How to Maximize Income during Retirement

by Neal Frankle, CFP ®

If you’re like me, you’re thinking about how to generate income during retirement .  No…I’m not thinking about retiring just yet. I figure I have another 20 years to go at least. But I don’t like surprises and I want to do whatever I can to make sure my retirement doesn’t surprise me.

I don’t know about you, but I get pretty ticked off as I read about how our government keeps mortgaging our collective future to the point of bankruptcy. Rather than “kevetch” about it, I came up with a solution. That’s right.  Money isn’t going to fall into our hands, and someday that paycheck is going to stop coming. So let’s kick some arse and create our own future. What do you say?

Note: A great way to “find retirement money” is to spend less.  Take a few minutes to figure out what it’s really going to cost you to retire before you pull the plug Pilgrim.

Here are four ideas on how to generate income during retirement and further secure our future:

1. Invest in real estate now.

Depending on your situation, this may seem brilliant, crazy, frightening or all three. I realize that real estate investors have taken it on the chin over the last several years – but that’s exactly why now is the time to get busy. Everyone loved real estate when it was 40% higher. It’s on sale now…so let’s go.

Of course when you invest in real estate you must be very careful about how you do it. If you’re considering rental real estate, make sure you are ready to become a landlord and ready to accept landlord liability. Also, even though prices have fallen, make sure you don’t overpay for your investment property or loans. That’s why even though I live in Southern California, I’m not buying property here. I’m investing in other areas that are cheaper and have better rent-to-price ratios.

Also, be ready for a bumpy ride. Prices may drop further. You have to be OK with that. Make sure you only get involved with real estate that you can hold on to – even if your experience vacancies. That’s why I bought properties for cash. If you are unable to do so, just make sure you put enough down to keep the mortgage payment manageable.

Neal’s Notes:  When it comes to real estate, you may want to re-think  your retirement residence.  Many people are looking at Community Care Retirement Centers.  They slash retirement living costs and free up lots of money for you to spend and enjoy!

This is hard work and it takes time. But if you plan on being retired for at least the next 20 years (or better yet, won’t retire for another 20 years and then plan to stay retired for another 20 or 30), this is a fantastic time to buy property.

This move is going to generate plenty of income during retirement. Down the road, rents will be higher, your property will increase in value and your mortgage might be paid off. That’s a spicy meatball!

2. Own great companies through funds.

Don’t do this as a speculator. Invest as an owner.

If you need a great CEO, buy a great fund company or hire a great financial planner. If you want to be your own CEO, buy an index fund or ETF. I don’t care. But think of this investment as being an owner.

Don’t speculate. Own and manage your business for long-term results, please. Take time for mutual fund evaluation. Don’t just jump into a fund blind. Otherwise, you’re really going to give me a headache – and I really don’t need it.

Much of what I said above is true here too. Growth funds are still 40% off their highs. Can I promise how long it will take for equity funds to regain their past glory? No, I can’t. But if your timeframe is 10 years or more, this is a fantastic time to own great funds that buy fantastic companies. As a business owner, you may elect to use any number of investment strategies that work. You don’t have to just buy and hold – although that may be your strategy.

I love owning companies through mutual funds right now.  One caveat friends; don’t buy a fund or stock for the dividend only.  For example, Master Limited Partnerships offer very high income – but they have much greater risk than most investors understand.

3. Become the CEO of You, Inc.

Run your personal finances like a business.

It’s always a good time to get out of debt – but if you want to know how to generate retirement income, there is no better way than to cut spending. I’ve written extensively about how you can slash your spending and get out of debt. You can learn more about it by picking up my book Money Academy For Couples.

4. Start a blog.

I started blogging for a variety of reasons, and I never imagined I’d make any money doing it. I wanted to communicate with my clients and help other people that I couldn’t serve without them feeling I was beating them over the head.

But I’m starting to make a little money at it now. Sweeeeeet!

I’m not going to retire for many years, as I said before. But I figure by the time I do retire – probably in 20 years – the blog will be generating some pretty serious coinage. Of course I could be wrong, but since I love doing it anyway, what the heck.

