Three Compelling Reasons Retirees Should Consider Dividend-Paying Stocks

We all know money can’t buy happiness, but it can buy two reasonably close things—time and freedom. Retirement is the ultimate symbol of both. If you’ve saved up enough, eventually, you won’t need to trade your time for a paycheck. Retirement happens, as the saying goes, “When you have enough, and you’ve had enough.”

If you’re like most people, you can’t afford to keep your retirement savings under the mattress. Often, what you’re looking for are investments that offer both stability and a steady stream of income.

One strategy that can provide both is ownership of dividendpaying stocks. Here are three reasons why they can be a fantastic addition to a retirement portfolio:

1. Mark Your Calendar:

Shareholders enjoy a portion of the company's earnings, which are often distributed quarterly or even monthly. Successful companies can keep this up for decades or longer; there’s

BY RENEE MICHEL, MBA, AND JOE SWEENEY, CFP ® , FINANCIAL ADVISORS AT SWEENEY & MICHEL, LLC

even a list of “dividend kings” which have paid and increased dividends for 50 years in a row.

2. The Income-Tax Loophole:

Most people don’t realize that a married couple can earn up to $83k in qualified dividends without owing any federal income tax. Above that, they only pay 15% on the next $400k of income.

3. Inflation Protection:

Dividend-paying stocks are historically one of the greatest ways to protect your paycheck from inflation. In 2022, while inflation touched 8%, the average dividend payer increased its payout by over 10%.

Every investment strategy comes with risk, including stocks. But we believe the potential benefits make them worth considering.

If you’d like to discuss your retirement income strategy, give us a call, or schedule a free appointment online today.