First Person: How I Plan to Make My Retirement Funds Work for Me

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While I'm not there yet, it doesn't mean that I'm not working toward developing a good plan for my retirement. A large part of this plan revolves around how my retirement funds will work for me during my golden years rather than vice versa.

Knowing how best to make use of this money is helpful to me on several fronts. First off, understanding these funds and how to maximize their potential will hopefully have me making the most of them in retirement. And second, through this maximization, I may be able to retire earlier, live off less of an overall retirement fund, or some combination thereof.


When I think about diversification, it's not only in terms of how my money is split in a retirement account among stock and bonds, but rather how it is spread among stocks, cash, bonds, physical assets, and investments in other income earning revenue sources. By spreading out where my assets lay, and from where my income sources derive, I can better hedge my bets against things like stock market fluctuations, inflation, income stream demise, and economic factors outside my control.

Dividends and Interest

In retirement, I'm hoping to be able to pull my necessary living funds from dividends, interest, cash, and similar non-revenue earning sources that would keep me from touching the principle upon which some of my more major income streams would build. Being able to rely upon dividends and interest from things like my IRA, savings bonds, certificates of deposit, savings accounts, and individual stocks could help me stay afloat financially without touching the principle upon which such dividends and interest is earned.

Proper Draw Down Techniques

Having a proper drawdown plan for my retirement investments can help make my money work harder for me, rather than vice versa. This will help me maximize the earning potential my investments have by being able to live off income sources like part-time work, Social Security, dividends, and interest rather than off the principle itself.

This way, let's say I have 10,000 shares of a particular income fund in my retirement account, which earn monthly dividends in the amount of 100 shares a month. If I can live off those 100 share monthly dividend allotments, my 10,000 worth of principle will be left untouched to continue to earn for me. However, if I pull from that principle -- say at a rate of 100 shares a month -- I will gradually draw down the strength of that principle and the power it has to earn for me. In turn, rather than being able to rely upon that relatively consistent 100 shares in dividend revenue each month, I might instead see that amount gradually begin to dwindle, say from 100 shares, to 99, 98, 97, 96, and so on every month or so as my principle had less and less earning power due to its diminished earning capacity.

Continuing to Pump up My Funds

A tire without the proper air pressure can take a harder beating than one that remains properly inflated. Much like my aforementioned example of the income fund and its dividends, the more "air" I let seep from my retirement "tire", the less effective that tire will be.

Being able to continue to pump up that tire -- if or when it begins to become deflated -- through other income sources could keep my travels on the retirement road less bumpy. I plan to do this through possible part-time work in retirement or hobbies that earn me money such as resale options (eBay, consignment shops, resale stores), garage sales, and similar income earning activities that I also enjoy. Not only will such income earning options hopefully help me avoid touching my retirement funds -- or at least relying upon them as heavily -- but they could help me replenish these funds should they take a hit in some way due to economic situations or forces otherwise outside my control.

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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 legal or financial advice. Any action taken by the reader due to the information provided in this article is solely at the reader's discretion.


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