The basic
steps for getting to and living in retirement look something like this:
--Save money.
--Invest
that money wisely.
--When you
have enough money, retire.
--Live
comfortably by drawing down on what you have saved and invested over the years.
The
conventional wisdom used to be that you could safely draw down about 4% of your
portfolio in retirement without worrying about running out of money over a
period of 30 years.
That wisdom
is no longer conventional. It has fallen out of favor, in large part due to
low-interest rates. When short-term treasury bills were yielding more than 4%,
guaranteed, it was a lot easier to pull off. Now, at more like 1%, not so much.
Live The
Dream
The dream
scenario for a retiree is a guaranteed source of passive income, like a salary
that you don't have to work for. Something that, through thick and thin, will
always kick out monthly or quarterly checks for you. That way, you don't have
to worry about low-interest rates or stock market fluctuations.
Now,
"guaranteed" is a tough hurdle, and isn't a word you can often use
when you're talking about the stock market. In fact, about the only thing
that's guaranteed is that stocks will go up and down, and you won't be able to
predict when, especially in the short term.
But with
some stocks, you can get reasonably close to guaranteed about one other thing:
Dividends. There are a lot of blue-chip names out there that have paid
dividends--and annually increased their dividends--for many years, and even
decades. Past performance is no guarantee of future results, as you may have
heard, but dividends from some stocks might be as close to a sure thing as you
can expect out of the markets.
