A big concern that many people nearing retirement often have is: “but are my retirement savings enough for me to continue to live comfortably?”. If this is a concern you share, know that earning income in retirement is still very much possible. There are various ways of doing this, but for now, these are some of the ways in which to turn your retirement savings into income in retirement:
Try ‘bond laddering’
An interesting way to earn income in retirement is to make use of bond laddering techniques. Investopedia defines a bond ladder as: “... a portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of purchasing several smaller bonds with different maturity dates rather than one large bond with a single maturity date is to minimize interest-rate risk and to increase liquidity.” We recommend consulting a financial advisor with this as it does have a certain element of risk attached to it. In the meantime, however, for a little extra information about bond laddering, read this Telegraph article.
You can consider buying an annuity (or multiple) with part of your savings for some extra income in retirement. This technically means that you pay your savings in exchange for an annuity rate, which will give you a constant income in retirement. The annuity rate that you are granted depends on various factors such as the conditions of the market, your age and your income (among other factors). Your rate will typically stay the same, unless you opt to link it to the inflation rate. Click here for more information on annuities.
Look into flexi-access drawdowns
The riskier alternative to annuities is to put your money in flexi-access drawdowns as a way to generate income in retirement. Through this account you invest your savings into the stock market and it allows you to receive a constant income. This plan, however, is a lot more complicated and a lot riskier than you might think initially. We highly recommend that you contact a financial advisor if you are considering this option, and remember wherever there are stocks, there is high-risk.
Consider selling your shares
Depending on your particular situation, you may want to consider selling some of your shares for some extra income in retirement. Some of these shares could be in stocks, bonds, mutual funds and so forth. Again, this is far more complex than you may think, and if you’re not entirely clued up on selling shares, get professional advice. This could be an incredibly lucrative way of generating income but the opposite is also true.
Invest in a property
Still one of the all-time best ways to generate income in retirement, if you have accumulated enough in savings, is to invest in property. If you purchase in a high-demand area (a popular year-round tourist destination or a property close to a world-renowned university, for example) and rent out your property, you’ll ensure that you have a guaranteed monthly income in retirement. Remember, the more you offer in a rental property (such as entertainment facilities, swimming pool, amazing furnishings and high-quality fittings) the more you can charge for rent. An added bonus of investing in property, is that it’s a physical thing that you own and that you can physically touch and see opposed to something that you have on a piece of paper. The added benefit of investing in a property is that later down the line you can use it as a family holiday home, a retirement residence, or you can just continue to rent it out.
If you’re interested in generating a healthy monthly income in retirement then property is one of the best bets. But not just any property, ideally you want an exceptional property in an unrivalled location, to ensure that it will never stand empty. Why not take a look at our phenomenal portfolio of property in Costa Blanca, where we have some of the best apartments, houses and villas in Calpe on offer.