Creating Streams of Retirement Income

In 2007, my plan was to use capital gains from stock investments to generate our retirement income needs.   Unfortunately, the stock market didn't cooperate with the 07-09 bear market :-(     It was fortuitous that the bear market occurred right at the beginning of my retirement. I now have an opportunity to adjust my plans to (hopefully :-)  enable a successful completion of retirement.

Originally, I had planned to keep non-invested cash in 5% CDs (really, they used to exist !) but the Fed's low interest policies have essentially eliminated this option.    I could have funded about 1/2 of our current retirement expenses by doing this, but not  at .05% interest rates that that is currently available.  So here's what I'm doing instead:

Dividend paying stocks.   I still have a significant amount of my company's stock in the company retirement plan. I plan to take an NUA when I am eligible.  I will only need to pay income tax on about 5-7% of the withdrawal and pay long term capital gains (whatever that may be) on the rest when I sell the stock.   My plan is to keep the stock since it pays about a 3% dividend, which is likely very safe. The dividend  would cover about 1/4 of our annual retirement expenses.

Rental property.  I am in the process of transferring over commercial rental property from my parent's estate.  The property is currently fully  rented with five tenants.  The main risk is vacancy, but we have a property management company that has done a good job to minimize vacancies over the past 20 years.   The rents will cover about 1/4 of our annual retirement expenses.

Social Security.  This is at least 8 years away as an option for me.  However, I am reviewing the options of taking it early, at full retirement age or at 70 1/2.   Provided it isn't modified for my age group, which is possible since I am under 55, Social Security would cover at least 1/4 of our current retirement expenses and up to 40% if I delay taking benefits.

Another option I am investigating is funding an annuity.  My current plan is to fund an immediate annuity about 20 years from now with the proceeds from selling our house.  Hopefully, by then our house will be worth more than we paid for it in 2003, enabling a profit that can be used to purchase an annuity.


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This is not financial, retirement planning or investing advice. Please consult a professional advisor.

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