Your nest egg doesn’t stop growing the second you stop working and making contributions to your 401(k) or IRA. Your wealth can continue to grow if your retirement savings and assets are wisely invested and properly managed.
There are a few different tactics that will allow you to continue building wealth after retirement. Many retirees (especially recent retirees) can maintain wealth generation through a combination of things like:
- Wise budgeting
- Continued diversification
- Supplemental income
- Debt management
Budgeting in Retirement
If you’re at peak wealth the day after you retire, why should you immediately start worrying about your budget? The fact that your retirement savings need to last you for 20, 30 or even 40 more years isn’t the only reason you should be thinking about budgeting. Maintaining a significant pool of resources that you don’t need to touch for living expenses gives you extra bandwidth for investing and post-retirement wealth generation.
If possible, you should consider leaving certain assets untouched for the foreseeable future so they can continue delivering income. These include things like high-dividend stocks, rental properties and bonds.
Retirees who want to continue building wealth can attempt to plan their budget around more liquid assets or regular 401(k) and IRA distributions combined with their Social Security.
Diversification
Every retiree’s situation is unique, which is why some may not have the option of maintaining a diverse portfolio that includes more aggressive investments. However, if you do have the financial bandwidth to continue pursuing more aggressive investment opportunities, like equities, it may be in your interest to do so.
Consider speaking with a financial advisor to learn about ways you can diversify your portfolio without incurring undue risk.
Supplemental Income
There are many ways in which retirees can earn supplemental income after they’re no longer bringing home regular paychecks from an employer. Investment properties are one popular option. How many investment properties you can afford will likely impact how much supplemental income you can expect to earn during retirement. Retirees who own three or four rental properties may be able to fund their current lifestyle solely off regular payments from tenants.
Other common types of supplemental income include dividends or interest payments from fixed income instruments.
Earning supplemental income through work might also be part of the retirement you envision. Many individuals with valuable skills retire every year. It’s not uncommon for those retirees to do some light consulting work to maintain some supplemental income. Whether you can live off that supplemental income depends on your situation and expertise.
Not every retiree is content with an entirely work-free life. Starting a small business or consulting might be a way to stay engaged while still maintaining control over exactly how much effort you must expend on “work.”
Should You Get a Reverse Mortgage?
There’s a time and place for nearly every financial tool, but reverse mortgages have a particularly complex history. If a retiree has no children and no family members to whom they want to bequeath an inheritance, and they’re worried about being able to make ends meet, a reverse mortgage might make sense. However, if you do want to leave something behind for your children or grandchildren, relying on a reverse mortgage for supplemental income might not be the ideal course of action. This is especially true if family members currently live with you.
Do You Want to Continue Building Wealth After You Retire?
Wealth management and retirement planning are core services offered by our financial experts and fiduciaries at Fullerton Financial Planning. Many Phoenix retirees and soon-to-be retirees contact us to learn more about ways in which they can continue to grow their nest eggs in retirement.
Building wealth, even after you’re no longer working, is a realistic option for many retirement savers. Wise investments and holding certain asset classes can help you reach your goals.
Call us at (623) 974-0300 to learn about your options.
