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income streams and family ties

December 17th, 2016 at 03:28 pm

I recently purchased a book on Amazon called You Can Retire Sooner Than You Think. It was meant for me, but then I remembered a conversation I'd had with my cousin M. on Thanksgiving Day. When I shared my hope that I could still retire in 3 years, despite my layoff, she longingly said she would love to retire too (she's 64) but that she had withdrawn a lot of money from her 401(k) to pay the bills when her husband was ill (Parkinson's) and she wanted to keep working until she had replenished $100,000 to the account. (I hope that's not all she has, but I really don't know. She'll probably have a pension from her employer as she's been there over 20 years.)

Anyway, I decided she might like to read this book, especially since I had already suggested that she might want to leverage the value of her home in a very expensive part of NJ and move to a lower cost area when she retires.

Her husband is gone now and her one son lives in Florida and spends the holidays, as far as I can see, with his in-laws. She has a much older brother who lives in AZ. So there are really no family ties left for her in NJ, and truth be told, I'd love to have her closer to me.

I even sent her an MLS listing of a comparably sized home in CT that cost $100,000 less than her current home value, has half the property taxes and 2 fenced-in acres for her dogs compared to probably a quarter acre she has now.

So I was going to buy a second copy of the book and send it to her for Christmas, but becus I am so frugal, I decided to quickly read the book for my own benefit and then mail that copy to her as a gift. That's what I did, being careful not to open it too wide because I didn't want it to look "used," or thumbed through.

As it was, the book only cost me $5 becus I took advantage of an Amazon holiday promo where if you bought $20 worth of books you got $10 back, so I'd gotten 2 books, and this was one of them.

There were 2 thoughts that interested me the most in the book. One, he emphasized the importance of having multiple income streams in retirement, something I've heard before but never really had anyone talk to me about in detail.

During their careers, most people have just a single income stream, their paycheck. But it's desirable to have at least 3 income streams in retirement so in case something happens to one of them, you're not left hanging. Many people have just 1, and many others have 2, but 3 or more is ideal.

Your retirement income streams could include any combo of the following:

1. Your Social Security check

2. Interest and dividends from your savings and investments. (The Vanguard CFP I spoke to recently suggested opening a designated account that would receive all the dividends from my stock mutual funds. I thought this was a good idea so I could clearly see just how many dividends my funds are spinning off and know what I had to spend each month, or each year; I've reinvested them for so many years I have no idea, really.)

3. Income from p/t or f/t work.

4. Rental income.

5. Freelance writing (I added this one myself since to me this is at-home, one-off computer work compared to finding a local, ongoing p/t job somewhere)

Can you think of any more income streams? I guess you could add things like focus groups and market research studies, although they are not ongoing.

Now I have no interest in being a landlord, but do hope to have #1, 2, 3 & 5 when I retire. So I think I will keep this idea more in mind as I prepare for retirement.

The 2nd thing the author talked about was the importance of having at least 3 "core pursuits," things to do that you're really passionate about. It has to be something more than a mere hobby, meaning it's something you find yourself thinking about at odd times and you get real excited doing.

It also CANNOT be reading, which his research shows is something more unhappy retirees do than happy retirees. He emphasizes the social aspects of any possible core pursuits.

At this point, my core pursuits include:
1. Genealogy research: Granted, this is a solitary pursuit much of the time, but I do excitedly share my findings with dad and others, and I hope to attend more genealogy meetings here in town. It's definitely something that gets me very excited and I think about it a lot in my spare time.

I now have 206 people in my family tree!! Remarkable!
Now granted, with some of these people, all I have is their name and nothing more. Others, I have their name, birth date and death date, where they lived and where they worked, who and when they married, were baptized, when they came to America and even, in some cases, a physical description, which you can get from a WWII draft registration card.

I have a detailed description, for instance, of how my great grandfather died, gleaned from what I found on his death certificate. He was hit by a truck in an intersection near where he lived in Philly. My cousin said he was drunk at the time. He was 75 and was admitted to the hospital with a broken arm. He died 10 days later of pneumonia, no doubt a result of laying prone all that time and further proof to me that hospitals are not a good place to be if you can avoid it! And kind of a shame, because he shouldn't have died of a broken arm. He was a larger than life character in the family, a drunkard and widely feared.

I sometimes daydream about, if I could magically know all the people in my family tree, which ones would I like the most, and which might I not like as much? (I'm sure there were some bad apples in there.)

When I was a news reporter, one of my weekly assignments was the "man on the street" interview, where I had to snag some unsuspecting passerby, ask them a number of personal questions about their life and take their photo for publication in the paper. I never liked doing it because there'd always be a bunch of people who didn't want to do it, or they agreed to do it until I whipped out my camera and then all my work interviewing them was for naught. I had to look for the extroverts.

