The retirement rules have changed. 30 years ago, being “in” retirement meant getting out of growth stocks, looking for income only – maybe even getting out of stocks altogether. The objective was to generate significant cash volume while minimizing risk. Those are still worthy goals, but the landscape for achieving them has changed. No longer can retirees count on fixed income staples like CDs or money market funds to generate the return they need to ensure they don’t outlive their money. Growth has become a necessity not just before retirement but into retirement. This is putting individual growth stocks back into play as part of an asset allocation strategy for a retirement portfolio. Fortunately, the landscape for growth stocks has changed as well.
When the words stocks and retirement are used, dividend stocks immediately come to mind, and with good reason. Dividend stocks have been a staple of many retirement portfolios. When considering a dividend stock, however, it’s wise not to simply chase the highest yield. Instead, investors should look for companies with a solid track record of delivering consistent dividends. These are the dividend aristocrats. They have issued a dividend in at least 25 consecutive years and, in many cases, have increased the amount of their dividend every year. As a retiree, that’s the kind of reliability you’re looking for. However, there are a number of dividend stocks that can also provide a healthy level of growth. This means that retirees can expect their portfolio to at least keep up with the cost of inflation in their golden years.
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