As you get older and greyer, you’ll plan for your pre-croaking days by accumulating assets. That just means you'll get more and more of them. You’ll do this by buying stocks and bonds that will grow over time.
You’ll then decumulate your assets when you retire. The goal: to accumulate enough assets such that their "throw" or dividend or interest payment more than covers your retirement needs (like are you really going to bet that Social Security will be around for anyone other than the very poorest in society?)
Specifically…if you think you’ll need 50k a year, net after taxes to live nicely in central Arizona, you’ll need to have accumulated say, $200k in bonds throwing off 5% a year pretax, 4% after or 8 grand; and stock worth $1 million throwing off 4% yields gross to net 3% after tax or about $30k a year and $10k a year comes in from that apartment rental investment you did in your 40s.
All told, you juuuussst make the lifestyle you want. And if you don’t, well, Uber is still hiring drivers until the robots take those jobs too.
Related or Semi-related Video
Finance: What are Bonds?393 Views
Finance a la shmoop what is a bond? well a bond is your word your promise your [Women shake hands]
handshake your John Hancock on a contracted piece of paper your mortgage
your credit card debt yeah their bonds to your "I swear I'm not a deadbeat"
declaration... that's your bond right well bonds come [Man lying on a sofa]
in many complex flavors and compositions simply put bonds are loans aka debt you
borrow money or you promise or you you bond that
you'll pay it back when you borrow money the amount you borrow is called the
principal you pay rent on that amount borrowed and that rent is called [rent appears at bank]
interest to the entity loaning you the money that interest is called yield
thank you very much for the yield like if the lender rents you a grand for a
year and you pay them a thousand 80 bucks at year-end paying back the
principal and then the rent on the money while the lender will have had a yield [Yield of lender appears]
of 8% on the grand that they loaned you so that's a bond you borrow money you
pay it back and if you don't the person who loaned you the dough well they [Person stamped with property of shmoop bank]
generally own your tuchus and yeah you know what Shakespeare said about bonds
yeah that's what he said so if you don't really know what you're doing don't do
it...
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