Hello again.  If you have a retirement plan of any type, odds are its tied in some way, shape or form to the performance of our U.S. equity or bond markets.  The good news, is that since the recession of 2008-2009 began, those asset classes have staged a steady, if not impressive comeback. Your “pile” has probably grown, net of any needed withdrawals. The not so good news, is that stock and bond markets don’t always go up, and eventually, some sort of correction is bound to occur.

According to an analysis of the latest census data, the typical U.S. household headed by a person age 65 or older has a net worth 47 times greater than a household headed by someone under 35. We have more investments to protect. But we are living longer as well, so striking the right balance between investing and security has never been harder to achieve. I remember years ago, when as new broker at Morgan Stanley, they encouraged us to employ a “clients age in bonds” strategy. In other words, if you were 69, 69% of your portfolio would be invested in bonds, 31% in stocks… If you were 50, it would be more of an even split between stocks and bonds. This thinking doesn’t work in our current world.

Interest rates from bank CD’s and Money Markets, which used to help pay utility bills or at least a nice dinner out, are so paltry, they don’t cover the cost of inflation. Unless you go into speculative bonds, the yields aren’t much better. If you are counting on your retirement dollars to get you thru, those investments need better returns, and by definition, somewhat more risk.

Dividend paying stocks have become one clear answer. Solid companies which pay quarterly or monthly dividends can give an investor a way to achieve a reasonable rate of return, say 3% – 8%. At the same time, the value of the stocks owned  can increase with a rising stock market. This may be out of some Sixes and Sevens comfort zone, but the new normal requires us to be at least more aware of this low interest rate environment which has been with us for several years now, and will most likely be with us for several years to come.

Remember, the stock market is at all-time highs, and someday there will be a correction. But that day hasn’t come yet. I heard plenty of smart people on Wall Street claim the markets would crumble in 2013, and they were not even close to getting it right.