As you go through daily life, that is normal daily life, you primarily think about income as the money you earn from some sort of a job. For most people, it’s money paid to you from an employer, the business you report to every day and who pays you a check every week or two. If you have a real skill and are lucky, you may even have your own business and be the boss.
That’s the way it was before the pandemic hit. Now, getting a weekly paycheck for getting up and heading to a job seems like it was a past life for an awful lot of people. I was just speaking to someone on the phone that has only been home for four days and he is already going crazy with anxiety. He is not alone.
That’s why I appreciate the fact that just getting a paycheck is only one way to earn money and earn a living. This isn’t your father’s world anymore and today there are a lot of boxes to be checked that can and will supplement your sources of income, now and yes, even in your retirement.
That’s the reason that my anxiety level isn’t quite through the roof right now, even though there are a lot of other reasons to be afraid and anxious for sure.
Here’s my question to you: How many of these boxes are you checking off as your sources of income? If you don’t already have them, consider planning now for the future.
Potential Sources of Income
Box 1. Weekly Paycheck or Income
First, do you have a job? By that I mean a regular source of income that is either steady or at least somewhat predictable that can and will pay your bills? Formerly called a “career” in my day.
These days there are numerous variations of that theme and even writing a blog for many is their daily work. The point is, if you are ready, willing, and able, then working to earn money regularly is the number one way to pay your bills.
The need is obvious. During this pandemic crisis, if you have lost your regular job, the good news is that you will collect unemployment and even get up to another $600 if you qualify based on your earnings. Having that kind of regular income has now more than ever become a real insurance policy to keep you afloat. Even independent contractors are going to be protected. Hopefully, returning to your job is in the near future rather than long term or never.
Box 2. Interest Income
You’re probably not ever going to get rich by earning interest on some bank account, but the thing us why not take a few bucks when they want to throw it at you?
Every single bank account I have pays me some sort of interest, from pennies to dollars, and every month I proudly watch those numbers accumulate. Last year, I earned over $200 by doing absolutely that and I’m pretty proud of it. Years ago, I started earning interest and by now the dollars I have earned must number in the multiple thousands. You can start now and do the same thing.
Box 3. Investment and Dividend Income
The stock market and investing isn’t everything for everyone and it may actually depend on what stage of life you are in. Time and your risk tolerance are key factors, but the truth is that investing in “something”—stocks, bonds, mutual funds or even your very own retirement plan—is an important way to build your wealth and increase your earnings.
You may not use your investment income regularly, but when you get to retirement, those funds became a big part of your nest egg, especially if they are being managed properly.
Don’t have the skills or you are just plain afraid of the market? At least explore the possibilities of a 401(k) or some kind of managed plan through a listed broker or your local bank.
Box 4. Owning a Home / Home Equity
The American dream is still alive and for a good reason. Home ownership has proven to be a surefire way to build wealth over the years and yes, it may have its ups and downs, but in the end it almost always points up!
When you rent, you get no return on your money and you can’t ever draw upon equity when you need money like when you own a home.
My advice, and the usual track, is to start small and trade up as you and your family grow. Then downsize when you near retirement and you will find a small bonanza if you have done it right. Most happy retirees have netted money from downsizing when they owned a home before retirement.
Box 5. Rental Income
Another part of “owning” may be to own a rental property. If you are in a position to buy and rent out a property, that property can be a regular source of income to you for years and years, including your retirement years. There are some risks when you rent and you may have possible problems with bad tenants and periods of no rental income that can cost you. But if you have done your homework and due diligence, that can be minimized and get you where you want to be. Again, start small and build your expertise over time.
Box 6. Tax Rebates and Refunds
I try my best to keep totally on top of any rebates and money that my local, state, and federal governments are issuing. It is highly possible that if you do not pay attention to this, you can and will miss some of them. For example, as a senior, I have had my real estate taxes frozen with a senior credit here in NJ based on a year to year adjustment when those taxes go up.
I always file my taxes early (even though I have not had to pay federal or state taxes for several years…legally of course), and I have received an EITC, an earned income tax credit. That’s free money and many people don’t know that you can actually get it without having any children in the mix as most people assume. It may only be a small amount, but every penny counts, doesn’t it? This year I received over $400.
As a homeowner (even a condo qualifies), I also take advantage of our state homestead rebate which gives a credit against my real estate taxes every year. If you don’t file, you don’t get it.
Box 7. Social Security
The major part of my monthly income comes from my Social Security monthly benefit check. That is true for the vast part of all retired or disabled Americans. Sadly, if you are depending on it as your only form of retirement or disability income, you are likely to have problems.
I won’t address the issues with Social Security and its future here today, but you can read about it here if you want to find out where it stands.
Social Security was never intended to be your sole support and that is something that many people do not realize until it’s too late. You simply must have alternate sources of income to live without stress in retirement.
I took retirement early at age 62 (the earliest you can take Social Security because of my health reasons) and because I did, I had my benefit reduced by 30%. Yes, I did get five years of payments until age 67 that I would not have gotten otherwise, but the truth is that it pays to wait. If you wait until the maximum age to draw it (age 70), you actually get extra money when you do. For me, the breakeven point is age 78. After that age, I am losing some money vs. if I had started at age 67 for my benefits. It’s a gamble because we do not know how long we will live in retirement, but we are living longer than our parents did, so choose wisely. You may really need that extra money.
Box 8. Pensions
Pensions are almost as extinct as the dinosaur these days, however there are a few still out there. They become important to employees that have some longevity in their jobs and it is a great incentive to be “vested” so that when you retire you get a monthly check as your reward. Waiting decades to actually get it may seem odd, but every month now when I get that $400 check from R.H.Macy’s, I am so glad I did.
Box 9. Annuities
Here’s a form of income that you simply can’t outlive. Annuities will pay you money from an initial amount given to a major insurance company for a period that is certain and beyond if you want that kind of real security. But, is it the best return on your money that you can do?
No, it isn’t, but a fixed annuity is guaranteed and safe. I chose a fixed deferred annuity and I’m now getting my monthly check guaranteed for 20 years and beyond if I live that long!
Some do advise against it while others will say that it is important. Read about annuities here and you can make a better decision.
Box 10. Gifts
If you are very fortunate, someone will gift you money. That most likely would be a parent or guardian and it may come to you while you are still actively working or in a trust that pays you later on a schedule.
If it’s cash, then you can simply incorporate it as a part of your total income or retirement planning. An asset like property, antiques or jewelry is a different kind of inherited gift and requires you to liquidate it if you intend to use it for income. Gifting is something you can do yourself for you friends or family members if you are in a financial position to do it.
Box 11. Sale of Personal Items
Selling your stuff on websites like eBay is a great way to get some extra cash when you need it. It can be done at any time and if it’s an item in demand, you actually can make big bucks for it. Face it, you are probably loaded with things you never use that can be turned into cash even right now.
Box 12. Side Hustles
Side hustles or side gigs are really fast becoming a part of the mainstream way to earn money. If it’s done right, it can even turn into a career. Write a blog like me and earn some money. Or just use a talent that you have like playing piano or making cookies and selling lessons or sweets. Maybe it’s just taking surveys to make some extra cash. Find the right outlet and you’re in a side business that gets you both money and fulfills you too!
In times like these, money seems to be a huge concern, even more that it usually is. When anxiety about your job confronts you, it’s calming to know that you have options and other ways to bring in some cash. Even if you can’t act on all these sources of income right now, it’s time to start planning for the future.
So ask yourself the question, “How many boxes can you check off?” and see if you are happy. Are you? If not, what can you do now to fix it?