My local newspaper here in CT has the same sort of feature. One of the questions they ask is, if you could spend time with anyone in the world, past or future, who would you spend it with?

A lot of people name their parents or some other long gone relative. Others name a famous person or the US President.

I always had a hard time pondering who I would spend time with, until I got into my genealogy. Well, I still don't know if I could narrow it down to one person, but I definitely would love to meet any one of my ancestors whom I've researched as living in the 1700s, 1800s or around the turn of the century. How interesting that would be!

Even though they are all dead, and have been for many, many years, I have such warm and loving feelings toward all of them. It's hard to describe. I still think that part of it is a result of my mother's passing, that the need for strong family bonds is still there and seeking a port in a storm.

2. OK, back to my list of core pursuits in retirement. My 2nd one would have to be walking, my primary form of exercise.

I'm pretty widely read on health and wellness topics, especially diet/nutrition, and for me regular exercise is a way of fending off a litany of problems including Alzheimers, weight gain and obesity, diabetes, osteoporosis and depression, to name a few. (I also practice balancing on one leg for a minute or more, when I think about it.) My goal these days is to try to walk 5 days a week, at least 30 minutes each day, or fewer days, but for longer periods, as long as the total reaches 150 minutes at least.

I've been a walker all my life.

3. My 3rd core pursuit....hmmm....not sure if there's a 3rd that really stands out in my mind, although I do like reading, quality time with my cats, and, when I can push myself out of the house, attending meetings of the historical society, book club, or garden club. I did love kayaking, but I haven't used it in years because it's too much for me to manage by myself and I haven't found the right person to kayak with. (Yes, I know there are clubs, but I'm an introvert, remember?) I do also enjoy cooking and trying new recipes, although I haven't really felt I've had the time lately.

TRAVEL would be a huge core pursuit but again not something I've done much at all since my 30s/early 40s becus I have 2 cats at home and always feel bad about leaving them, plus Waldo needs his twice daily meds now. But he is 14, and Luther 7 or 8, so I am biding my time...someday, I really hope to spring loose and visit friends (one of them Dido in PA, from here on Saving Advice, and another also in PA near Lake Erie).

And now I have some cousins in PA, one near Harrisburg and the others north of Philly. Honestly, I've long thought of PA as a good place to retire for its low cost of living compared to CT, NY, NJ, but I wouldn't want to make that kind of move alone.

Who knows, I could talk my cousin M. into retiring with me in PA near the Philly area and be back to where one arm of the tree started their lives when they traveled across continents from Eire. Everything that goes around, comes around.

So....can you come up with other types of income streams during retirement? What are your core pursuits?

14 Responses to “income streams and family ties”

  1. ceejay74 Says:

    It's one of the reasons I haven't looked too seriously into selling the UK home -- the thought that rental income could assist us in retirement. Of course maybe we should sell it and buy something closer to us to rent out. Or would it be better to sell it and put all the money into mutual funds? I really have no idea, but I do think we're going to need more in retirement than what we're putting away.

    Judging from my parents, I won't want to retire entirely for a long time, so freelance writing seems like a good prospect. Of course it all depends on health and mental wellness holding out, I suppose.

  2. Kiki Says:

    State pension, social security, investments income, house and pet sitting for as long as I can.

    I'd have to think about the 3 activities to do.

  3. livingalmostlarge Says:

    Good luck. hope your cousin can retire and sounds like a good thing you sent her the book.

    Personally I think people in HCOLA should look at cashing in home equity and using that to bolster their retirement income. I don't think we'll have more than SS and investments.

  4. alice4now Says:

    How cool to have a new cousin to conspire with!

    Right now my income streams would be my state pension, social security, investment income, and a small rental property (a dribble from each stream!). But I've got 20 years or so before I can consider retirement, so I don't know what any of those streams will look like by then.

  5. FrugalTexan75 Says:

    Hmm... I guess my streams would be ss, money from retirement accounts, money from taxable investments, and odds and ends from whatever I find at the time (Swagbucks, Pinecone or their equivalents) - maybe look into developing some side job like reselling stuff.

  6. Dido Says:

    Additional income streams: buying yourself an annuity, either a SPIA or a QLAC (if there's longevity in your family then you may benefit from mortality credits); taking out a reverse mortgage after age 62.

  7. Dido Says:

    Also, glad to hear you might somneday visit and are considering PA as a location. It's actuallyba pretty good place both in genera! and tax-wise. Qualified plan (401k, IRA etc) is not taxed on post-retirement distribution because it was taxed on being earned if you earned it in PA...most other states exempt some but not all of it, fairly low tax rage (3.07% flat but that will change soon as it's been at this level for a decade

  8. CB in the City Says:

    Well, I disagree heartily on the reading! Reading is a great joy to me! I understand that people need social outlets, but to suggest that reading is an indicator of unhappiness is crazy. Maybe if you are just reading anything because you are only killing time ... but an involved reader with a passion for literature is surely just as happy and healthy as anyone else!

