Using Social, Human and Financial Capital to Build Retirement Income

Using Social, Human and Financial Capital to Build Retirement Income

Judy Loy, the CEO of Nestlerode & Loy, Inc., has some sound basic insights to share on retirement planning.

It’s quite simple in conception: to help clients understand sources of income in retirement, encourage them to consider the three basic streams present during their working lives: social capital, human capital and financial capital.

Companies often speak of human capital as the people who make up their workforce, with all of their skills, determination, drive and indeed weaknesses. In this case, Loy is speaking about the simple ability to earn money by working.

Nowadays, it’s pretty unusual for retirees to simply down tools and sit by the swimming pool. Many prefer to continue working in some fashion. This can involve part-time consulting, where a retiree can share the skills learned over a lifetime and earn a bit of income. Others start small businesses, frequently online, often as a labor of love. Still other seniors take on part-time jobs, sometimes in search of an income boost, and often for a bit of companionship. Human capital can contribute to a senior’s income for many years into retirement.

In the United States, social capital means the Social Security system, Medicare and other federal and state programs that support the elderly. Many private organizations exist to help retirees, providing meals, transportation, social activities and other services. Retirees must take care not to miss out on any assistance that is freely available from the government and in their particular locale.

Finally, financial capital comprises what a person has saved and invested. For many retirees, this portion often seems quite strong at first, sufficient to provide a comfortable life. However, as people age and medical expenses mount up, along with others, their financial capital can diminish dramatically.

For more information, please read:
Understand the Different Types of Income When Planning for Retirement |


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