Sometimes I write posts to educate. Others, I write to share my observations — a small nugget that catches my attention and why it’s done so can help you get comfortable with investing, with money. (It took me a very long time to get comfortable with money, for so long it was all about safety and if I let even $1 go I was less safe. But, I digress…)
Some of you know that I’m a martial artist. Have been since 1980 (coincidentally, the same year I started investing in stocks, though it would be until the next year that my life changed when I got my first dividend). When students have an injury, they’re encouraged to come to practice just like every other student. But their practice is different. They may just sit and watch, if that’s all they’re capable of with their injury. We’ll even pull a chair onto the dojo floor so they can watch comfortably (though they are required to sit properly — which is itself a practice). They learn to watch others, and train their observational skills & their mental training.
I like to watch
I watch and observe a lot. I’m a synthesizer. That means that I’m a big picture person, one who needs a lot of inputs to inform how I learn.
In any case, all of that leads me to this article, ‘For smarter retirement planning opt for lifetime income’. I’d have written it with a slightly different style — perhaps a few headings to make it easier to read. That said, if you can work your way through it, it’s short and makes a lot of good points. Including:
…according to recent studies, over 50% of Americans will live longer than their money
Would you rather have a large nest egg you siphon money from, or a lifetime stream of income you can’t outlive?
I have found that the older a client is, the more they wish they had planned for monthly income. AARP predicts nearly 40% of retired Americans will be forced back to work because of insufficient income.
But what if you can’t go back to work? Or don’t want to?
My grandfather worked until into his 80’s, and literally had to be kicked out because they knew it was too much for him (even part time).
The future of work
I believe “work” is changing, and we’re moving away from this idea that we have a period in life where we “work” and a period where we “retire”. That said, like my grandfather who loved being a tailor and working with people, I hope we can all “work” at something we love in a way that satisfies us, rather than the drudgery of a 9–5 that we keep for the paycheck.
Put your money to work so you can be free… to work (but on your passions)
In any case, investing for income is important, but… as we live longer, it’s also important to accept some risk so that we have the opportunity for more reward (they go together when investing). That often means more investing in the stock market, and less in bonds and treasuries (where income is usually found).
Investing in dividend paying stocks has a history of really good returns. It’s a great way to build an investing portfolio that will allow you to plan your financial retirement based on income. On the other hand, you won’t be as likely to run out of money because you’re less dependent on the principle that you’ve stashed away.
It’s better to learn these mistakes from others by watching while we’re still young enough to change our behavior, than to learn them first hand once it’s too late.
Why not get started?
You can do it.