Most financial planning is based on the same basic premise – work for several decades while saving a pot of money, which you will spend once you reach retirement. Indeed, this is the path that the financial industry leads you to – all the while earning fees and commissions by managing your growing portfolio.

I’m asked all the time, “How much of a nest egg is enough to ensure I don’t live in poverty or outlive my money?

There are lots of calculators online that will help you determine your “number,” but they don’t help you accurately predict the unknown variables – how long you will live and your health, future economic conditions, stock market returns and the rate of inflation. The further away you are from retirement, the harder it is to determine what your desired income will be twenty or thirty years down the road.

Related: Five things missing from your retirement budget

The prudent strategy is to work longer to provide a “just in case” buffer, but that’s the opposite of what most people want to do, namely early retirement.

If you want to achieve financial independence, especially earlier than the traditional retirement age, the nest egg has to be quite large. Starting early can take advantage of long-term compounding, but at the same time there are a lot of competing priorities for your employment dollars.

Boost Your Retirement Income With Regular Income Streams

It’s not the nest egg – it’s the income

If you’re worried about being able to save enough from your work earnings to meet your retirement goals, how about supplementing your nest egg be generating regular income streams.

I hesitate to call this “passive” income as it can initially take a substantial time and money commitment and some effort to build. Part of the process is taking the time initially to do some research and understand the risks involved. You want your income creation system to eventually be self-sustaining and need very little of your time to maintain it.

1. Invest in dividend paying stocks.

Investing in high quality, dividend-paying companies can provide a steady income stream, often with regular increases. The upside is it doesn’t take a lot of maintenance. However, you do need a rather large amount of invested capital to create meaningful income where you can live off the dividends.

Related: How to get started with dividend investing

Starting early and reinvesting dividends can help build a sizeable dividend-stock portfolio over time.

2. Rental property

Renovate your basement to build a rental suite or purchase quality properties with good cash flow. Once the mortgage is paid off the net rental income will help pay your living expenses.

Related: Are you cut out to be a landlord?

Rental property investing takes a bit of time and effort, but, the potential rate of return can be higher than for dividend income. Rental rates often rise over time providing a hedge against inflation.

3. Some other miscellaneous income producers

If you are a creative person, you might be able to produce a product that provides you with royalties – book, e-course, computer software, art and music.

Online income streams come from internet ads and affiliate marketing on websites, or the sale of digital informational products.

Related: How I turned a blog into a profitable online business

Although on the riskier side, you could invest in peer-to-peer lending, be a silent partner in a business you don’t actively participate in, or own a business you don’t operate yourself.

Final thoughts

As soon as you can create a stable income stream you can comfortably live on without touching your capital (or be able to stretch out those funds over a longer period of time), you can retire regardless of your age. After retirement, your net worth could potentially increase instead of depleting.


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