A Layman’s Look from Don: Streams of Retirement Income, Pt. 6

by Donald Whelpley
@ 2022 All rights reserved.


Streams listed in previous Articles:

  • Social Security (Spouse’s SS)
  • Pensions
  • Traditional Retirement Accounts (IRA, 401k, etc)
  • Annuity
  • Non-Retirement Accounts
  • Marketable Collections

The goal here is not to report EVERY option, but to give you a wide range of options.  Also, as you will see, to show some examples of extending your resources.

You want to DELAY digging into your retirement investments as long as possible and still enjoy retirement.  Do something to earn “walking around money.”  As long as you are in good health you might want to work part-time.  I chose to work 3 days a week, but I delayed signing up for Social Security.  It still pays for more than half our ordinary expenses.  I’m thinking of reducing it to 2 days per week while receiving Social Security (which will allow me to buy some toys I’ve been wanting without impacting our budget.)
However, do not be fooled into thinking a “hobby” is valuable unless your income from it pays better than minimum wage for the time you put into it AFTER accounting for the money you invested in materials.  You can get minimum wage delivering flowers or sweeping the floor at a hardware store with no investment in product to sell.  Remember, if you have applied for Social Security there are wage limits after which your benefit is reduced ($19,560 in 2022 or $1,630 for any month you work after you begin receiving benefits) if you have not reached Full Retirement Age (FRA).

This is an excellent revenue stream.  But it can fall into the same trap as other investments if one of you requires Medicaid assistance.  (Check the Medicaid rules for your state).  You may be forced to sell (or give up your income from) your properties unless you have created a “rental corporation” of which you are not the only beneficiary.  Rental partnerships with a brother, friend or trusted ally may be safer.  Then Medicaid can only take YOUR “profits” while receiving assistance.  Also, as you age rely less on this stream of income.  Economies, tax laws, and property values change.
Have you considered that there are other types of rental situations.  For example, if you have a barn or other out-building on your property you can rent part of it out as a storage facility for campers, cars or boats.  If you do this, please take out insurance to cover theft, fire or wind damage.  Also be aware that you should make efforts to control animal/rodent issues.  It does not take many mice or more than one raccoon to seriously damage someone else’s property.
I knew one gentleman who had put ALL his eggs in this basket and “owned” nearly 40 properties.  I say “owned” because he had mortgages on most of them.  He was no longer able to do repairs and maintenance and wanted out…except that property values had just dropped by 35% in our area.  If he wanted out he had to LOSE money on his investments and PAY the bank the difference between loan balance and sale price, yet he could no longer keep his rentals in good enough repair to pass local rental inspections.  His retirement “gold mine” became a stone around his neck.  His biggest failure was not paying off properties as he expanded his empire.

One word … DON’T!!!  (OK, technically that’s 2 words).  Sadly, some retirees have no other option.  There is no shame in using this, but it should be the LAST resort.  Remember that you still have to carry home insurance, pay your taxes, and do essential home repairs even if the bank “owns” your home.  This option is only available if you own a significant portion of the value of the home AND if you do not have liens on the property.  How much can this help?  That depends on your age, your health, and the value of the home. (In some states the Medicaid rules count this as income if received as a lump sum.  Think about receiving payments instead.) 

See Part 1 of A Layman’s Look from Don: Streams of Retirement Income
See Part 2 of A Layman’s Look from Don: Streams of Retirement Income
See Part 3 of A Layman’s Look from Don: Streams of Retirement Income
See Part 4 of A Layman’s Look from Don: Streams of Retirement Income
See Part 5 of A Layman’s Look from Don: Streams of Retirement Income


Leave a Reply

Your email address will not be published. Required fields are marked *