So You Want to Retire? Try This
Have you planned for retirement or financial independence? Many people mistakenly believe these two concepts are one and the same, however without financial independence, one cannot plan for retirement.
There are many so-called methods out there that will help you figure out how much you need to establish financial independence and retire with ease. Some of these include saving 25 times your working income or eight times your combined gross salaries. But, both of these methods come with no rhyme or reason behind them. Where did financial advisors come up with these numbers?
The true formula to use when determining financial independence and the ability to retire is: investment cash flow + social security > retirement expenses + cash reserves.
For investment cash flow, think of income generated through dividends, taxable income from your IRA, or any pensions your job has offered. Many financial experts, including Eddie Herring, Martin Rice and Bob Wells to name a few, believe retirees should use income from dividend-paying stocks to pay for expenses during their retirement years.
Retirees sometimes believe the only option to earn extra income is to use annuities, bonds or letting an advisor take control of your money, however with this formula, these are unnecessary.
There are a huge number of dividend paying stocks for retirees to choose from, including Southern Company, 3M, Duke, General Electric and Kraft to name a few. Because of the high number available, retirees have a great variety of choices when it comes to investing.
Many retired couples find that using an investment plan and covering expenses with dividend-paying stocks allows them to have extra cash on hand throughout their retirement years. Whatever your decision, be sure to plan an investment plan ahead of time so you can establish financial independence and enjoy retired life.
