Stepping into Retirement

The old adage is you have to crawl before you can walk and walk before you can run, so why do we not take our own advice? Retirement or what we like to call time freedom shouldn’t be an impossible chasm that we cross in one day as we quit our job. Remember Indiana Jones in the Last Crusade when he tried to cross the chasm with one giant leap?

Are you looking at the other side of retirement as an impossible chasm? Maybe it’s because you have never had your assets work for you. What do we mean by that? It is said the average millionaire in America has 7 streams of income. They didn’t just get to that point in one day, they stepped into it, one step at a time. They bought a rental property that brought in an extra $300 a month. They invested in the stock market and the dividends and interest brought in another $500 a month. They built a business that passively brought in $3,000 a month.

When we look at retirees, we tell our clients you will most likely have 5-7 different sources of income in retirement. Let’s do a case study:

Meet Jim & Deb who are both are retired:

  • Jim’s Social Security: $2,200/mo
  • Deb’s Social Security: $1,750/mo
  • Jim’s Pension: $1,200/mo
  • Jim’s IRA (formerly 401K): $2,000/mo
  • Deb’s IRA (formerly 403B): $700/mo
  • Jim and Deb’s JT Brokerage Acct: $675/mo
  • Jim and Deb’s 80 acres of farmland they cash rent: $2,000/mo (paid semi-annually $12,000 every 6 months)

So, how could Jim and Deb step into retirement as opposed to trying to coordinate all of this income at once in order to retire?

One of our favorite ways is to start having your brokerage or investment accounts start producing income now, so you get used to receiving income on your assets. Chances are you have already received income from your farmland. Why not receive income from your investment portfolio?

What if the last thing you had to do to retire was just filing for social security? If you wait to retire to turn on income from all of your different sources, it can be daunting but if you start stepping into it in your 60’s and take it $500 a month over three to four years, the only thing typically left to do is turn on social security, file for that pension and get a final resting place for the remaining 401K dollars. Learning to crawl towards retirement might just be activating your first stream of income that doesn’t involve you working.

If you want help evaluating your first step, we are here to help.