Here are some basic guidelines to consider as you decide when to claim Social Security: Monthly payments vary a lot. You can start taking Social Security benefits at age 62, which shouldn’t be confused with age 59 1/2, at which you can take penalty-free withdrawals from tax-advantaged retirement savings accounts like IRAs and 401(k)s. But taking the benefit as soon as you can will lower your monthly payment amounts throughout retirement. When deciding when to claim Social Security, you’ll want to factor in your retirement savings, either in the form of pensions, tax-advantaged accounts or other investments. There are several different strategies for maximizing Social Security checks as a married couple: Claim and suspend. Basically, the higher-earning spouse will claim Social Security benefits at full retirement age, but suspend payments indefinitely. The lower-earning spouse can then claim a spousal benefit, while the higher-earning spouse’s suspended payments increase his or her Social Security benefit over time. Waiting until full retirement age to collect Social Security will increase your spouse’s survivor’s benefit, so it’s usually a good idea to wait until at least full retirement age to claim benefits. Deciding to keep working. But if you are below full retirement age, you will get reduced benefits if you make over a certain amount - $1,310 per month for 2017. One more thing to keep in mind is that if your benefits are withheld because of your earnings, your payments will be increased once you reach full retirement age.
They call it the “silent wealth killer” for a reason: it takes the 2.2% yield you’d get from say, a 10-year Treasury note today and almost completely wipes it out.
And if this hidden threat perks up even a little bit (as it’s certain to do), it will push your average Joe (or Jane) into negative yields, no matter if they’re playing it “safe” in Treasuries or CDs or holding tight to the big names of the S&P 500.
I’m talking about inflation—and I’ll name 3 terrific investments that safeguard your income when it flares up in just a moment.
Before I do, let me just say that I know that inflation hasn’t been on anyone’s radar for years. But before you roll your eyes, consider this: even though personal consumption expenditures—one of the Fed’s main inflation gauges—were just 1.7% in April, the SPDR S&P 500 ETF (SPY) yields just 1.9% as I write.
It doesn’t take a math whiz to see that this leaves us with just 0.2% “real” income on the S&P 500 and 0.5% on the 10-Year—so we’re not retiring on either one!
A Slow Burn
Inflation is an even bigger worry if you’re retired or near retirement. That’s because, as my colleague Michael Foster pointed out in a June 6 article, the cost of health care rises far faster than what you’ll pay for many other things.
According to May 2016 numbers from HealthView Services, a healthy 65-year-old couple retiring this year can expect to spend $377,412 in today’s dollars on health care throughout their golden years.
That’s shocking, but it gets worse.
Because the average annual inflation rate for retiree healthcare costs is expected to clock in at 5.1% over the next 20 years, easily doubling up today’s inflation rate and the yields on both the “sacred cows” of the S&P 500 and the 10-Year.
The bottom line: If you want to keep your income safe, you need to prepare now.
Don’t Just Weather Inflation—Attack It
We’re going to do just that by zeroing in on stocks that raise their payouts faster than inflation and the market as a whole—preferably a lot faster.
That’s where the three names I have for you today come in. All three have solid dividend-growth histories and the strong cash flows they’ll need to keep those inflation-crushing payout hikes coming.
And here’s something that would make first-level investors go pale: all three are real estate investment trusts (REITs), investments most people think get hammered when inflation strikes … but that’s a myth, as I’ll show you in a second.
3 Proven Inflation Killers
When researching REITs for my Contrarian Income Report service, I like to start by looking at the past. And there’s no better place to look than at the last sustained period of soaring inflation,…