  9. rob62521 Says:

    Interesting book, I think! DH gets Social Security and a pension and I get a pension. We have retirement savings, but have not had to touch it. Not sure where our third source might be.

    I am with CB and I disagree with reading not being an interest. I loved to read before I retired and I still do. In fact I have read 98 books so far this year and that doesn't count some of the smaller ones that I didn't count and all the magazines and newspapers. Although reading itself is a project I do on my own, sharing what I have read is a social thing, both online and in person. DH and I try to exercise as well as get out and socialize.

  10. terri77 Says:

    Reading is a love of mine. It makes me happier & more relaxed- even a bad book is better than no book!

    My income streams will be pension, SS, & retirement accounts (TSP & Roth IRA).

  11. Dido Says:

    Also a big reader--on target to finish 52 books by year end. Reading and learning are always core pursuits. I still have at least two professional certifications I plan to earn, and when I get of retirement age, there are programs in a few of the local colleges that allow taking courses at a reduced fee. Plus I don't think I'll fully retire until I lack the vitality to work. I do plan to reduce hours at some point, though not sure whether that would be at FRA (full SS retirement age) of age 67 or at 70. After that I will either do taxes during tax season (one reason I chose this path was that it makes for a good part year retirement career), and maybe do a little teaching at a local college and/or some writing). But eventually I'll reduce paid employment to part year and/or part-time to allow for travel, art classes, playing in an orchestra or chamber ensemble, and volunteering for a local historical organization. And to allow for having another Basset Hound in my life--it's a lot easier when one is away from home 6 hours a day rather than 8.5 to 10.

    As for retirement income, there will be Social Security, and I'll use part of my retirement funds to buy an annuity to establish a minimum assures level of income, and then draw from the rest to fill the gap to what I need. I'll probably consolidate the employer accounts to one IRA for ease of management, plus I'll keep contributing to the Roth IRA and HSA as long as I meet the requirements to contribute.

    And if need be, there's the reverse mortgage possibility if I still own the house and need the income. I'm thinking I will probably sell when I retire and move to a an active retirement community because I already find home maintenance burdensome.

  12. snafu Says:

    I was surprised that your Vanguard advisor was suggesting you tangibly take Dividend distributions and interest income produced from your taxable investment portfolio merely to identify variable performance. It's year end and I'm sure this information is available on your monthly/quarterly statements, easily tracked to the penny on-line. These sums are taxable even when reinvested so you have the details in your income tax submissions back to 2008.

    With retirement on your mind, it is helpful to do a comprehensive examination of the benefits of remaining in your home as opposed to a 45 plus type condo community. There is a huge amount of work involved in changing primary residence and you might try a quick read 'The Life-Changing Magic of Tidying Up' if your open to considering a different viewpoint as advance preparation.

    Are there any courses of interest offered at your Community College [Extension/adult ed] where it's easy to meet like minded ?

  13. PatientSaver Says:

    Snafu, I don't think the adviser was suggesting allocating dividends to a separate account solely to identify how much income is generated. That was my thought. Probably he felt this might be preferable to withdrawing a fixed 3 or 4% for income regardless of actual performance.

    I have read that book, I think. Yes, there is something called OLLI here...the Osher Lifelong Learning Institute, which is an arm of UConn, and open to all seniors at affordable costs. A lot of different talks and lectures, and I plan to check this out in a few years.

  14. Dido Says:

    A fixed 3 or 4% is not an optimal "glidepath"; it is just a very broad rule of thumb. Ideally you have enough money in cash accounts and fixed income investments to enable you to ride through a market downturn without having to sell off too much of your portfolio. The danger of this "sequence of returns risk" is highest especially within the five years before and especially after retirement. Dividend paying stocks to provide a steady income stream are ok too. In terms of portfolio draw down, another broad "rule of thumb" strategy that has been shown to allow portfolios to last longer than the 4% rule of thumb is to use the IRS tables for RMDs (the "Single Life Table"--don't use the "Uniform Life table" as it will draw your moeny down too quickly). If you want to use it for years before age 70, just add one to the age 70 amount of 27.4 (e.g., for age 60, use 37.4)--that number becomes the divisor for your December 31 retirement account a sustainable withdrawal for a 500K account balance for a 60 year old would be about 13,369, while an 80 year old could draw 26,738 since their remaining lifetime expectancy is less. If you are going to go the "rule of thumb" route, use one that is more responsive to circumstances rather than the 4% rule, which would advocate 20,000 regardless of age.

    There are Osher Lifelong Learning Institutes at colleges all over the country, BTW.

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