What would you do when you reach your retirement age? For sure, you would want to just sit back, relax, and enjoy life. By that time, earning a sufficient income should not be your concern anymore. That is why you have to start saving for your retirement as early as when you get your first job.

Enjoying retirement is like enjoying the fruits of your hard and long labor. Isn’t it ideal if you could still have a steady flow of income when you retire? By now, you should learn more about these five ways to fund your retirement.

1. Buy an Immediate Annuity

Convert part of your savings for retirement into a lump sum that you should use to buy an immediate annuity. By the time you reach your retirement, the investment would start paying out a steady income stream, which would be independent of declining interest rates and declining stock prices. If you buy one, you would not be able to take it back. The income payment, once it starts, would also not increase. But you could expect a regular income flow until your death.

2. Strategic Systematic Withdrawals

If you decide to put your retirement savings into a bank account, set up a strategic systematic withdrawal schedule. That means you could only withdraw a specified amount of cash within a given period. You may have to project just how much you would need to cover your basic expenses before setting up the strategic systematic withdrawal amount. This strategy would help you be sure that your own stream of income would last for as long as you would need it.

3. Laddered Bonds

Buy multiple bonds that would mature at staggered intervals, also known as bond ladders. By doing this, you could be sure of consistent returns in the future. In general, bonds could make interest payments for about twice every year. Thus, having a portfolio consisting of six bonds could logically give you a steady cash flow monthly on your retirement years.

4. Laddered Certificates of Deposits

Just like a bond ladder, laddered certificates of deposits could help make sure you would get a steady flow of income in the future. Certificates of deposits are sold by banks. You may use them for your short-term income requirements. Just structure or plan your certificates of deposits properly, taking note of the maturity dates and payouts.

5. Have a Great Retirement Portfolio

Retirement funding may involve multiple possible sources of retirement income. Aside from the first four mentioned above, you may count on your pension, inheritance, social security benefits, and real estate as other sources of steady income stream in the future. If you could be sure you would have these multiple income sources, you could be certain you would not have any problem about income generation and flow when you reach your retirement age.

As always, observe proper and strategic planning when establishing retirement funding. For now, you may have to continue to save diligently, make effective investments, and buy retirement investments that you could rely on in the future.

Andrew Black works in the finance industry for Australian Lending Centre, a private lender. When he is not working, Andrew loves sharing his thoughts online.
alc@fullsteamconsulting.com.au

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