaving full-time employment and claiming maximum Social Security benefits, without liquidating other retirement savings.
Another potential source is your home. One option is a reverse mortgage, although not suitable for all retirees. Essentially, a reverse mortgage is a loan collateralized by the home's equity. The lender either pays the senior homeowner a lump sum or regular payments over time, while the owner still lives in the home.
Once the owner leaves, either to move into a retirement facility or dies, the lender claims the property, unless the heirs want to and can pay back the loan. Another option is downsizing or renting your home. Downsizing to a less costly residence likely means paying less in utilities, property taxes, insurance and maintenance over time. Or rent your home for short periods through services such as Airbnb. Or you might take in a boarder, if that is acceptable to you.
For retirees with investments in stocks, dividends can be another source of income. For example, a stock portfolio valued at $500,000 with an overall dividend yield of three% would generate $15,000 in annual income. That sum is likely to grow as dividends from profitable companies tend to increase year-over-year, according to Investopedia.
Beyond stocks or real estate, you may have other valuable assets — perhaps in unusual places, like the attic, basement or garage. Antiques, vintage toys, rare books, paintings, estate jewelry could fetch substantial dollars at a yard sale or sold online; however, determining which collectables or antiques are valuable is the key. Price It! Antiques & Collectibles is a leading identification, research and pricing tool for collectors, dealers and appraisers for objects 100 years old or older.
Although finding and selling antiques or heirlooms is not a reliable source, it can provide an additional, one-time infusion of cash.
Having steady income during retirement, beyond Social Security and pensions, requires pre-retirement planning, diligent savings, conscientious investing and astute use of available assets.
Diversifying income streams in retirement also provides additional security as well as extra money which helps assure peace of mind.