Our 60s should be a time of joy and celebration. In fact, the only stress we should have is from babysitting our grandkids. But these magical times don’t just happen; we must create them.
We must build a level of financial sophistication that ensures we can weather any economic storm. This foundation starts by understanding and leveraging stocks, bonds, and options trading.
If we haven’t learned how to invest in capital markets over our lifetime, now is the time to get involved. The fate of our retirement rests in our ability to create money from thin air. Let’s begin.
Bond Investing in Your 60s. Bonds will become even more important in your 60s because the preservation of capital could be your top priority.
How to Retire Early as a Couple
I say “could be” because it depends on your financial situation, mainly if you have a government or corporate pension. If you have a pension, you are more secure financially than most.
You must use bonds to create a pension-like resource if you don’t have a pension. Luckily, you can use various types of bonds to create the effect you seek. Let’s review some of the bonds you can leverage in your 60s.
Treasury Bills, Treasury Notes, and Treasury Bonds will be your primary source of bond income. Remember to use the bond interest to invest in higher-yielding income sources like closed-end funds and business development companies. I call this high-yield bond reinvestment.
Your 60s will be a good time to invest in corporate bonds directly through your brokerage account. Corporate bonds have a higher yield than Treasuries. Find good companies like AT&T (T) and Verizon (VZ) with bonds that pay 4-5%.
The idea is to have your bond income cover your living expenses entirely. Whether you can pull this off will be tough. For example, if you need $5,000 per month, that would require $1.5 million at 4%.
Understanding Dividends ETFs
You can combine bond income with social security to make this number more reasonable. If you receive $2,500 from social security, you only need $750,000 in bonds.
There is nothing sexy about bonds until there is a stock market crash. When you retire, you can’t work to repair the damage of a crash, so capital preservation becomes your top priority. With a bit of planning and a lot of money, bonds can build you the financial foundation you desire.
Stock Investing in Your 60s. Stocks will play a massive part in your wealth creation in your 60s; however, you must avoid the trap of depending on stocks.
As I said earlier, you should live on pensions, bonds, annuities, and social security. These products should easily cover your monthly expenses.
The Dividend Debit Card 3
If these products don’t cover your expenses, take drastic action to ensure they do. This action could include getting roommates, moving to a small city, or going overseas.
Let’s look at my case. I have a $9,000 monthly military pension. I use this money to cover all of my monthly expenses and savings. If it didn’t, I would need to find a way to live below my means.
Once your retirement income covers all of your expenses, stocks will come in to give you the life you want. Think of your retirement as a seven-layer dip, with bonds on the bottom.
You invest in the stock market to generate dividend income. You can be a dividend growth investor who buys stocks like Verizon (VZ), AT&T (T), Google (GOOG), Abbvie (ABBV), CVS (CVS), and Costco (COST).
Income investors create even more passive income by investing in closed-end funds, preferred shares, business development companies, and dividend ETFs.
Understanding Mortgage REITs
Dividend investing aims to give yourself a high level of financial security and comfort. For example, let’s say you cover your $5,000/month expenses with bonds and social security. You could create another $2,500 from dividends.
Outside of my military pension, I earn $2,100 monthly in dividends. I can use their money however I want without guilt or shame. No matter what I do, this money keeps coming back into my accounts each month.
I know it may sound confusing to organize your life and finances in a layered format, but take the time to think it through. Most people fail financially because they have no plan.
Think of bonds as the birthday cake, with dividends as the ice cream you add on top. The final step is to add the cherry, which would be options trading.
Make Enough Passive Income to Cover Your Mortgage
Options Trading in Your 60s. Do you want to go on the European vacation you always imagined? Do you want to take your kids and grandkids to Disneyland?
If bonds cover “needs” and dividends cover “wants,” then options can cover our “dreams.” Options trading is so potent because you don’t need much capital to generate massive returns.
Let’s use the options wheel strategy of selling covered calls and cash-secured puts to generate $1,000 monthly. Using my rule of 40, you would need $40,000 in your account.
By comparison, you would need $300,000 in bonds (at 4%) or $150,000 in dividends (at 8%) to generate that same $1,000 per month in income.
Understanding Closed-End Funds
If you decide to trade long strangles in retirement, you would need $15,000 in your option account (using the rule of 15).
Is options trading stressful? If you use my rules, options trading will not be stressful. Remember, your expenses and fun are already covered by bonds and dividends.
The money you earn from options trading is for purely extraordinary events like first-class travel and five-star hotels. If you don’t make much money in options, just travel economy class.
Making your financial cake. You will be pretty happy when all the cake layers come together. However, it will take some time to get everything in motion.
Pursue Your Creative Career with Dividends as a Backdrop
Most people need a clear vision of retirement and their sources of income. They work for 50 years and replace their job paycheck with a social security paycheck.
However, your goal must be to create as many income streams as possible. Going further, you must organize your life around the various layers you created.
Let’s say you earn $3,000 from social security, $3,000 from bonds, $3,000 from dividends, and $1,000 from options trading. How much should you pay in expenses?
That’s right; our monthly expenses should be under $6,000 (bonds + social security). Once you visualize the various layers of the cake, you will create your dream life.
Conclusion. It has taken me a while to build this layered approach to retirement. The main reason I like layering is that it ensures I always live below my means.
Understanding Preferred Shares
I know my “base” lifestyle must be under $9,000 monthly. Therefore, I focus aggressively on keeping these expenses low.
I then layer on all types of passive income, but I don’t truly need this money now. I invest it into my future and the future of my kids.
I have been retired for a year, and my net worth and passive income have increased. My plan is to keep building wealth and passive income until I die.
You can do the same. You can live below your means while living an extraordinary life. You can do this by layering your retirement into needs (bonds), wants (dividends), and dreams (options). Good Luck!
- PDF of the Month: Don’t Gamble with Retirement 12 (Free 460-Page PDF)
- Free PDF Downloads: Download FREE PDF LIST here
- Financial Mindset: Become CEO of Yourself 2 (Free 196-Page PDF)
- Retirement Planning: Your Retirement Planning Guide 2 (Free 255-Page PDF)
- Investing: How We Plan to Retire on Dividends 4 (Free 139-Page PDF)
- Cryptocurrencies: Counting on Crypto 2 (Free 159-Page PDF)
- Real Estate: Financial Independence through Real Estate 4 (Free 112-Page PDF)
- Business: Retire Rich, Retire Comfortable with a Business 4 (Free 149-Page PDF)
- Latest DGWR: Don’t Gamble with Retirement 11 (Free 410-Page PDF)
- Everything!: The Biggest Book on Passive Income Ever 4! (book)(Web Edition)(Art Edition)
- Writer’s Comparison: M1 Macbook Air vs. GalaxyBook3 Pro 360
- Read My Books for Free: Free Kindle Books Schedule
- Book Design: Design Tips on YouTube
- Kindle Unlimited: Why I Finally Subscribed Kindle Unlimited (learn more)
- Book Reviews: 505 Takeaways from 101 Books (pdf)
- Writing: The Publishing Chronicles (Part 1, Part 2, Part 3, Part 4, Part 5)
- Best REIT- Fundrise: Fundrise vs. US Treasuries (Join Fundrise)
- Follow us: On our Facebook Page and Join our Facebook Group
- Support the Channel on Cash App: $Kingmarine1981
- For more detailed analysis, join my Youtube: MFI YouTube Channel
PDF of the Month: Don’t Gamble with Retirement 12 (Free 460-Page PDF)
Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing
Leave a Reply