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I have time to retire 10+ years and wondering how have people creating monthly income streams.
A couple of option I have been following
1. Rental income
2. Annuity
3. Social security
The problem with SS income is, I believe it offsets if you have other incomes. What other options are there where people are withdraw monthly even when following 2% or 4% rule.
In general SS does not offset. However you could have a goverment related pension that does have coronation with SS. You did not list a pension so I see no reason why you would think you would not receive the full benefit. Might want to add your reasons to get a better answer.
On SS, if you can delay taking to 70. Consider the forgone SS income to be the cost of buying an inflation adjusted annuity.
There is income tax on SS as your income increases. No way around this unless you have tax free income.
I would look towards dividend paying stocks and preferred stocks. I think bonds will be a problem due to the low interest rates.
I think stock market returns will be a lot lower than in the past.
Location: Was Midvalley Oregon; Now Eastside Seattle area
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We set up deferred GLWB annuities in 2008-2012. We recognized that their payouts were 5%+ on Income Acct, in a falling rate environment, with opportunity for Value Acct to grow, and remainder on death. We had expected to go at least 5 years before taking income from annuities but we have gone almost 8. We may begin taking Income from a couple of annuities in Jan 2017 at ages 66/69 inorder to show "regular" income for a new home.
We also have a rental that we acquired from an inheritance.
We have 4 buckets with potential streams of income: SS+small pension, Annuities, Rental, trading accounts. We can live well on any two and currently doing so on SS+small pension and rental. Took early SS at ages 62/64. Marginal federal tax @25%.
I have time to retire 10+ years and wondering how have people creating monthly income streams.
A couple of option I have been following
1. Rental income
2. Annuity
3. Social security
The problem with SS income is, I believe it offsets if you have other incomes. What other options are there where people are withdraw monthly even when following 2% or 4% rule.
Interesting question and you have posted some of the answers. What other information are you actually trying to get to?
As for the SS income it is not offset or affected unless two things. First you take it early. If you are still working and take SS it will be reduced by 1 dollar for every two dollars earned over 15760. If you are asking about the taxes that will be assessed as your retirement income reaches certain thresholds to a maximum of 85% of your SS income being subject to taxes. 15% would be excluded from taxes.
If you have any thought of other sources or pots of money and want to know how to turn that into an income stream you just have to ask.
In general SS does not offset. However you could have a goverment related pension that does have coronation with SS. You did not list a pension so I see no reason why you would think you would not receive the full benefit. Might want to add your reasons to get a better answer.
On SS, if you can delay taking to 70. Consider the forgone SS income to be the cost of buying an inflation adjusted annuity.
There is income tax on SS as your income increases. No way around this unless you have tax free income.
I would look towards dividend paying stocks and preferred stocks. I think bonds will be a problem due to the low interest rates.
I think stock market returns will be a lot lower than in the past.
That is what I did and am doing.
My FRA was over two years ago but if I had taken benefits then I would have received right at $2,300.
If I hold out to 70, and I shouldn't have a problem doing that, my benefit is not estimated to be $$3,050. That's equivalent to having a job that provides a weekly take home pay of $704 and as long as you own your home, don't have any debt and don't live in a high COL/high tax area of the country one person should be able to get along pretty good on social security alone.
If you take that plus the $1,150 my wife receives, last April we were among the last that could file and suspend, we will receive $4,200/month in social security alone and it is worth mentioning that is exempt from both state and federal taxes for most people. I said not everyone but most.
Yeah, I just checked it and if all we got was $4,200/month in social security our federal income tax is a big fat zero!
Even with a little IRA money, say $500/month, federal and state taxes are still a big fat zero.
Where else can you get a guaranteed annual 8% tax free return with cost of living adjustments simply by working one extra year?
I didn't get here because I was smart, I should have been in position to retire 4, 5 or 6 years ago, but I didn't save like I should have because I am one of those types if I have it I will send it. So while I did save some we didn't save nowhere near what some try to tell us we need for a comfortable retirement, I feel I made up for a lot of past sin simply by working longer. Working longer is exactly what I did. Actually still doing but it ain't long now.
In my opinion the last thing anyone wants to do is collect benefits while they are still working because that is when taxes will take a big whop out of you.
To give an idea if I elected to take benefits at my FRA together my wife and I would receive $43,200 in benefits but a whopping 85% of that would be subject to federal income tax so out of that $43,200 we would have lost $9,180 of our benefits to federal income tax.
I have time to retire 10+ years and wondering how have people creating monthly income streams.
A couple of option I have been following
1. Rental income
2. Annuity
3. Social security
The problem with SS income is, I believe it offsets if you have other incomes. What other options are there where people are withdraw monthly even when following 2% or 4% rule.
We chose #1 and #3.
We both had adequate incomes and there was very little promise of a pension.
So in 1987 we built a pair of town houses and rented them out. By 2002 they were paid for with tenants money and have been generating income ever since. That helped pay our mortgage off.
In 2007 my wife retired and started drawing Social Security.
In 2010 my small pension began (I left the company years ago).
In 2010 I retired and started drawing Social Security.
Meanwhile in 2005 we started living off what our retirement income would be. So in 2010, when I retired, our income did not change.
2 Social Securities
2 rental incomes
1 small pension.
SS, IRA RMD's and drawing down some non-IRA Mutual funds but more importantly, no debt. At my present draw rate, the Mutual Funds would last for over 40 years and that assumes no growth. I am 74 so I plan on becoming more aggressive with my draw down rate.
There are months I have to watch my extra spending when I spend on extras like a recent 1st class trip to visit family. I could have rented a smaller car, gotten a cheaper air fare, and stayed with family but I wanted a nice hotel for myself. I also picked up quite a few restaurant checks like one for $320......LOL.
I have time to retire 10+ years and wondering how have people creating monthly income streams.
A couple of option I have been following
1. Rental income
2. Annuity
3. Social security
The problem with SS income is, I believe it offsets if you have other incomes. What other options are there where people are withdraw monthly even when following 2% or 4% rule.
What you may be thinking of with SS is that if you have earned income over the limit (which is about $15K) and you are under Full Retirement Age then you will be penalized and lose part of your SS. It gets added back into to your benefits after FRA.
Besides the 3 you mention, and defined benefit pensions (from Corporations/Government), the other thing you can do is create an income stream from your investments.
In my mind, you take can take two paths for that.
a) Bonds. You can buy bond funds but your principle can be put at some risk. Or you can buy Exchanged Traded Debt (ETD) also known as Baby Bonds. The face amount is $25 (usually) and there will be a set date in the future when you can redeem for $25. So, for example you buy something for roughly $25 that redeems in 25 years and pays 6%. As long as you hold it till maturity and the company doesn't go bankrupt you won't lose principle. I own a little bit of these and may buy more in the future.
b) Dividend Stocks. You have to have a different mindset to invest in dividend stocks. You have to stop worrying about how big your pile of money is, and instead focus on the income it produces. For example you can buy AT&T and get roughly 5% income stream. Is it going to have huge gains? Almost certainly not. But the dividend income will roll in and it usually increased 2% a year. You can invest in funds but I prefer to buy the individual stocks.
Where else can you get a guaranteed annual 8% tax free return with cost of living adjustments simply by working one extra year?
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you are not getting an 8% return by delaying , you are getting an 8% increase but giving up checks and spousal benefits to get that additional 8%. your actual roi does not start until you pass break even . roi wise you are still at a loss .
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