Millions of baby boomers should be getting ready to retire within the next decade, and fixed income investing is important at this stage of the game; exchange traded funds (ETFs) may be able to help out.
Sounding the Alarm. There are many soon-to-be retirees who simply do not have a large enough nest egg to completely retire and be fine without a doubt for the remainder of their lives.
Chance Carson for Index Universe reports that labor experts are now estimating that 25% of all retiring Americans will be dependent on working part-time jobs even after they begin to draw Social Security benefits. Their life-expectancy will also be even longer, thanks to medical breakthroughs concerning heart disease and cancer.
The Importance of Distributions. One easy retirement strategy is to reduce your growth investing and invest primarily in investments that always pay monthly or quarterly distributions. This is possible by diversifying most of your retirement dollars into high income paying stocks, bonds and specialty ETFs.
While this is not what ETF Trends uses as an investment strategy, it may be suitable for others.
Planning Ahead. Traditional retirement planning often advocates investing in growth stocks or mutual funds and systematically withdrawing monthly checks of 6-7% per year, conservatively. However, when your fund isn’t paying distributions and you’re withdrawing these funds, you’re chipping away at your principal. Over time, the result is that your principal could be gone, even at a modest withdrawal rate.
When you’re planning for your golden years, consider your needs and goals carefully, then act accordingly.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.