LAST week a reader of this column called to express her appreciation for the insight received from reading the articles, while sharing some of her takeaways.

However, her financial situation as a retiree is troubling. Now in her 70s, this retiree does not have any retirement income and is not a homeowner. Living as a tenant she fears running out of money should she live long in retirement. Her experience underscores the need for streams of retirement income.

Generally, there are two ways to make money — you working for money or money working for you. Many people spend their lives working for money and ignore putting their money to work. Having funds in a savings account or putting it under a mattress is simply storing money to be used later. Investing your money means using your money to buy assets that will increase in value over time. Idle money cannot create financial freedom.

Recently on a radio programme, BPM Financial shared some interesting statistics on inflation. “In 2005 a whole wheat bread cost $91.82; in 2012 it cost $185 and in 2024 whole wheat bread costs $485.” With time, because of inflation, it takes more money to buy less. It therefore means that everyone should be investing long term in investment instruments that will beat inflation. Money is infinite but time is finite. Time already spent can’t be regained. Investing needs time to grow your money. Time is the “soil” in which compound interest thrives. We need streams of income because time is limited and we can’t work forever, nor can we purchase time.

The retiree mentioned above said that she had resigned from her job and went into her own business. Without a pension plan in place, she began her entrepreneurial journey. She ran a successful business for 15 years but, unfortunately, it did not survive the financial crisis resulting from the COVID-19 pandemic. She sold the equipment and all the assets she owned in the business. Her house was also sold at less than the market price due to mounting debts. Her savings, at the same time, running low. What can she do now to create retirement income? The mocking words “if I only have time” lingers. But there is hope for her. I made several suggestions to her which can bear fruit. She may not be able to have the lifestyle she dreamed of but should be able to live the remainder of her years in comfort. Her experience and credentials make her an excellent candidate for human resource consultancy, coaching, and teaching online classes, provided she continues to enjoy good health.

The mistake she made is one that sadly, some self-employed and business owners continue to make — believing that their business can be all things to them. Some believe that their businesses will always provide income now and in the future. The business basically is their “pension plan”. There is no strategic plan in place for retirement and how the retirement goals will be funded. Creating other streams of income while working is important. Having a pension plan has proven to be beneficial in retirement as it provides for pension income for life. It requires continuous saving in a registered retirement scheme. Discipline, commitment, and persistence are required in achieving your retirement goals. There are tax benefits with a pension plan that some persons have ignored. The earlier funds are invested, the longer it will be able to compound and provide pension income. I have met with individuals whose sole hope of retirement income is rental income. They haven’t factored in maintenance costs, non-payment of rent, and the impact of inflation. At retirement, they are still likely to struggle to make ends meet. Don’t put all your eggs in one basket. Diversify your investments and do so early.

In retirement, your pension income may not be enough to cover all your living expenses. Therefore, streams of income are necessary. The financial landscape has changed. It has long been recommended that employees should seek replacing between 65 to 85 per cent of their pre-retirement income as their retirement income. But that may not be enough as each individual has financial responsibilities that are unique to them. One size doesn’t fit all. Individuals should seek to save and invest early and regularly. This can’t be overstated.

Create streams of income through stocks that pay dividends, investing in mutual funds, unit trusts, and bonds to earn passive income while you are gainfully employed. Working part-time is another option that can provide a decent stream of income. Investing in real estate for rental or lease provides a continuous source of income. Additional streams are online initiatives such as lectures, seminars, and blogs. There are lots of opportunities online to create and monetise content. These options can also be fruitful for retirees who have to contend with limited time and solutions. A financial advisor can assist in creating a diversified investment portfolio as well as provide the guidance necessary for financial security in retirement.

Grace G McLean is a financial advisor and retirement specialist at BPM Financial Limited. Contact her at gmclean@bpmfinancial or visit the website: www.bpmfinancial.com. She is also a podcaster for Living Above Self. Email her at livingaboveself@gmail.com