Investing in multiple sources of retirement income while working allows you to create significant savings and a steady flow of money you can rely on once you have retired. Identifying and sorting through sources of retirement income can however be a problem, when you have several to choose from and do not know what makes one better than the other. This is where doing research on the Internet and reading relevant articles come in handy, and in addition we are here to guide you through the process of finding the best sources of retirement income.
Retirement Does Not Mean That You Need To Stop Working
Most people believe that once they retire, income from a job completely disappears, however in many cases this is not true as many continue to work. In fact many retirees choose to work either full-time or part-time in order to supplement their pension they are getting during retirement. Others just choose to keep working because they just want to remain fit and healthy and feel that they have a lot to contribute to the professional world. Many have to keep working, because they do not have a good source of retirement income due to inadequate planning or their pension is quite small.
Investing or Owning a Business
Many retirees have skills that are useful for businesses and entrepreneurs. So it is not surprising that some set up businesses of their own once they retire. Owning part of a business, allows for retirees to use their skills and experience to bring in more customers while not having to work throughout the day. Retirees most often however choose to create a small business in an industry they have worked in, as this is a safe choice.
Social Security Payments
Especially among Americans and others who have access to Social Security, it continues to constitute about 30 percent of retirement income. Experts estimate that this percentage will increase over the years as investments in other sectors do not perform well. Those who are classified in the baby boomers age frame and will hit 65 years in the next decade are going to increasingly rely on Social Security and so it is important that people understand what benefits they can get. When it comes to claiming social Security it is better to wait rather than availing 100 percent of it once it is available. Waiting for several years before claiming social security, results in benefits growing by 8 percent per year. As a result many in the United States prefer to wait and claim social security benefits before the age of 70, which is the cut off age when benefits stop growing every year.
Reverse Mortgages or Moving To Smaller Home
Dipping into equity in a home is another way to meet retirement expenses and is a popular option among people who have paid off most of their mortgage or own their residence outright. Taking a reverse mortgage allows people to continue living in their home for the rest of their life. They can then opt to receive the reverse mortgage payments as monthly installments or a line of credit. Some retirees even move into a smaller home or rent, after selling a bigger home and use the money to finance their retirement.
401(k) or Similar Accounts
Among Americans contributing to a 401(k) account is a major way of saving money for retirement and the similar offerings are available in other countries. As part of the 401(k) account which is normally run by the company that a person works for, up to $18,500 can be saved per year if the person is under the age of 50. People who are over the age of 50 can save more and the amount permitted in 2018 is $24,500 a year. Saving in the 401(k) account also gives people some tax benefits and companies even contribute a portion, which in some cases can be about 50 percent of what the employee puts in. However, in spite of saving a large chunk of money per year in such accounts it is recommended that they should not be relied on completely when planning for your retirement. The risk involved in such accounts is that, in cases of bankruptcies or closures people who own stock in a company through their 401(k) will find that their investments are of no value. So it is essential that people who are opting for a 401(k) account decide where to invest the money saved.
Opting for Annuities
Buying an annuity is what many people who are about to retire do. After making an investment people can opt to receive annuity payments immediately. A deferred annuity results in the initial amount being invested and payments being provided once you have retired. Usually there are hundreds of annuities available for people who are about to retire or who are still going to be working for a few years. Financial advisors can help you find a good annuity offered by an insurance company or another institution and ensure that you do not make a bad choice.
Employees can also avail of pension when they retire and have been working in companies for several years. However, pension payments can be quite small if you have only worked for a company for a few years so you should ideally be looking to cultivate several sources of retirement income when working.
Investing in stocks is another sound option when planning for your retirement. However you need to invest in stocks that are safe and increase in value over the years. Since all stocks do not go up in value, you will need to keep an eye on prices, sell ones that are under performing and reinvest your money.
Whether you plan to write a book and use the royalties after you retire or rent out a property or home, you need to make a plan when you are part of the workforce and invest in several sources of retirement income. Additionally since all sources of retirement income are not 100 percent safe you need to spread your investments around to ensure their safety.
Wall Street Week Ahead: Investors weigh new stock leadership as broader market wobbles
By Lewis Krauskopf
NEW YORK (Reuters) – A shakeup in stocks accelerated by the past week’s surge in Treasury yields has investors weighing how far a recent leadership rotation in the U.S. equity market can run, and its implications for the broader S&P 500 index.
