A surprising statistic reveals that older Americans fear running out of money more than death itself. Even retirees with savings may struggle to cover expenses due to low investment returns, forcing them to dip into their principal. The traditional retirement investing approach is no longer effective, as current bond yields are significantly lower than in the past. Social Security benefits also face uncertainty, with funds projected to run out by 2035.
To combat these challenges, retirees can consider investing in dividend-paying stocks as an alternative to low-yielding bonds. Look for companies with a history of steady dividend growth and a yield of around 3%. Three options to consider are AbbVie (ABBV), Banco Latinoamericano (BLX), and Carlyle Group (CG), each offering competitive yields and dividend growth rates.
While stocks generally carry more risk than bonds, high-quality dividend stocks can provide income growth and reduce portfolio volatility. Additionally, dividend-paying companies often increase their payouts over time, helping to offset the effects of inflation. If opting for dividend-focused mutual funds or ETFs, be mindful of fees that could impact your overall returns.
In conclusion, investing in dividend-paying equities can potentially lead to a more secure and stress-free retirement. By choosing quality stocks or funds with low fees, retirees can enjoy a reliable income stream and mitigate financial risks in their golden years.