ARBOR WEALTH: Inflation is only the half of it

Published: Thursday, February 7, 2013 at 17:27 PM.

Dividend-paying equities act much like bond coupon payments, except that they may provide better opportunities for growth along with their payout. We favor American companies with broad, global appeal, which have historically increased their dividend payouts to shareholders.  So when the cost of half and half goes up, your increased dividend helps you pay for it.  We believe dividend-paying stocks will be even more important in the years ahead, as millions of baby boomers retire and many with a nest egg less than what they hoped to have. 

A recent Wall Street Journal article by Lauren Weber entitled “Americans Rip Up Retirement Plans” addresses this issue.  “Nearly two-thirds of Americans between the ages of 45 and 60 say they plan to delay retirement,” says Weber, quoting an upcoming report from the Conference Board. Just two years ago, only 42 percent of those interviewed planned to delay retirement. “The increase (in the number of people putting off retirement) was driven by the financial losses, layoffs and income stagnation sustained during the last few years of recession and recovery, said Gad Levanon, director of macroeconomic research at the organization and a co-author of the report…”

The American work force, along with the population, is aging. 

“The labor force has been getting older for decades for reasons that range from longer life spans and better health to companies’ replacement of defined benefit pensions with higher-risk 401(k) plans,” says Weber. And according to the survey, a larger percentage of our aging labor force is going to keep working.  Weber suggests that despite recent upticks in the economy, many older Americans “now find that leaving the work force on their original timeline is no longer viable…”

Levanon counters that many folks will still retire when they thought they would. “Research shows that intentions don’t necessarily align with reality, and people often end up retiring as they had expected because of health reasons, job losses or simply a miscalculation of their own desires,” says Weber.

Margaret R. McDowell, a chartered financial consultant and accredited investment fiduciary, is the founder of Arbor Wealth Management, LLC, a fee-only registered investment advisory firm located near Sandestin. Call 850-608-6121 or visit www.arborwealth.net for more information. Arbor Wealth specializes in portfolio management for clients with $250,000 or more of investable assets.

 



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