Retirement Income Choices: Planning Ahead

Posted by on 7-07-16 in Uncategorized | Comments Off on Retirement Income Choices: Planning Ahead

If you are concerned about having enough income in your retirement, then it is important to plan ahead. Depending upon how much time you have until retirement you have different options available to you. If you are not planning on retiring for twenty years, then you have a lot of flexibility in determining how you will generate that income. If you are much closer to retiring, on the other hand, you will need to choose a narrower selection of options. Here are 4 great ways to generate income in retirement, along with some timeframe considerations for each. Rental Income A great way to have steady income is to own a rental property. While some people might want to invest in multi-unit homes, you don’t have to go that big. You can purchase a two-family home and live in one section and rent out the other. Or you can purchase a cottage and rent it out for vacationers. This is not something you should decide to do at the last minute, when retirement is right around the corner. Being a landlord can have a steep learning curve, so you should consider this if you’re not planning on retiring for quite some time. You will need to figure out if you are going to handle the property yourself (rent collection, repairs, etc…) or if you will use a property management company. However, if this turns out to be something you enjoy, then it is an awesome way to get relatively passive income in retirement. Blue Chip Stocks Blue chips stocks (such as Coca Cola, IBM, Johnson&Johnson) are huge, stable companies. If you develop a portfolio of blue chips that also issue a good dividend, then you will have a nice income stream in retirement. This is something you want to do early on as well. It helps to build up your portfolio over time. You should look for the Dividend Aristocrats. This is a list of companies that are known for increasing their dividends over time and being very stable. You should try and diversify, because even though these companies are considered very safe, you should always spread your investment in equities over several different companies. Bonds Bonds are a good choice for someone who is getting ready for retirement and doesn’t want to handle the swings of the stock market. Even big blue chip stocks can have swings that can upset your lifestyle. Also, a company might end up cutting back on a dividend, which will force you to re-calibrate your lifestyle. So bonds become a very attractive option. A bond is not a share in a company. Think of it as a loan. You buy a bond, and receive a premium. This is the “interest” on the loan that the borrower pays. You can find large “basket” bonds that are made up of many different individual bonds so that if one borrower ends up defaulting you won’t be hurt too much. Annuities If you are really close to retirement, and don’t want to risk stocks or bonds, then annuities are the way to go. These are financial instruments that you purchase with a lump sum of money. The issuer than calculates your expected life expectancy and you receive a guaranteed amount of money every month based off of that...

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Three Myths Regarding Financial Planning For Young Adults

Posted by on 4-04-16 in Uncategorized | Comments Off on Three Myths Regarding Financial Planning For Young Adults

The life of a 20-something young adult is busy. Once high school is finished, most kids are off to college, then maybe graduate school. Others hit the workforce right out of high school while others join the military. Then there is dating, possibly marriage and starting a family. Once babies come along, it’s difficult to concentrate on anything outside of work and raising those babies to be productive little citizens. A lot of things fall by the wayside during these years, including financial planning. In addition, many young adults in their 20s and 30s never see a financial planner until they reach their 40s or 50s, as they’ve been convinced that the following myths are true.  Myth #1: I am too young to worry about financial planning. You are never too young to worry about financial planning. Financial planners do more than just establish retirement accounts and help clients fund those accounts with solid investments. Financial planners can help you determine your financial goals, map out a path to reach those goals, and give you advice on credit, debt, saving, spending and investing. You can live a debt-free life on the income you have, and still do the things you want. You need an expert to guide you in the right direction.  Myth #2: I can think about retirement later when I’m older No one knows what the future holds. Most people expect to retire between the ages of 62 and 70. However, you may be able to retire earlier with the right investment strategies. You may also be forced to retire early due to a personal injury or down-sizing at your place of employment. It’s best to start your retirement planning as early as possible, so you can retire comfortably without worrying about making catch-up contributions to your retirement accounts a few years before you actually retire. Myth #3: I can’t afford a financial planner. Financial planners do charge a fee for their services; these professionals also have bills to pay and financial goals to meet. However, you can’t afford NOT to hire a financial planner. Your financial planner will give you sound financial advice and keep you from making mistakes that will derail your plans. The fee charged by your financial advisor is minimal in comparison to the amount you can save by having an expert guide you and help you make the right decisions with your...

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