Are you prepared for retirement?

Retirement is the period in your life when you get to sit back, relax, and enjoy life. You get to maximize leisurely activities and make time for things like traveling, spending time with your family, or just generally enjoying day-to-day life. However, to sustain a certain kind of lifestyle, having steady income streams is a crucial element for retirement — after all; the money you have saved up over the years may not last forever. And that’s where retirement planning comes in.

Unfortunately, the prospect of a well-funded retirement saving is daunting for many citizens, with CNBC reporting that 15% of Americans have nothing saved up for retirement. Meanwhile, 17% have saved up less than $75,000, a number that falls short of the $1 million retirement fund recommended by most experts.

That said, here are three options you may not have considered during your retirement planning but that can help you make sure you have some money coming in outside of your retirement plan so you can enjoy a job-free life.

Invest in dividend-paying stocks

If you have always thought about investing in the stock market but never had enough time to learn about it, then retirement is your chance. Stocks are investments that have historically given better returns, with a post by FXCM outlining that stocks had an annual average return of 11% between 1928 and 2016. This could be due to their ability to overcome inflation, relatively low costs, or the accessibility of information about them. However, whereas common stocks can be volatile, dividend-paying stocks, in particular, ensure that you are getting returns on your investment. These are regularly distributed earnings from reputable companies, making them better options compared to common stocks.

Get a certificate of deposit and start a CD ladder

As you grow old, your retirement fund isn’t going anywhere — so wouldn’t it be better to make sure it’s growing, instead of simply sitting around until you spend it? One way to do this is to take out a certificate of deposit (CD), which is an arrangement where you’ll essentially put a lump sum in the bank for a predetermined amount of time in exchange for high-interest returns by the end of the period. Certificates of deposit are FDIC-insured, which means you’re insured for up to $250,000 per deposit, and won’t have to worry about it being at risk. Typically, the period for CDs can be 6 months, 1 year, or 18 months. Of course, you have the option of taking out your funds before your period ends if needed, but there will be a small penalty and you won’t get your promised interest back. But if you can afford to keep your money within the CD arrangement for longer periods of time, you can even build a CD ladder. This involves acquiring multiple CDs that mature at different dates, so you can get a higher amount of money back periodically.

Consider investing in real estate

Real estate investment is often overlooked when thinking through retirement planning because people assume it’s going to be too difficult to get started. However, there are many ways you can start investing in real estate: You can explore real estate crowdfunding, buy a property and rent it out on Airbnb or long-term leases, or even invest in a Real Estate Investment Trust (REIT). While the first two methods are straightforward, many may be unfamiliar with REITs, which The Balance defines as a security that has a goal of receiving rental income on the properties, while also participating in price appreciation. This will allow you to buy and trade REITs like a stock. Whichever option you choose, real estate investments are an excellent way to build wealth and are perhaps the most universally effective of all passive income methods.

Overall, money invested during your retirement years should not come with too much risk. It is best to keep investments predictable, even if the returns are not significant, to avoid losses of funds that are crucial for your retirement years.

The article was exclusively written for
Authored by Holly Baker

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