Here is some bad news: The average monthly Social Security benefit was recently just $ 1,544 – about $ 18,500 a year, and not enough for most of us to retire comfortably. The news may not be so bad if you have earned something above average over your working life, as this means that you will earn more. But not This one a lot more. If you average your maximum earnings and delayed receiving your benefits until this year, when you reach 70, you will receive $ 3,895 per month. That’s a lot more, but it’s still only about $ 46,750 a year.
Fortunately, as long as you have a few years before you retire, there are steps you can take to fund a better retirement.
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Increasing your financial security in retirement
Here’s how to build a more robust income stream in retirement:
- Save more aggressively. Saving just 10% of your income will not be enough for most Americans. Calculate some numbers and find out how much you need to punch.
- Investing more effectively. For long-term dollars, consider low-market broad-index funds or individual stocks. Shares that pay dividends can be particularly effective as you approach and enter retirement.
- Consider Annuities. Immediate annuities can deliver specific sums to you each month for a specified period – even for the rest of your life.
These are some of the possible ways to increase your retirement income. Here is a more detailed analysis of some individual stocks that can create wealth for you over time, including two that also generate dividend income.
No. 1: Verizon Communications
Verizon Communications (NYSE: VZ) it is certainly a household name, and it is also the giant of a telecommunications company, with a market capitalization recently close to $ 225 billion. It also offers a dividend, which recently yielded a heavy 4.6%. This payment has been increased for 14 consecutive years and has been driven by an average annual rate of 2% for the past five years. With its payout ratio (the share of its earnings paid out as dividends) recently below 60%, Verizon appears to have plenty of room for further dividend increases.
The company’s offerings include wireless and fiber-optic networks, including a 5G network that will help boost business as sales of 5G smartphones increase. Verizon has more than 94 million retail customers and more than 26 million commercial customers. Its media brands (such as Yahoo, TechCrunch, Engadget, Rivals, RIOT, #BuiltByGirls, Autoblog and AOL) are accessed by around 900 million people worldwide. Clearly, Verizon will not be leaving anytime soon, and with a recent price / earnings (P / E) close to 13, its price is also attractive.
No. 2: Johnson & Johnson
Johnson & Johnson (NYSE: JNJ) it is another known name, with a market value recently exceeding US $ 425 billion. It is also a dividend payer, recently earning 2.5%. This may not seem like much, but it exceeds the average yield of the S&P 500. In addition, it has increased for 58 consecutive years and has grown an annual average of 6% over the past five years. With a payment rate close to 72%, this payment seems safe and has room for growth.
You may not appreciate the scope of Johnson & Johnson’s business. Best known is its consumer products division, which houses brands such as Listerine, Band-Aid, Carefree, Stayfree, Tylenol, Motrin, Benadryl, Zyrtec, Visine, Nicorette, Neutrogena, Aveeno, Rogaine and Lubriderm – among many others. But the company has two other major divisions: medical and pharmaceutical devices, the last of which has a COVID-19 vaccine that may have received approval from the Food and Drug Administration at the time you read this article. Its pharmaceutical offerings (including many in its pipeline) are focused on immunology, cardiovascular and metabolic diseases, pulmonary hypertension, infectious diseases and vaccines, neuroscience and oncology.
No. 3: Amazon.com
Like Johnson & Johnson, there is much more to Amazon.com (NASDAQ: AMZN) than it looks. We are all very familiar with its vast and dominant e-commerce business, which contributes heavily to its annual revenue of around $ 386 billion. But Amazon also includes its dominant and growing Amazon Web Services (AWS), which generated more than $ 45 billion in fiscal 2020, an increase of 30% over 2019. The company is also branching out into large markets, as health, which offer great growth potential.
Meanwhile, Amazon’s Prime service also deserves attention, as it covers hundreds of millions of members who pay a subscription fee to access an ever-increasing set of benefits, such as fast shipping, Prime Video, Prime Reading, Music Prime, Amazon Gaming, Amazon Photos and more.
Amazon.com, despite its enormous size (its market value recently exceeded $ 1.6 trillion), does not pay dividends – largely because it is still growing rapidly and needs all of your earnings. It is easy to imagine a point in the future where management decides that it can save a good portion of the profits to distribute in the form of dividends, but even if it does not, the stock price will likely continue to rise in the years to come, and that it can reward retirees and pre-retirees very well.
These are just three of the many solid actions that can help you build the wealth you need for your retirement. Dive into anything that interests you and look for more portfolio candidates if you need them. Also, remember that simply parking most or all of your long-term money in a broad, low-rate market index fund will also be useful for you.