The furious search for an income stream in this low-rate environment is leading retirees down an uncertain path. For most of this year, advisers have been talking up blue chip dividend-paying stocks as a substitute for CDs, annuities and bonds. Many of their clients have taken the advise, and so far it’s not working out all that well. On the surface, swapping low-yield fixed income products for big-company stock dividends seems like a wise move.
Yet stocks and bonds are on opposite ends of the risk spectrum. You have to ask: Is the extra yield worth the wrenching ups and downs of the stock market? Be careful. Your answer today might not be your answer tomorrow. In the real world, retirees with no ability to replenish their assets have a difficult time accepting any hit to their principal even if it may prove fleeting and the dividends keep rolling in.
Source: Time Moneyland
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