A recent survey from State Street Global Advisors draws a conclusion that seems inevitable in the contemporary market. Investors want a monthly retirement income, in addition to whatever they may get from Social Security. That seems like an obvious desire as that is indeed the whole point of retirement saving: having money to live on when you are in your retirement years. However, the novelty that the survey found reflects a more nuanced consumer sentiment. Consumers want a monthly sum with which to pay bills and living expenses, as opposed to one lump sum which can be spent haphazardly. This is also understandable as people usually think financially in terms of the day to day and month to month. What is not so understandable is the best way to achieve that goal. Coming from a traditional financial services institution, the solution proffered was centered on distributions. In short, financial advisors should sit down with their clients and map out a timetable for distributions that fits the clients’ retirement needs. Although this sounds good in theory, even a cursory probing shows the fallacy in the notion. You can schedule from here until the end of time, but you can’t schedule a distribution for money that isn’t there. Most investors do not have enough of a nest egg to be able to make a decent monthly distribution for their life expectancy timetable. Creative scheduling will only go so far before the till runs dry. That being the case, what should an investor be looking at if he/she wants a stable monthly income? The only way to legitimately generate an appropriate amount of income is to have a retirement investment that itself generates income. Most mutual funds and stock holdings are meant to be long term investments. Put your money in early and cash out at the end. They are not intended to provide a steady stream of revenue. Investments that can produce that steady stream are not as simple as depositing cash in a fund, but the relatively small amount of maintenance involved is more than compensated by a regular and significant monthly income. Examples of income producing investments include real estate in the form of rentals or active businesses like a franchise. (Of course, to put these kinds of assets in a retirement fund requires the use of a platform like a self directed IRA.) You should definitely speak with a financial professional, and find out which venue is most appropriate for your retirement funds. Bear in mind, though, that if you are looking for a regular stream, advice alone won’t deliver it.
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