Written by Becky Wilcox
How much money is enough for retirement? Although that’s a common enough question, the answer may surprise you. Any number you come up with for your lifestyle will be something of an educated guess. In other words, it’s unlikely to be accurate. While it would be wonderful to establish a figure that defines a comfortable retirement, there is one problem with coming up with anything close to an accurate reckoning: the goal post keeps moving. Some variables that confound any calculation is that the rate of inflation, the cost of living, and confidence in the social security system keeps changing. In addition, with medical science making rapid advances every year, your chances of longevity keeps improving.
It’s unrealistic to simply hope to stockpile enough money to live out your retirement years. Rather than hoping you won’t outlive your money, it makes more sense to continue to generate passive income during your retirement years. Some investment vehicles that would be a good option for continuing to invest in your retirement years include precious metals, real estate investment trusts, dividend-paying stocks, US Treasury notes and bonds and Treasury inflation-protected securities.
When you invest in gold bullion, you’ll be joining a trend that has become increasingly popular during the last decade as the US debt has increased at an alarming rate. With the US national debt rising by an average of $3.8 billion a day and government borrowing at the rate of $5 billion every single business day, faith in the stability of the US dollar has been shaken. Consequently, gold is seen as a hedge against hard economic times.
People who are interested in gold bullion find it easy to buy and sell gold and appreciate the accuracy with which gold content can be verified after purchase. They believe that investing in gold has significant upsides in an uncertain economy.
Real Estate Investment Trusts
When you buy Real Estate Investment Trusts (REITs), you make money as a shareholder. REITs make money by purchasing property and then renting, leasing, and selling them. REITs are made available to the public through IPOs, or initial public offerings. After your purchase, you will be pleased to observe that 90% of a REIT’s taxable income is regularly distributed to shareholders like you.
When you buy stocks, you will receive dividend payments. The best way to make money from your investments in stocks is to find companies that have developed an excellent reputation for increasing their dividend payments every year. These companies will continue to pump money into your bank account year after year. And, of course, as you add more shares to your portfolio, the more money you’ll make.
When you buy municipal bonds, usually refer to as “munis,” you are lending a government entity money. A muni, then, is a debt obligation issued by a government entity to fund its diverse projects. In exchange for your loan contribution, you will receive a fixed number of interest payouts over a predetermined schedule.
U.S. Treasury Notes and Bonds
When you buy U.S. Treasury notes and bonds, you will be paid interest on a discount bond upon maturity. This is a bond that you can buy for less than its face value. You will then be paid the full value of your bond when it matures.
Treasury Inflated Protected Securities
When you buy Treasury inflated-protected securities, otherwise known as TIPS, you will benefit from inflation protection. The primary disadvantage of TIPS is that you will earn a lower interest rate than if you were to buy other types of government securities or if you were to buy credit securities. In addition, your tax bill will be higher.
In conclusion, you should continue to invest in your retirement years. Although you might expect to only spend a third of your retirement savings to cover your living expenses, this evaluation may not be accurate. In reality, much of your savings will be used to cover costs that you had not anticipated. For instance, the rise in the cost of medical expenses may be much higher than you could have predicted.