One thing most of us need in retirement -- besides hobbies and senior-citizen discounts -- is income. Once you stop working and your paychecks stop arriving, you'll need some money coming in with which to pay bills and live a comfortable life. Retirement income is critical, and it's up to you to plan where it's going to come from. There are plenty of possibilities besides Social Security, such as retirement accounts, regular investment accounts, dividends, and annuities. Let's review these...
Dividends are also a great retirement income source, and they have the terrific habit of being increased over time, too, when they're coming from healthy, growing companies. Imagine, for example, that your $300,000 investment account is kicking out $6,000 in dividends to you this year. That's an overall yield of about 2% -- not bad! But if those payouts are upped by an overall annual average of 5% over a decade, they'll approach $9,800 in 10 years. Dividends don't officially offer inflation protection, but they do often grow at a faster rate than inflation, which can be very welcome in retirement.
Source: Motley Fool
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