Introduction:

• Imagine going on a long vacation with your car, but you can never stop for gas. You can only use the fuel you start with. This is similar to retirement—once you stop working, you're not receiving income, and your savings (like your gas tank) are all you have.

Retirement and Savings:

• In retirement, you may have a pension or social security, but these aren't usually high-income sources.
• Many rely on retirement funds like 401k, IRAs, or savings, but these aren’t the same as consistent income.
• If you're used to earning $100,000 a year, once you retire, you need to rely on savings, and they can run out quickly.

How Long Will Your Savings Last?

• For example, if you have $2 million saved and take out $100,000 each year, it would only last 20 years.
• At age 60, you’d run out of money by 80. At age 70, you’d run out by 90.
• This doesn’t account for inflation or unexpected expenses like healthcare.

The Importance of Income in Retirement:

• The key isn’t just having savings, it’s having income. Without a steady income stream, your savings will eventually dwindle.
• Options for creating income without a job include:
  • Real Estate: Rent properties for passive income, though it has risks and involves ongoing management.
  • Dividend Stocks or Bonds: These offer low returns, usually 2-3%.
  • Business Ventures: Starting a small business can provide a steady income, but it requires effort and time to set up.

Starting Early and Diversifying:

• Starting a business or creating an income stream early (in your 40s or 50s) gives you time to build it up and adjust as needed.
• Some people use side hustles, like making and selling craft projects, to generate an extra $2-3K a month, and they can keep this up into their 70s or 80s.

What If You Have Little Savings?

• If your savings are limited (e.g., $200,000), no matter how much income you generate, it won’t last long.
• For instance, if you withdraw $50,000 a year from $200,000 in savings, it will only last 4 years.

The Takeaway:

• The real challenge is creating an income stream. Whether it’s a small business, a side hustle, or investments, having some income to supplement your savings makes all the difference in retirement.
• Think of it like filling up your gas tank every month rather than draining it entirely—you’ll last longer and live more comfortably.

Conclusion:

• Don’t wait until retirement to start thinking about income. Set yourself up early, do the math, and take steps to ensure you have an income source for a secure and worry-free retirement.