Saving for retirement is different today than it was in the past. Big pensions are practically non-existent these days and social security benefits have never been intended to provide for all of a retiree’s needs. In all likelihood, you will need to finance your retirement from a variety of sources.
The first place you should look to when planning your retirement income is to the 401(K) or other retirement plan that is offered through your work. These retirement plans are excellent ways to finance your retirement. Your contributions are tax deferred and most employers will match a portion of your contributions as well. With the tax deferment and employer contributions, you can build up a nice nest egg quickly with these retirement plans.
Although fewer employers offer pension plans, if do have one it can be another source to finance your retirement.
Social security benefits will be another piece of the retirement finance puzzle. Just don’t depend on it for all your retirement needs.
The equity in your home can be another source for retirement income. There are several ways you can take advantage of the equity built up in your home during retirement. You can borrow against the equity in your home by taking out a home equity loan, you can get a reverse mortgage and use the proceeds to live on and meet other retirement expenses, or you can sell your home and move to a less expensive one and use the excess funds as retirement income.
Investment income can be another source of retirement income. This could come in the form of dividend or interest payments or you may have investments you can sell for capital gains.
You may also want to to work part time after you retire to supplement your retirement income. Hopefully this will be because you choose to do so and not out of necessity.
Another way to supplement your retirement income would be to own rental property or a business that provided you with a monthly income.
You can finance your retirement in many ways and from several different sources. If you set up your income streams before you retire, you should have a nice nest egg built up along with income coming in each month to meet your monthly living expenses as well as other expenses such as travel or medical bills. Knowing that you have many options and that your retirement income doesn’t have to come from one source should give you the motivation and make the process of financing your retirement more enjoyable.