I don't want to draw down upon our assets in retirement, preferring to leave them for emergency purposes and an inheritance for the children if at all possible. But I'd at least want to shoot for this as a retirement goal. Over the years, I've been working on a strategy to help me achieve this goal. And while I still have some time to perfect my plan, my goal of using other people's money -- through things like interest, dividends, passive income, and Social Security -- rather than my own money to fund my retirement is growing clearer.
Sure, I know that much of what I'll get back in Social Security benefits is my own money; however, this money is paired with government funds, and almost seems like a tax rather than a retirement plan when it's taken out of paychecks, so it's kind of like money that was never mine to begin with.
I plan to start taking Social Security as early as possible, since even though I won't be realizing increased benefit payments, I could make up for this lowered payment amount through a longer payment timeframe. I recently wrote an article entitled, "Ignore the 'Wait Until You're 70' Retirement Advice" to explain how this works.
Reaping the rewards of dividends
My retirement plan is currently invested in a dividend reinvestment plan -- or DRIP. Each month it pays out a dividend that is reinvested into the plan and yields about 6 percent each year. However, in retirement I hope to pull those monthly dividends as income rather than reinvesting them back into the plan. In this way, I have a regular income stream that is paid by my retirement plan.
In retirement, I hope to continue to work part-time. As a writer, I enjoy my work and have multiple sources of income from it, including residual income from previously published pieces and eBooks. By utilizing these sources of income rather than retirement savings, I hope not only to keep our own nest egg intact, but possibly grow it as well, which could help me with the next aspect of my retirement goal of using other people's money to fund our retirement.
Interest from savings
Right now (as of 2013), interest on savings pretty much stinks. Savings accounts (even high balance accounts), certificates of deposit, money market funds, and the likes are often offering well under 1 percent interest on savings. This can make it hard to rely upon this aspect of income in retirement. However, there may be a shift in interest rates before I retire, and certain things like government savings bonds are still offering several percent in interest. Using interest money paid to me by financial or government institutions -- even in small amounts -- to help fund retirement is better than nothing at all.
Inheritance for the kids is the main goal
My main goal for trying to keep our own nest egg intact is not only just financial security for us, but as a possible stepping stone for the future of our children. By using other people's money rather than my own, I hope to be able to leave at least something to our children to help get them started. Life can be difficult enough without having any sort of jumpstart, and I'd prefer them to have a better chance at things than I did.
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The author is not a licensed financial professional. The information provided in this article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader's discretion.
- Retirement Benefits