How Many Retirement Income Streams Can You Create?

How much do you have in savings?

Is it enough that you could live off the income in retirement?

If you’re like most people, it’s not.

Most folks hope to rely on two other things for a retirement income.

They say they’ll rely on their super, and their house.

Maybe you think the same thing. That’s nice. But what if neither of those assets can provide the income you’ll need?

What will you do then?

It’s a thorny question. But there’s no point ignoring it. If you act now, there’s still enough time to build an entirely separate source of income…

Last week we wrote to you about the idea of a ‘Retirement Plan B’.

But to be honest, that’s not nearly good enough.

You should also have a ‘Retirement Plan C’…and ‘Retirement Plan D’…oh, and a Plan E, F and G too.

More, if you like.

If you’re only relying on one income stream for retirement, you’re leaving yourself wide open for years of misery.

More busybodies don’t want you to have your money

We know that may sound blunt.

But there’s no point sugarcoating this.

You know our view on the superannuation system. If you’re under 45, it certainly won’t exist in the form that you know it today by the time you retire. And if we’re right about the future of super, it won’t exist at all…even five years from now.

If you’re between the ages of 45 and 55, there’s probably only a 50% chance that you’ll ever see your super. And if you’re older than 55, but haven’t yet retired, you may only have a 75% chance of ever seeing your super.

We’ve taken a lot of flak for saying this, but we say it with good reason. Every day the mainstream press reports on someone else who says that you shouldn’t have access to your super.

Take this from the Age:

Looking at the recommendations of the Murray inquiry and the findings of the 2015 intergenerational report together, the debate over whether to ban lump sum payments from superannuation is a live issue, said Antoinette Elias, EY Oceania’s head of wealth and asset management.

“The big question is whether the government should act to prevent lump sum payouts,” she said.

Ms Elias isn’t the only one to back a ban on lump sums. As The Age also notes:

‘[Deloitte’s head of superannuation, Russell Mason] supports the idea of banning access to super balances in a lump sum retirement, so long as the reform is well-implemented and an exemption is put in place for people with small balances.

If you still don’t think they’re coming to take your super, wake up. It’s happening.

That’s why you need to create alternate sources of income. Odds are your super won’t be there when you retire. The government will nationalise it and then pay you a pittance as a pension.

Plans C through H

So if superannuation is your ‘Plan A’, forget about it. What about Plan B? For many people, that means relying on your home as an income source in retirement.

Many like the idea of a reverse mortgage. The major problem is that the banks will only lend you around 20% of the value of the home, because they know that interest charges will eat away at the home’s equity in a short period of time.

Alternatively, you could sell your home. But where would you live? Retirement home fees aren’t cheap. And is that somewhere you really want to go?

What about downsizing? Maybe. Unfortunately, downsizing from a four-bedroom house to a one-bedroom house doesn’t mean that it will only cost you a quarter of the proceeds from selling your bigger home.

Quite often, the difference between a smaller house and a bigger house in the same area is only marginal. That’s usually due to the fact that most of the value is in the land.

We’re not saying that you should completely forget about the potential to use your home as an income stream. But we are saying that it perhaps isn’t the best solution that most people think.

So, what are your solutions?

This is the importance of creating multiple income streams outside of your superannuation. Our new income specialist Matt Hibbard is all over this.

As part of the launch of his new investment advisory, Total Income, Matt has pinpointed six potential income streams for investors to look at now (if you like, these are plans C through H).

Keep adding those income streams

The bottom line is that, with interest rates at record lows and expected to stay there for a long time, you have to completely rethink what it means to earn a passive income.

It means making the most of your ‘active’ income (wages), and even looking at the potential to work for longer, or part time, or in contract work…or even doing local ‘odd jobs’ for cash.

If you can find an ‘active’ income that you enjoy doing, great. Not only will it provide you an income, but it will keep you active and keep the ‘grey matter’ ticking over.

But we also know that you don’t want to work forever. You want to enjoy your life in retirement. That’s why it’s important to have a reliable, steady, and sustainable passive income.

Start small. Create one income stream. Then another. And another. Build as many as you can comfortably manage.

This is important. Remember everything we’ve told you about the future of superannuation — there is no future to superannuation. Start building those passive income streams now.


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Kris is never one to pull punches when discussing market developments and economic events that can affect your wealth. He’ll take anyone to task — banks, governments, big business — if he thinks they’re trying to pull a fast one with your money. Kris is also the editor of Microcap Trader — where he reveals the best opportunities he’s discovered in the markets. If you’d like to more about Kris’ financial world view and investing philosophy then join him on Google+. It's where he shares investment insight, commentary and ideas that he can't always fit into his regular Money Morning essays.
Kris Sayce is the Publisher and Investment Director of Australia’s biggest circulation daily financial email, Money Morning Australia.Kris is a fully accredited advisor in shares, options, warrants and foreign-exchange investments. Kris has close to twenty years’ experience in analysing stocks. He began his career in the biggest wasp’s nest in the financial world — the city of London — as a finance broker back in 1995.
It’s there where he got his ‘baptism of fire’ into the financial markets, specialising in small-cap stock analysis on London’s Alternative Investment Market. This covered everything from Kazakhstani gold miners to toy train companies.After moving to Australia, Kris spent several years at a leading Australian wealth-management company. However he began to realise the finance and brokerage industry was more interested in lining its own pockets with fat fees, commissions and perks —rather than genuinely helping out the private investors they were supposed to be ‘working’ for. So in 2005 Kris started writing for Port Phillip Publishing — a company which was more attuned to his investment outlook. Initially he began writing for the Daily Reckoning Australia— but eventually, took over Money Morning. It’s now read by over 55,000 subscribers each day. Kris will take anyone to task — banks, governments, big business — if he thinks they’re trying to pull a fast one with your money! Whether you agree with him or not, you’ll find his common-sense, thought-provoking arguments well worth a read. To have his investment insights delivered straight to your inbox each day, take out a free subscription to Money Morning here. Kris is also the editor of Tactical Wealth and Microcap Trader where he reveals the best opportunities he’s discovered in the markets that you could profit from. If you’d like to learn about the latest opportunity Kris has uncovered, take a 30-day trial of Tactical Wealth here or Microcap Trader here. Official websites and financial e-letters Kris writes for:

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