One of the biggest keys to retirement is understanding the difference between wealth and income. It's a mindset that is so important, I dedicated an entire chapter to this topic in my book, Repurposed: The Untold Story of Retirement in America.
{AUDIO) Wealth vs. Income: Debunking a Retirement Myth
What IS the difference between wealth and income?
Wealth is like grain bin that is storing grain but never gets used. Think of it like the excess that grows and grows over the years. Income is the useful or actionable side of money. These are two simple concepts - but, very different aspects of money a retiree needs to understand.
What is more important in retirement, wealth or income?
In my opinion, income is way more important. We all know money doesn't make us happy. However, it's the useful side of money that gives use the opportunity to have experiences, build memories with family or give to charity. Remember, the purpose of building and having wealth is to create income in retirement. But many times, this is struggle for retirees because they have been filling the stockpiles, so to speak, and now they are seeing the growth plateau or go down once they retire.
Can wealth be a source of strife for a retiree?
Yes, it certainly can. If a retiree has been so focused on wealth, it can cause anxiety seeing that number change over time because they are using it for retirement or there's a bump in the stock market. Again, this is the reason it is so important to maintain and reinforce the goal of wealth - which is to produce income.
How do you develop income in retirement?
Chances are you've been used to getting a regular paycheck every two weeks during your working years. So, it's crucial to develop a diverse group of income streams when you retire. This could include any or all of the following: pensions, part-time work, rental properties, farm land, Social Security, traditional IRAs, Roth IRAs, municipal bonds, and/or annuities.
If you need help building your retirement income plan, please, feel free to call us to schedule your no-cost, no-obligation review meeting at 320.222.4236.
Or you can email me at [email protected]