Retirement income is a topic that must be carefully discussed with your financial advisor to determine the best possible route for you. There are many sources of retirement income, and some work better for you than others. Having different sources of income for your retirement will mean you won’t be as dependent upon any single source. Below are various sources of retirement income that you may not be aware of and should consider as options.
Home
Having a home can be a great source of income in your later years if you plan and budget appropriately. By renting out rooms, you can create some income from your house after you’ve moved out. You can even rent it out for the summer to vacationers or for the entire year through Airbnb. The key to this route is to maintain the home well so that it is attractive to renters. This will draw more people and increase your sources of income for retirement. Always pay for any repairs needed to the home out of pocket so you can deduct them from your taxes.
Reverse Mortgage
A reverse mortgage is a loan provided to homeowners over 62 years, allowing them to receive payments from the bank instead of paying them. This loan is based on your home’s value, and as long as you still live in the house when you die, it goes back to any children you have. It can also be used by people still living in their homes, but only if they live there. The loan will come due immediately if the house is sold for any reason.
Pensions
If you are lucky enough to have had a long career in one company, you may have a pension as an option for retirement income. A pension is like an annuity that is not immediately received through monthly payments from the pension company. This is great news since pensions are often tax-deferred and thus grow exponentially. It can be a great way to support yourself in your retirement years.
Social Security
Social Security is very important in your retirement years. The monthly amount you will receive is based on how much you contributed to the government over your lifetime. The number of benefits received can vary significantly. The higher your salary or savings, the more money you will receive in retirement. Your spouse may also receive a smaller amount of money, but having any income will still be essential as you age.
Stock Market
Many people think of the stock market as something risky to avoid. However, if done right, investing in stocks can benefit a well-thought-out retirement plan. Investment can be made by purchasing individual stocks. Individuals can also purchase mutual funds or ETFs (Exchange-Traded Funds). All of these options have their pros and cons. When investing in the stock market, it is important to monitor your investments regularly since the risk is involved.
Having multiple sources of income for your retirement is the best way to ensure its success. Several sources of income ensure that you will not depend on one source so that even if one source is diminished, you can still fall back on another to fund your retirement years. Talk to a financial advisor about your options to ensure that you are properly funding your future.