Where will I get income for retirement?

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Focus on Finance by Frank Anderson

Question: I just turned 40 and am concerned about how I will be able to have enough money for retirement. I am afraid Social Security will not be enough and right now that is all I have lined up. How can I get the extra income that I will need in retirement?

Answer: You definitely should be concerned about your future. In my case, the Social Security my wife and I draw is about half of what we need to match our current living expenses and we do not live an extravagant lifestyle. But I have a secret weapon for retirement. I have thousands of people all over the country working to make money for me while I am taking a nap in the recliner or taking a bike ride with my friend, Fred Naas.

While I am sleeping they toil away making money for the 15 companies I partially own that send me money in the form of dividends either monthly or quarterly. You see, I own stock in these dividend-paying companies.

As a stockholder, I am a small percentage owner in each company. From stock sales, companies generate money to invest in expansion, new business, etc. In exchange for the money from the stock I buy, I get to share in the money the company earns in the form of dividends.

The process is called investment as opposed to savings. With savings you put your money aside, usually in a risk-free insured account, and draw interest. These accounts usually are government insured and the return currently is very low.

Investing is putting your money into something that has risk and hoping for a larger return over time. My dividend stocks have risk because the market value of the stock goes down as well as up, depending on the success of the company, the economy and world events. Other investments include bonds, real estate, gold, collectibles, etc. Each of these requires a separate body of specialized knowledge that should be acquired before and during investing.

You need to immediately begin saving as much as you can and when you have an emergency fund saved up, then you will be ready for investing.

There are many things in which you can invest — it takes knowledge to be successful. I recommend you set up an investment plan with a financial adviser. They can help you lay out a plan so you will have the money you need at retirement. They can provide the specialized knowledge necessary for you to be successful. Because you are only 40 years old ,you have 25 years to reach Medicare age and to accumulate money for retirement. There are many ways to invest, so see a financial adviser today and start putting your financial future together.

Frank Anderson is a successful retiree who lives in Hardin County.


What is Focus on Finance?

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A panel of local experts with experience and knowledge of this community respond to questions about 401(k)s, 403(b)s, annuities, certificates of deposit, home mortgages and/or refinancing, investing in the stock market, financing retirement, reducing income taxes and related topics. Email your questions to: focusonfinance@thenewsenterprise.com or mail to: Melanie Parker, The Wright Legacy Group, LLC, 1104 Julianna Court, Elizabethtown, KY 42701.