Moves this week further spurred a shift that has seen months-long outperformance for energy, financial and other shares expected to benefit from an economic recovery, while a climb in Treasury yields weighed on the technology stocks that have led markets higher for years.
The two-track market left the benchmark S&P 500 down for the week, and sparked questions about whether it could sustain gains going forward if the tech and growth stocks that account for the biggest weights in the index struggle.
So far this year, the S&P 500, which gives more influence to stocks with larger market values, is up 1.5%, while a version of the index that weights stocks equally is up 5%.
“That just tells us the gains are less narrow, more companies are participating, and I think that’s healthy,” said James Ragan, director of wealth management research at D.A. Davidson.
The focus on market leadership comes as investors are weighing whether the S&P 500 is due for a significant pullback after a 70% run since March, with the rise in long-dormant yields the latest sign of trouble for equities as it means bonds are more serious investment competition. The yield on the 10-year U.S. Treasury note this week jumped to a one-year peak of 1.6% before pulling back.
Economic improvement will be in focus in the coming weeks, including the monthly U.S. jobs report due next Friday, as will the country’s ability to ensure widespread coronavirus vaccinations, especially as new variants emerge.
Tech and momentum stocks helped drive returns in 2020 “when everyone was locked down and all they had was their computer,” said Jack Ablin, chief investment officer at Cresset Capital Management. “Now it seems with the vaccines, the stimulus and the prospect of reopening that we are looking out toward a recovery phase.”
The shift in the market this week is building on one that was fueled in early November, when Pfizer’s breakthrough COVID-19 vaccine news generated broad bets on an economic rebound in 2021.
Among the moves since that point: the S&P 500 financial and energy sectors are up 29% and 65%, respectively, against a nearly 9% rise for the benchmark index and 7% rise for the tech sector. The Russell 1000 value index has gained 16.5% against a 4.3% climb for its growth counterpart, while the smallcap Russell 2000 is up 34%.
“You definitely are seeing the reopening trade that has pretty much come alive here,” said Gary Bradshaw, portfolio manager of Hodges Capital Management.
Despite the gains, there remains “plenty of room for the reflation trade to run from a valuation perspective,” Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, said in a report this week. RBC is “overweight” the financials, materials and energy sectors.
Rising rates tend to be favorable for more cyclical sectors, David Lefkowitz, head of Americas equities at UBS Global Wealth Management, said in a note, with financials, energy, industrials and materials showing the strongest positive correlations among sectors with 10-year Treasury yields.
Still, how long the market’s reopening trade lasts remains to be seen. Investors may be reluctant to stray from tech and growth stocks, especially with many of the companies expected to put up strong profits for years.
Any setbacks with the economy or with efforts to quell the coronavirus could revive the stay-at-home stocks that thrived for most of 2020.
And with a GameStop-fueled retail-trading frenzy taking hold this year, banks and other stocks in the reopening trade may fail to draw the same attention from amateur investors as stocks such as Tesla, said Rick Meckler, partner at Cherry Lane Investments.
“There isn’t the pizzazz to those stocks,” Meckler said. “There rarely is a potential for stocks to make the kind of moves that big tech growth stocks have made.”
(Reporting by Lewis Krauskopf; editing by Richard Pullin)
Exclusive: European officials urge World Bank to exclude fossil-fuel investments
By Kate Abnett and Andrea Shalal
WASHINGTON (Reuters) – Senior officials from Europe have urged the World Bank’s management to expand its climate change strategy to exclude investments in oil- and coal-related projects around the world, and gradually phase out investment in natural gas projects, according to three sources familiar with the matter.
In the six-page letter dated Wednesday, World Bank executive directors representing major European shareholder countries and Canada, welcomed moves by the Bank to ensure its lending supports efforts to reduce carbon emissions.
But they urged the Bank – the biggest provider of climate finance to the developing world – to go even further.
“We … think the Bank should now go further and also exclude all coal- and oil-related investments, and further outline a policy on gradually phasing out gas power generation to only invest in gas in exceptional circumstances,” the European officials wrote in the letter, excerpts of which were seen by Reuters.
The officials took note of the World Bank’s $620 million investment in a multibillion-dollar liquified natural gas project in Mozambique approved by the Bank’s board in January, but did not call for its cancellation, one of the sources said.
