👴👵 The most effective income streams in retirement!

(1 comment) So many companies seem to not provide pensions like they did in the past.

I agree a part-time job should be on the list.

Hmmm, with all the up and down with investing, not sure about that being an option.

Nicole 🙂

@Anonymous 

It seems like you've about covered it for folks like us. The rich have other ways to generate income while avoiding taxes, but they are probably not visiting this site. 🙂

I would add rental property to the list.

Being retired already it is difficult for me to change my income streams. Many of the various sources of income listed hinge on being created prior to retirement, and likely best set up (and funded) 20-30-even 40 years before retiring. At or after retirement one can make some adjustments and realignments, but this seems to be more fine-tuning, the practice of tactics rather than strategy.

I was thinking that a broad stroke way to look at this is "other peoples' money vs my own money". Two broad buckets. Other peoples' money (that flows to me as income) includes Social Security, pensions, other benefits. "My money" is everything that I've saved and invested, the allocation is immaterial for this view.

OPM (Other peoples' money) is not controlled by me, the benefits can be changed pretty much at any time, at will, by those "others". Have a sweet corporate pension? Remember Enron? And so many others. Social Security? let's see in a few years.

"My Money" is owned and controlled by me. I get to decide the allocation to the various streams (taxable, tax deferred, tax free [Roth]) and what the investment allocation is (equities, bonds, RE, etc). It can take some work and some interest to determine these allocations. And again, some of this must commence many years before retiring. But even in retirement this is under my control and spending a little bit of time managing and shepherding these things along may gain me some increased return (to make up for shortfalls in that "OPM"?)

It pays to do some reading on personal finance. One doesn't have to make a full-time study of it. But I think everyone can benefit from learning how to make their money work for them...rather than working for someone else (that you pay to do this, one way or another).

One of the best softwares to use for this sort of thing was iORP. Developed by James Welch and provided for free use. Sadly, James is no longer able to maintain the software and has likely passed on. His software is no longer available. It surpassed so much commercial software for this sort of planning (the "O" was for Optimizing Retirement Planner). James' background was in mathematical optimization of commercial chemical processes and he applied the same principles to optimizing saving for, and living in, retirement. I learned a LOT from using his software and in discussions with him. Even today only a handful of commercial software (and they are quite expensive) even try to match what James provided (for free). My own background involved a lot of verification of engineering software and I applied the same rigor to iORP. I learned so much from doing this and gained even more respect for James.

Roth accounts + paid-off house have been huge