Taking Stock in Retirement

By Rich Topps, Sr.

There is a school of thought that says as you near and enter retirement, your exposure to stocks should diminish markedly – and that’s true… to a degree.  Virtually everyone wants some amount of certainty in the amount of income they will enjoy in retirement.  Typically that objective is addressed with Social Security, a defined benefit pension, and interest payments from bonds and/or CD’s.  These sources of income, however, tend to be somewhat fixed in the amount and rate of income they pay.

A Sometimes Forgotten Source

Although there is greater risk in stocks – price fluctuations, the dividend security, etc. , they may well be appropriate for at least a portion of your retirement investment portfolio.  For comparison, a very safe 10-year U.S. Treasury Note recently paid about a 2.20% rate of interest.  The stocks of some of America’s premier companies’ dividend yields were in the 3.00% to 3.5% range.  On average, that’s about 50% more income than the Treasury Note.  In addition, the financially strongest companies tend to increase their dividends regularly, so the income from them is likely to increase over time and help defray the effects of inflation.

Seek Advice Before Investing

We recommend you seek professional advice before investing.  In view of the potential risks involved, you may wish to have the investment professionals of Bolmgren RetirePLAN develop a diversified group of high quality stocks to help you decide how much stock, if any, you may be comfortable in having in your retirement income plan.  Other factors, such as investment objectives, risks, charges and expenses should be considered before investing.