How To Finance Your Retirement From Multiple Sources

Today saving for your retirement is much different than it used to be.  Generous employer pensions are basically non-existent, and benefits from social security were never intended to fully fund anyone's retirement.  These days you will most likely need to fund your retirement from multiple sources of income.

When it comes to financing your retirement, the first place that you should consider is your 401(K) plan or other type of retirement plan that your employer offers. These types of retirement plans are great ways to help finance your retirement. The contributions you make are tax deferred. In addition, most employments match part of your contribution to help you build an even larger nest egg. If your employer does offer a pension plan, that's another source for financing your retirement through your work.

Your working years also fund your social security account that you will be able to draw on. Just don't rely solely on social security benefits for providing you with a full retirement income.

Another potential retirement income source is the equity you build up in your home.  During your retirement there are several options for taking advantage of any equity you have built up in your house.  One option is to take a home equity loan out and use the proceeds to help meet your living and other expenses after you retire.  Another possibility is taking out a reverse mortgage for income.  One common alternative that many retirees take advantage of is to sell a home and then move to a less expensive, smaller house and use the extra money for retirement expenses.

Another retirement income source is investment income. This could be interest or dividend payments as well as capital gain proceeds from selling off investments. The earlier you start an investment program, the more potential income you will have after you retire. Taking advantage of your 401(K) or other employer retirement plan should come first. Then start to build up an investment portfolio.  Another idea would be buying investment property.  That way, once it is paid off, you'll have a steady stream of monthly income.

You can also supplement your retirement income after you retire by taking on a part time job. Other ways of supplementing retirement income include owning rental property or starting a small business to provide you with a full or supplemental retirement income.

These days you will probably need to finance your retirement using multiple sources of income.  If you can set your income streams up before you retire, your nest egg will have a chance to grow along with a regular monthly income stream that you can draw on to help meet your regular living expenses, along with medical bills, travel and other forms of expenses you may have.  It actually can be easier to start several income streams rather than trying to build up a huge investment portfolio, so think of several ways to save for your retirement instead of one.