5 Good Retirement Income Investments and Their Benefits

To build a life on this spinning blue ball, you need to earn money, and how you spend it dictates your current and future level of financial comfort. It is important to live in the present moment, but we need to prepare for our retirement when we no longer toil away and get to sample the fruits of our life-long labour.

Do you have your money working for you as you approach retirement? It can be scary if you are not savvy about earning an income from your portfolio. To help you in your journey, here are some good retirement income investments to pursue.

1. Dividend-Paying Stocks

Buying stocks means you are gaining fractional ownership in a company, and there are many ways to invest, including:

Active Investing

Active investing involves watching the market and trying to make gains in the short term. This could be day trading or swing trading done through a brokerage or online platform.

Passive Investing

This is the buy-and-hold technique, and it is hands-off as you hold your stocks over a long period.

For retirement, you need more than the hope of a gain in a stock price; you need income coming from them. This is what dividend stocks do. You typically get regularly scheduled dividends as a cash payment to shareholders every quarter. Stick with large, stable companies as you need to limit your risk.

2. Investing In Mortgages

Investing in mortgages is another way to be involved in real estate to make retirement income. This allows you to be the bank but as a private investor. This could be someone buying a home or looking to get money out of a property for their business, personal debt or whatever else they need.

You alone, or part of a syndicate, fund the mortgage for a premium and collect interest for the loan term. Mortgage investments are typically made through a:

Private Mortgage

You become the sole financier, along with the help of a broker or asset manager, and collect a high-interest rate. You also assume all the potential risks.

Public Mortgage

Public mortgage investments are publicly traded funds of mortgages that you can invest in through your broker.

Mortgage Syndication

With mortgage syndication, you team up with like-minded individuals to form a mortgage syndicate, acquiring a fractional interest in various types of mortgages. Your money may be spread over multiple deals and is usually best for more experienced mortgage investors.

3. Bonds

Bonds are a safe investment issued by the government or a corporation, and you are essentially giving them a loan as they seek to raise capital. You will have a fixed term where the face value, plus an agreed-upon interest, will be paid back to you.

This is a good way to diversify and keep your investment money in a safer vehicle while gaining interest payments semi-annually or annually. In a retirement position, you should get short to medium-term bonds which mature from 1 to 10 years.

4. Rental Property

You don’t want to retire only to get another job to make an income. You need to produce passive income, and a great way is through income-producing property.

There are few things better than receiving a monthly rent cheque in the mail, and it turns an investment into a revenue stream. You could buy a:

  • Storage unit
  • Bare land
  • Commercial property
  • Rental House
  • Condo
  • Airbnb

These properties can be rented out for short or long-term rentals and keep money coming in. You will have to pay for the mortgage, property taxes and any strata fees associated with the property, but that should be worked into the rental or lease.

5. Bucket Investing

This good retirement strategy gets you diversified into investments geared toward short, medium and long-term investments. Even in retirement, you need easy access to cash and the desire to have your money grow for 10+ years. Here is how it works:

Short Term

This is a 1-5 year plan where you can put your money in easy investments like high-yield savings accounts, GICs and CDs. You can draw from this immediate bucket if needed in the short term.

Medium Term

Your intermediate bucket will invest in stocks, longer-term bonds and REITs. You want your money to grow over 5-10 years before you may need it.

Long Term

This is your long-term bucket, and it can hold some riskier investments that take advantage of the market over a longer period. Although these investments may be volitive in the short term, their growth potential over 10+ years makes them more attractive and worth it.

These are good retirement income investments to consider as you look to your future rest from the workforce. Use these and work with a qualified financial advisor to help you achieve your retirement goals. Then, all that is left is to put your feet up and take a well-deserved rest from your contribution to the planet.