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The Dos and Don’ts of Generating Income in Retirement

12 December 2018 No Comment

Once you retire, you’ll need to replace your paycheck. Here are some important dos and don’ts for generating consistent income in retirement.

Three things are certain in life: taxes, retirement, and death!

Well, while there are people who choose to keep working until they drop dead, the vast majority of today’s workers plan to call it a day at some point.  

If you’re among those planning to retire, how’s your retirement readiness looking? Given that one in three Americans has saved nothing for retirement, it’s safe to assume things aren’t rosy.

Retiring without an adequate stash of cash means you’ll need to keep making money – or risk living a lower standard of life. To ensure you don’t make the wrong moves, we’re giving you the dos and don’ts of generating income in retirement.

Read on!

Do:

This what you should be doing.

Start a Business

Even though entrepreneurship is a major component of the American dream, not many Americans will live to achieve it. The fact that most people enter retirement after years of employment is proof of this.

Fortunately, you can still start a business in retirement. This will give you an opportunity to kill two birds with one stone: generate an income and live the American dream.

You, however, have to be smart with your choice of business. It has to be well-suited to your retiree lifestyle and have a strong demand.

An example of a solid business idea is coaching or consulting. If you’ve amassed several years of distinguished service in environmental management, for instance, nothing stops you from launching an environmental consultancy and lending your expertise.

Rent Out Your Property

64 percent of Americans own residential property.

If you are in this lot and you’re in retirement, your home presents an ideal opportunity to earn an extra buck.

Yeah, it’s understandable that this idea might not be an attractive prospect to most retirees. You certainly want to enjoy your life in a tranquil environment – and letting people into your home might interfere with the tranquility.

Our focus, though, is to help you make money in retirement. Of what good is a serene environment if you have no money in the bank?

You have to compromise and let out a part of the property.

Those who own homes with a clean, well-organized organized garage, for instance, can rent it to out to people looking to start a small business. Renting out a part of your home, however, has tax implications. Be sure to understand your tax responsibilities as a landlord before renting.

Hire/Consult a Personal Financial Advisor

Why I need help managing my own money?

This is the question that rings through the minds of people who are advised to hire a personal financial advisor. It’s a question you shouldn’t entertain.

The need for hiring a personal financial advisor is even greater in retirement. This is a time you need to make the most of what is in your savings accounts. An advisor will help you make the right decisions, and even hook you up with the best opportunities to earn income, especially in the bond and stock market.

Don’t:

By all means, don’t be caught making the following mistakes.

Invest Without Doing Due Diligence  

Seniors are vulnerable to financial abuse and scams. In fact, men over the age of 70 are the most likely victims.

To generate an income in retirement, you must make sound investments. And to make such investments, thorough due diligence is necessary.

Take time to learn more about a potential investment opportunity. Talk to friends and close relatives, and find out what experts are saying. Hint: a personal financial advisor can also help with the due diligence.

Ultimately, you should put your money into something only after you’re fully confident. If you have even the slightest doubt, don’t. Losing money during retirement can leave you in a terrible position, and even increase your risk of early death.

Gamble with Your Life’s Savings

Even with the odds of winning a jackpot still being close to zero, millions of Americans still gamble.

Sure, it isn’t a bad thing to gamble. It could be your lucky break, and you could walk away with a hefty sum – like $1.5 billion!

In retirement, gambling is even more appealing. You have all the free time to make your bets, as well as the money to stake. Sometimes you win some, but often you lose.

The addictive nature of gambling ensures you keep on staking and losing. The more you do, the more your account drains.

Gambling isn’t a feasible income generating activity. Whatever you do with your retirement money, just don’t gamble.

Retire with Debt

The average American is over $30,000 in personal debt.

Unless you have an aggressive debt servicing plan, you can’t rule out retiring while still in debt. Yet, this is a major don’t if you’re to generate income in retirement.

When you retire with debt, a portion of your savings will go to debt settlement. This might deprive you of the freedom to capitalize on investment opportunities. For instance, you might shy away from investing in a certain venture, because you know that if the investment goes wrong, you won’t have money to service your debts.

If you are already in retirement, avoid taking on unnecessary debt. First, senior loans typically have higher interest rates, and you don’t want to spend most of your retirement income repaying loans.

Make the Most of Your Income in Retirement

You spend most of your adult life working for money. When you’re retired, your money should work for you.

To earn a good income in retirement, though, you must make smart investment decisions. Thankfully, we have given you the dos and don’ts, so you’re now in a strong position to make the right moves.

Keep tabs on our blog for more investing insights.

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