If you are unsure that you have saved enough for retirement, you do not have to worry. There are options that you can follow to help you increase your retirement income. This will not only make your life more comfortable, it will also help you feel more secure about your future.
Of course, if you expect to retire with debt, a retirement income may have to be a necessary arrangement for you. Unless you can work on paying off your debt before you retire, you do not have to worry about anything. There are many debt relief options that you can use to get rid of your credit obligations. You can consolidate debt, settle them, or even get a credit counselor to help you manage debts. It is important to know the debt relief options before you commit to it though. That is how you can be assured that debt will not have a place in your retirement life.
While working while retired is an option, there are retirement income options that will not require much physical exertion from you. All you have to do is create a plan and know the different options that you have in growing the money that you have accumulated before retiring.
Planning your income in retirement
There are four important steps when you are planning for your retirement income.
Step 1: Know how much you need.
Of course, it is a must that you identify first how you plan on living out your retirement years. Will you be living the same house where you raised your kids? Or will you be downgrading? What hobbies do you want to pursue? Being retired comes with so much time in your hands. You will only enjoy lounging about for only a few days and you will get bored. It pays to be prepared for these instances. Also, you may want to consider your health. You are not as robust as before and you want to be prepared for your annual check ups and any medical treatment that you will need.
Step 2: Find out your retirement income options.
The thing about retired individuals is they may be physically weaker, but their mind is about as sharp as can be. That being said, the best option as your source of retirement income is investments. Research the options that you have to grow your money without really putting a physical effort in it. The goal is to find an option that you can understand and will allow your money to grow at the same pace as the inflation.
Step 3: Choose when you want to start your retirement income.
You can choose to begin before you retire or you can start after. The choice is up to you but of course, you must know that the earlier you start, the better it will be for you. The more you can save up and the lesser you will be required to earn every month.
Step 4: Understand the implications of earning a retirement income.
It really depends on your age and how you plan on earning your retirement income but you can be taxed for your profits. It is possible to pay less for it but there may still be some income taxes to consider. Incorporate this into your planning. Feel free to use online retirement income calculators like those from Bankrate to help calculate if you will be getting enough. You can also use these three retirement calculators that Forbes.com recommends.
Income options when you are retired
You have many options for your retirement income and you can actually use one or more of these. Any financial expert will always encourage you to put your money in more than one basket for security purposes.
Here are the different options that you have to generate a retirement income.
Stock dividends
As companies grow, their stocks and the value will also increase. You could buy company stocks to help grow your money as the inflation increases. Of course, when the market crashes, your stocks might lose value too. That is the risk here. This is why you want to make sure that you choose the company you will buy stocks from.
CDs
Certificate of deposits is usually a very safe form of investment. The principal amount that you invest is safe from being undervalued. However, this will not get as many returns as the other type of investments. Even the high-interest rates are still low when compared to other investments. If you want a high return, you need to invest more.
Bond ladders
These are bonds that have staggered maturity dates. That way, you can benefit from your investment for a longer time. This is a great way for retired individuals to expect money periodically – like an income. The drawback here is it may not rise in time with the inflation. But just like CDs, it will be safer to invest this way.
High yield investments
This can give you a high return but it also fluctuates in value. Sometimes, a slow economy can reduce your income greatly – and possibly even eliminate it. The best way to do this is to combine it with another investment strategy.
Immediate annuity
This type of retirement income involves getting into a contract with an insurance company. The company will calculate the amount that they can give you on a monthly basis. This is like a regular monthly income for retirees. This usually does not keep up with inflation unless you opted for one that does that. The drawback is you will not have access to the principal amount that you placed in it and you cannot pass it on to your heirs.
There are other retirement income options apart from these 5. Choose based on your preference and how much you will need on top of your Social Security benefits and retirement plan. It is important for you to learn how to manage your retirement money so it will last a longer time. That way, you don’t have to worry about it falling short when you need it the most.
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