The World Bank confirmed receipt of the letter but did not disclose all its contents. It noted that the World Bank and its sister organizations had provided $83 billion for climate action over the past five years.
“Many of the initiatives called for in the letter from our shareholders are already planned or in discussion for our draft Climate Change Action Plan for 2021-2025, which management is working to finalize in the coming month,” the Bank told Reuters in an emailed statement.
The Bank’s first climate action plan began in fiscal year 2016.
The United States, the largest shareholder in the World Bank, this month rejoined the 2015 Paris climate accord, and has vowed to move multilateral institutions and U.S. public lending institutions toward “climate-aligned investments and away from high-carbon investments.”
World Bank President David Malpass told finance officials from the Group of 20 economies on Friday that the Bank would make record investments in climate change mitigation and adaptation for a second consecutive year in 2021.
“Inequality, poverty, and climate change will be the defining issues of our age,” Malpass told the officials. “It is time to think big and act big in finding solutions,”
He said it was also launching new reviews to integrate climate into all its country diagnostics and strategies, a step initiated before the letter from the European officials, said one of the sources.
(Reporting by Andrea Shalal in Washington and Kate Abnett in Brussels; Additional reporting by Valerie Volcovici in Washington; Editing by Matthew Lewis)
GameStop rally fizzles; shares still register 151% weekly gain
By Aaron Saldanha and David Randall
(Reuters) – GameStop Corp closed 6% lower on Friday as an early rally fizzled but the stock finished the week 151% higher in a renewed surge that left analysts puzzled.
The video game retailer’s shares closed at $101.74 after retreating from a session high of $142.90. The weekly rocket ride higher came despite a broader market selloff that sent the benchmark S&P 500 <.SPX> down 2.5% over the same time.
Analysts have struggled to find a clear explanation, and some were skeptical the rally would have legs.
“You might be able to make some quick trading money and it could be a lot of money, but in the end, it’s the greater fool theory,” said Eric Diton, president and managing director at The Wealth Alliance in New York. The theory refers to buying stocks that are over-valued, anticipating a “greater fool” will buy them later at a higher price.
Analysts mostly ruled out a short squeeze like the one that fueled GameStop’s rally in January, when individual investors using Robinhood and other apps punished hedge funds that had bet against the stock, forcing them to unwind short positions. Many GameStop buyers took their cues from online investment forums on Reddit and elsewhere.
Short interest accounted for 28.4% of the float on Thursday, compared with a peak of 142% in early January, according to S3 Partners.
Options market activity in GameStop, which has returned to the top of the list in a social media-driven retail trading frenzy, suggested investors were betting on higher prices, higher volatility, or both.
Refinitiv data showed retail investors have been buying deep out-of-the-money call options, which have contract prices to buy far higher than the current stock price.
Many of those option contracts were set to expire on Friday, meaning handsome gains for those who bet on a further rise in GameStop’s stock price.
Call options, profitable for holders if GameStop shares hit $200 and $800 this week, have been particularly heavily traded, the data showed. GameStop’s stock traded this week as high as $184.54 on Thursday, far below the $483 intraday high it hit in January.
“The actors are looking to take advantage of everything they can to maximize their impact and the timing is important,” said David Trainer, chief executive officer of investment research firm New Constructs. “The options expiration will contribute to their strategy on how to push the stock as much as they can and maximize their profits.”
Bots on major social media websites have been hyping GameStop and other “meme stocks,” although the extent to which they influenced prices was unclear, according to analysis by Massachusetts-based cyber security company PiiQ Media.
The U.S. Securities and Exchange Commission (SEC) on Friday suspended trading in 15 companies because of “questionable trading and social media activity.” GameStop was not among them.
The 15 companies were in addition to six stocks it recently suspended due to suspicious social media activity.
Robinhood said it has received inquiries from regulators about temporary trading curbs it imposed during a wild rally in shorted stocks earlier this year.
Other Reddit favorites were also lower on Friday, with cinema operator AMC Entertainment down 3.4%, headphone maker Koss off 22.4% and marijuana company Sundial Growers down 2.9%.
(Reporting by Aaron Saldanha in Bengaluru; additional reporting by Caroline Valetkevitch in New York, and Devik Jain and Sruthi Shankar; Writing by David Randall; Editing by Alden Bentley, Shinjini Ganguli, Anil D’Silva, Dan Grebler and David Gregorio)
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