Retirement - The Traditional Way, Less and Less Reliable

This year, Social Security is not taking in enough to cover the benefits it pays out. Especially when you don't take in account the contribution of IOU interest. This hasn't been seen since the 1980s.

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          The systems Trustees predict a temporary rebound back into a surplus for the next couple of years, but they also expect a permanent shift to not enough money going in than what goes out. They feel it will happen in just seven years and by 2037, Social Security will only pay out 78% of the promised benefits.

          Do you think Washington will look into this gargantuan problem?

          No! They will do what they did in the 1980s, come up with this temporary solution, which will contain lower benefits and higher taxes for most Americans.

          This is so unnerving, especially when you consider the fact that, in 2009, the average benefit for an individual was a merely $1153 a month. Can you live on that. Can you pay for food or heat with that amount. I know I can't. So what's the solution?

          The Solution is: We are on our own when it comes to retirement. We are going to need supplemental Income.

          I know what your thinking, your thinking your not going to get anything from Social Security. That's just not true, especially if your about to retire or your very near to retirement. If this is you, a few simple steps can be done to boost your Social Security payments. And many defined benefit plans will continue to provide promised benefits, too.

          I truly believe that every American should not depend on any of the traditional means for retirement. Instead, we should save more on our own and be smart in investment decisions, so that we are prepared of what might or might not happen.

          For such a purpose, dividend paying stocks are just the ticket. Here's why:

          1. Conservative companies are yielding six or seven times as much as you'd get from a CD or a money market
          2. These firms, by their nature perform no matter what the economy feels like doing.
          3. Dividends represent non-refundable returns on your investment.
          4. They are also immune to the shenanigans from the accountants to make corporate earning reports these days.
          5. There is a super value at this moment due to March's lows.
          6. Your yield isn't fixed upon purchase, when the company increases its dividend, your yield rises.
          7. As history show, dividend paying companies lose far less during market declines.

          Back in 2002 for example, the S&P 500 had a very hard year, declining around 20 percent. Stock that don't pay dividends in the index fared much worse, they lost about 30 percent of their value. But dividend paying stock in the index only fell 11 percent over the same exact period.

          Guess what happened in 2008, the same thing, with dividend paying stocks outperforming non-payers by about six percent points. The best dividend paying stocks produced a positive return during the recent Bear Market.

          I guess, in a nutshell, if you are concerned about retirement and the state of Social Security, this is one way you could supplement your retirement income. Do your research and for the long term, dividend paying stocks are my method of choice.

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