How much will your future lifestyle cost? Will your Social Security and investment income be enough to pay for the lifestyle you want?
If that’s not enough, you could have up to six other possible, less common, sources of income.
Two of the potential income sources would be available only if arranged long before retirement:
- You could work for one of the 5% of American companies that provides pensions. Right now these include Johnson & Johnson, Coca Cola, JPMorgan Chase, Merck and Prudential. In addition, schools and governments frequently offer pensions. Some employers will also provide a continuation of health benefits upon retirement. In any case, you should check all of your previous employers to verify what you are entitled to.
- You might accumulate property or develop products that will produce a regular income when you retire. You can purchase and develop commercial, residential or other properties to rent out in retirement. You might write a book or software or invent something. All of these could generate royalties—but only if successful and profitable.
To generate more income after retirement you could:
- Work part-time for pay. Part-time might be seasonal or some parts of the day, week or month. The work might be in the same company as pre-retirement or different companies. Job responsibilities could be the same or quite different from what they were before retirement.
- Sell something of value that you own. It could be a boat or vacation home. Or you could downsize your home. You would then invest the cash proceeds to generate supplemental income.
- Apply for financial aid if you qualify for it. Governments, charities and religious institutions are the largest providers. Government programs include Medicaid and food stamps. The most common financial aid for seniors is Medicaid to pay for long-term care, but each state has strict rules on income eligibility. These programs are generally available only for people with exceptionally low incomes and, in fact, only fifteen percent of seniors use Medicaid.
- Get help from family or friends. The most common providers of such aid in retirement are children or siblings. Sometimes the help is in-kind, e.g. room or board. Sometimes parents might provide support, if still alive, or thorough an inheritance upon death.
All six of these sources of extra income take planning, and some may not be feasible or desirable for you.
As described in previous blogs, your income from Social Security could be maximized by using an effective claiming strategy. Of course, the more you save and invest over your working years, the more money you will have as your retirement investment income. During retirement, you also can maximize income through your selection of investments and your strategy for distributing income while taking income taxes into account.