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7 IMPORTANT Retirement Income Streams - YouTube
Channel: Holy Schmidt!
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- In this video, I discuss
seven common income streams
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that people have in retirement.
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Coming up next, on Holy Schmidt.
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(loud ringing)
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- [Announcer] Holy Schmidt.
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- You can never have too
much money in retirement.
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Yet, those contemplating
retirement or those in retirement,
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often miss opportunities that
are right in front of them.
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This video discloses the seven
most common income streams
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that retirees utilize when
they're in retirement.
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Before we begin, please make sure
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you click subscribe notifications
so that you get alerted
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the next time I post a video.
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I post about twice a week.
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All right, let's get into it.
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Number one is social security.
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This is the most obvious one.
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Most of this channel is
devoted to the who, what,
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when, and how of social security.
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Getting social security right
is really, really important
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because there are a lot of decisions
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that need to be made around this important
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to retirement asset.
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The number one question is
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when do you draw on social security?
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Age 62 for retired age, age
70, somewhere in between.
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But there are other questions
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like how to optimize the spousal benefit,
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how to optimize the survivor benefit,
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how much can you earn and
still draw on social security.
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All of these are really
important questions,
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and that's why social
security should be a big focus
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for anyone entering retirement.
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The next is your 401(k)/your IRA.
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This type of retirement account
could be managed passively
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with an index fund, or
actively with intent.
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The setting on a Roth
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versus a traditional investment
vehicle, for example,
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is a big choice.
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As are the amount and
timing of contributions,
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when to withdraw, and the tax
consequences of your choices.
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Where you put your funds
is equally as important.
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A mutual fund, stocks, even Bitcoin
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in some retirement
accounts are now allowed.
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Number three is a pension.
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Many employers offer a pension.
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Some are what are called
defined-contribution pensions
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in which the amount going in is specified.
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Others are called defined benefit plans
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where the amount coming out is defined.
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In a defined contribution plan,
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the employee wears the risk
of investment performance.
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In the defined benefit plan,
the employer wears the risk.
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Number four is personal savings.
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This is money in your
checking and savings account,
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your rainy day money,
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Three to six months worth
of bills for many people,
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as well as your everyday funds
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for things like your day-to-day expenses.
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Number five are traditional investments
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like stocks and bonds.
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Stocks are often a
source of great revenue,
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especially if they're
dividend stocks for retirees.
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But be careful with dividend
stocks because there is a risk
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that the company can cut dividends
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if business turns south.
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A lot of dividends were
cut in 2020, for example,
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because of the pandemic and
business didn't look very good
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for many businesses that were affected.
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Bonds are a little bit less risky.
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The company has to make
regular interest payments
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that is an obligation of issuing a bond.
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Municipal bonds are particularly
attractive to retirees
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because the payment is received
free of federal income tax,
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in most cases.
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Finally, under the category
of traditional investments
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are mutual funds.
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This is by far the number one choice
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for just about anyone, not just retirees,
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but just about anyone,
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in terms of how their money is managed.
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Because, effectively, you're
taking the management risk
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and moving it off of your responsibility,
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away from your responsibility
and onto someone else.
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One of the biggest
advantages of mutual funds
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is that they don't have
single company exposure.
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So if you bought Apple stock tomorrow
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and it went out of business the next day,
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you lose everything.
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If Apple stock was part of a
mutual funds overall holdings,
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the mutual fund might
go down a little bit,
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but would not be vastly affected.
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Retirees generally receive
their money from mutual funds,
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both from dividends that are
paid inside the mutual fund
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and from stock sales.
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As well as the sale of
the mutual fund itself
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when the retiree wants to
monetize some of the holdings
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and some of the growth that has occurred.
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Number six is more
non-traditional investments.
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A lot of times non-traditional investments
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can now perform the market
because they require work
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on the part of the investor.
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Rental real estate is a classic example
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of a non-traditional investment,
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but it does require the
investor to oversee the property
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or pay someone to oversee the property.
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And that requires both time and money,
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depending on which choice you make.
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Annuities are another form of
non-traditional investment.
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Annuities can be structured
to solve a particular problem,
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like having a certain amount
of guaranteed payments
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over the life of an
individual or a couple,
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depending on which type
of annuity you purchase.
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What they don't like about annuities
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is that most people
don't really understand
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how the money is being
made, how much is profit
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to the insurance company,
and how much is a return
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of investment, and return on
investment for the annuitant.
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Number seven is hobby income.
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And this is essentially taking
the thing that you love to do
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and monetizing it.
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Collections like coins,
cars, and baseball cards
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are a great source of
income for some retirees
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because they have better knowledge
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about the value of those items
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than the people who are
buying them or selling them.
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Depending on if they're
buying for their inventory
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to sell later, or if they're
buying for just pure interest.
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Blogs, podcasts, and videos
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can also be a source
of income for retirees.
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A lot of this comes through
advertising revenue.
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The final item is teaching.
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I know a lot of retirees
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that go on to teach college part-time
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just for something to do.
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And they're usually teaching something
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that they have a big interest
in, that they're good at,
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maybe even something that
they did their entire career.
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And now the pressure of delivering
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on the business side of that is gone
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and they're teaching
others to do what they did.
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A final thought,
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most of you may only have two or three
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of these income streams in place.
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This video is there to help you
identify other possibilities
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and potentially have additional revenue
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coming from those streams in the future
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while you're in retirement.
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If you like this video,
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please make sure you click
subscribe notifications
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so that you get alerted the
next time I post a video.
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Retirement information is changing fast.
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I work very hard to get what's
out there, in here for you.
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This is Geoff Schmidt.
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Thanks for watching.
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