Living to 85? Will Your Money Keep Up?

Growing Old Will Your Money Keep Up?

Did you know there’s an 80% chance that a 60-year-old couple will have at least one spouse reach the age of 90?

And about 1-in-10 adults will live past age 95, according to the Social Security Administration. That’s a problem for most investors. Few retirement plans account for such a long period (sometimes more than 30 years!) of time.

So the typical question becomes: what’s going to last longer, you or your money?

Personally, I’ve never liked that question. I want to live for as long as possible and I don’t want to spend my final years worrying about whether I have enough money to pay the bills, especially with the ever-increasing cost of medical care. But traditional retirement planning has always relied on selling assets in an effort to generate income with the hope that market growth would replenish what was taken out.

But what if there was a way to continue to generate income past 95, or past 195 for that matter? What if there were an investment strategy that paid you to hold on to stocks instead of selling them? And better yet, what if those payments continued to grow over time?

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But there is an investment strategy that’s been around since the start of the market that does just that. One that accounts for nearly 60% of the total market return for the last 90 years*, but usually flies under the radar of the typical investor: dividends.

When a company has a positive outlook and wishes to reward investors it can offer a cash payment called a dividend. For example a company might pay a 2.5% dividend, meaning it pays its investors 2.5% back, in cash, on a regular basis as a thank you for investing in their company.  

As a result, this company is paying its investors in cold hard cash to hang on to their stock. No need to sell anything. In fact, selling would be counterproductive. Just the opposite of the typical retirement strategy.

This is especially important when you factor in the element of time. Instead of a race to the bottom between you and your money, the goal of our dividend growth strategy allows your money to continue to grow over time, even as you collect income. You can’t spend appreciation, but you can spend income.

You see, dividends are always positive. When a company pays a dividend there is no risk that they’re going to ask for it back. It’s hard cash, in your account, to do with as you please. And better yet, some companies choose to raise their dividends on a regular basis. These are the types of companies we look for in our strategy.

We like “every” companies: companies that provide a service to

  • Everyone
  • Everywhere
  • Everyday

For example these companies include a soda maker, a ketchup maker, a tear-free baby shampoo maker, and even an iPhone maker (legal says we can’t name names.) The kind of companies investors find “boring” but flock to when the market ups and downs get to be intolerable. These companies may not be rockets to the moon, but they have a history of paying a consistent dividend and growing that dividend over time.

Your retirement income should not be dependent on you dying at 85. Instead, your retirement plan should be able to provide and support for you and your family for as long as you need it to, regardless of age. Our dividend growth strategy aims to do exactly that.

But this is only one way dividends can help you work toward your retirement income goals. They can also help you avoid the problem of rollercoaster markets, conquer the leaky boat that is inflation, and even help you leave a legacy for your family or causes that are important to you. Want to learn more? Enter your email below and we’ll send you a recording of our webinar on the 5 Most Important Reasons to Use a Dividend Strategy, hosted by the founder of Prosperion Financial Advisors, Steve Booren.

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Steve Booren

Steve Booren is the Owner and Founder of Prosperion Financial Advisors, located in Greenwood Village, Colo. He is the author of Blind Spots: The Mental Mistakes Investors Make and Intelligent Investing: Your Guide to a Growing Retirement Income and a regular columnist in The Denver Post. He was recently named a Barron's Top Financial Advisor and recognized as a Forbes Top Wealth Advisor in Colorado.

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* According to Yahoo Finance.
Securities, Financial Planning, and Advisory Services offered through LPL Financial. A Registered Investment Advisor. Member FINRA/SIPC. Prosperion Financial Advisors is not an affiliate of LPL Financial.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
No strategy assures a profit or protects against loss.
Investing involves risk, including the risk of loss.
Dividend paying stock payments are not guaranteed. The amount of a dividend payment, if any, can vary over time and issuers may reduce dividends paid on securities in the event of a recession or adverse event affecting a specific industry or issuer.