Is there something you love that you could write about? If so, I strongly encourage you to give this a go. I’ve listed a few really fantastic resources to help you launch your blog below.

Now that I’ve shared these ideas…I need to let you in on a few secrets.

Before you learn how to generate income during retirement, you really need to understand these three secrets:

Secret #1

There is plenty you can do to improve your situation. Don’t sit there and complain that there is nothing you can do. Don’t focus on your fear…do something. There are tons of options. Pick one and get going.

Secret #2

It’s going to take work. That’s right. It’s not going to fall into your lap, but with a little work, you’ll see that you can really make a huge difference.

Secret #3

You have a longer timeframe than you think. Regardless of your age, you must think long-term. All great journeys begin with one small step. You can either sit home and worry about your situation and decide to spend your time doing that, or you can make it happen.

All three steps require a change in your thinking and behavior. There is no instant fix. You’ll have to get out of your comfort zone and do things differently. That’s the ticket or price tag to improve your financial life.

So here’s my question to you.

How are you going to generate income during your retirement?

Consider reading:

How to make money with a blog.



Subscribe & Get Your Free E-Book and E-Course as My Gift to You!

Investing Your Money Made SimpleOnce a week you'll get unique tips to make smarter money decisions about your investments, retirement, taxes, and career. You'll also get encouragement and ideas to help you get out of debt, earn more money, and generally stop worrying about your money.

Neal Frankle is a Certified Financial Planner™ with over 25 years experience. Subscribe today and tap into this wonderful, free resource!

Become a Fan! Follow @NealFrankle

{ 5 comments… read them below or add one }

Little House April 9, 2010 at 3:48 PM

I like the idea of a quasi-retirement; generating income through passive avenues or through a side business like blogging (though I’m not holding my breathe on this one! :) )or freelancing. I still have a while yet before I retire, but that’s a good thing. I’m not financially prepared yet!


Financial Samurai April 8, 2010 at 8:23 PM

Gotta say, if anybody can keep up a blog for at least 3 years, they are going to be able to make a great chunk of change every month.

$100K income online or bust! :)


Evan April 8, 2010 at 7:38 AM

I have this dream of owning a bad ass portfolio (yes, that is THE technical term) of stable dividend producing stocks. I literally just started it, I am only 28, so I think I have some time for compounding lol.

I don’t think I’ll every REALLY retire, just because I get bored and will drive The Wife nuts, but for someone that wants to literally do nothing I am not too sure the You Inc Idea would work


Neal@Wealth Pilgrim April 8, 2010 at 5:13 AM

Simple in France,

Thanks…or should I say Merci?

Sounds like you are thinking about this stuff and taking action. That’s half the battle. By all means….let’s compare notes in 20 years…!


Simple in France April 7, 2010 at 11:41 PM

We just moved to France, so I have to adjust to the fact that my retirement will now be some kind of multi-national hybrid. I’m forced to get my act together. Until recently, my retirement funds have been held by the State of California–I’ll be taking those out and putting them someplace more reputable and less likely to go bankrupt.

I’ve always liked the idea of investing in real estate, but that’s probably because I understand it better than other kinds of investments . . .and maybe also because it’s tangible. I wouldn’t mind having small rental properties and since rent tends to keep up with inflation, I figure it’s a good bet–as long as you don’t rack up a huge mortgage when investing.

I am researching the stock market a little bit more now, but am still undecided as to what kinds of funds to invest in. . .

As for blogging . . . it’s kind of funny to think of having a blog for 20 years (they come and go so fast!) But I suppose it could be a revenue stream at some point. Currently, I blog for free and for fun.

I guess we’ll both have to take stock of that one in 20 years.

One other thing I’d add is that I hope to/intend to get a plot of land on which to grow my own food. I don’t expect to earn money that way, but to use it as one way to keep inflation at bay if/when we ever do retire. . .and just because it sounds fun.

Ok, novel over! (obviously I liked this post)


Leave a Comment

Previous post:

Next post: