You’ve heard the saying a hundred times – “don’t pull all your eggs in one basket.” And, there’s a good reason why: when you spread your income sources across various avenues you won’t be hurt if one source takes a turn for the worse.
Here are six sources of retirement income you may want to consider.
Retirement Accounts
Retirement accounts like 401k’s and IRA’s should play a large part into funding your retirement and these accounts are usually the best places to start.
If your employer offers a match on your 401k you should take advantage. If you’re like me and have never had an employer sponsored retirement account, it’s up to you to start one.
There are now many investing platforms popping up that offer fee free investing so be sure to do your research before opening up an account.
Social Security
I’m 27 and I fully believe that social security will be around when I retire. No, it probably won’t make up a large percentage of my retirement income. But, nonetheless it will be a consistent source of retirement income.
Dividend Stocks
After my first stock picking fail (buying penny stocks) I’ve redirected my investing funds to dividend stocks. I’ve even allotted a certain source of my income specifically to purchase dividend stocks.
Building a portfolio of dividend stocks can provide you an income now and well into retirement.
Rental Homes
Real estate is the most alluring investment to me. With real estate there’s so much potential for steady profits and a positive cash flow if you can find a good property and the right tenants.
I have a family member who has built much of his retirement plan around rental properties. And since he has amassed several properties he can pull a profit even if one of the properties is vacant.
CDs
While CDs won’t make you rich they are a way you can park some cash risk free and earn a small amount of interest while doing so.
The bad news is that the interest rates on CDs are currently so low that inflation will outpace them. However, if interest rates ever rise CDs could be a good option to help you diversify your retirement income.
Royalties, Commissions, Sales
If you’ve ever performed a search for passive income ideas then you’ve surely come across these topics.
Since you want your retirement income to be passive you can invest time now in creating items that can bring in a small source of income for the long term. Some examples of this would be earning royalties from music, photos, books, or eBooks.
Conclusion
The more you work on diversifying your retirement income now the better off you’ll be in the long run. Focus on spreading your investments through different avenues that you feel comfortable with.
When you diversify your income you won’t feel the pain of one source of income drying up.
What are your plans for diversifying your retirement income?