There’s a serious disconnect happening right now – one that seems to be impacting retirees but has implications for anyone planning to retire someday.
On one hand, U.S. companies are paying out cash dividends at a record pace (see Item 2 below). In fact, I read an article in the Wall Street Journal last week saying that Americans earned about $3.7 trillion from interest and dividends in the first quarter of 2024 alone. That’s 26% more income than just four years earlier – far outpacing the rate of inflation over those same four years.
Yet at the same time we’re seeing this surge in investment income taking place, we also note that nearly a third of current retirees are now seriously considering returning to the workplace because inflation has driven up their cost of living (see Item 4). And here’s the irony: economists worry that more income will lead to more spending, which will keep inflation at elevated levels.
So, how is it that America’s retirees can be hurt so much by inflation when their investment income is rising faster than their costs? Simple. A huge percentage of those retirees stopped working without sufficient savings. And even some who could afford to retire invested their life’s savings in ultra-conservative fixed-income vehicles or annuities with fixed payouts that will never increase. They’re trapped in a rising-cost retirement with investments that can’t protect them. It’s back to work.
The answer – as I’ve preached in this very resource for more than a decade – is to invest in things that not only pay a consistent income, but that increase that income over time. That’s exactly what we discussed in last Saturday’s seminar, and it’s a theme that runs through much of this week’s Wealth and Wisdom.
It’s unusual to see corporate earnings grow while the economy is slowing – but it’s happening now. (Reading time: 2 minutes)
U.S. companies have never paid more dividends than they are today – after a 7% jump in the first quarter of 2024 alone. (Reading time: 3 minutes)
Dividends are responsible for more than a third of equity market returns since 1940 – and increased nearly twice as fast as inflation. (Reading time: 2 minutes)
After three years of sharply rising expenses, nearly a third of retired Americans are considering a return to the workplace to make ends meet. (Reading time: 3 minutes)
Hear about one retiree’s decision to return to work after two and a half years – and the five reasons he did it. (Reading time: 5 minutes)
To have a financially successful retirement, try to have these boxes checked by the time you reach age 60. (Reading time: 4 minutes)
Women typically earn less, save less, and live longer than men – which makes Social Security decisions even more important. (Reading time: 4 minutes)
A new study says ‘yes’. But there’s a lot more to financial success than picking investments. (Reading time: 3 minutes)
His books and radio show have helped millions become better off financially – but some of his key recommendations simply don’t hold water. (Reading time: 7 minutes)
Summer is a great time to start teaching the next generation about how to handle money. Here’s how to get started. (Reading time: 3 minutes)
Words to the Wise
“How far you go in life depends on your being tender with the young, compassionate with the aged, sympathetic with the striving, and tolerant of the weak and strong. Because someday in your life you will have been all of these.”
– George Washington Carver
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