Dividend Investing in Your 70s

Is it too late to start dividend investing in your 70s? Of course not. Plus, you will have to find a way to keep your 401K and Roth IRA growing throughout retirement and beyond.

Welcome back to the Dividend Investing at Any Age Series (20s, 30s, 40s, 50s, 60s), where we build investment strategies for our entire lives.

Three ways to choose. You’ll have a couple of options if you have a nice-sized 401K retirement portfolio. You can let it grow until you must take mandatory withdrawals, or you can use it to build a brokerage account. 

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For now, let’s remove the tax situation from the equation. Let’s talk about how comfortable you want to live and who you want to help with your money.

You can take three distant paths with your money: index funds, dividend growth stocks, and income products.

1. You can build an index fund portfolio if you want to leave a high-growth portfolio to your kids and grandkids.
2. You can build a dividend growth portfolio if you’re going to leave a medium growth portfolio to your family while making a medium revenue stream for yourself.
3. You can build an income portfolio if you want to leave a low-growth portfolio to your family while creating a high revenue stream for yourself.

If your cash pile is inside a Roth IRA, you will have some fantastic options available to you. However, remember your kids will have to liquidate the account ten years after your death.

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Why take money out of a 401K? You can keep your money in a 401K, using the 4% rule to attempt to outlive your money.

I feel that this creates more fear than it is worth. You won’t have the knowledge or education to make decisions on your own. You’ll most likely have to depend on a financial advisor for assistance.

By taking your money out at the appropriate age, you’ll have a chance to take control. You can create an emergency fund, invest in savings bonds and treasuries, and create some dividend accounts. 

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You’ll depend on three factors outside your control by leaving your money directly in a 401K fund.

1. The fund manager. Most of these 401K have active managers. It is incumbent on them to slowly transition your high-growth portfolio to low-volatility bonds and stocks.
2. The stock market. The money in your 401K will be in the stock market. Sure, you may have some bond funds, but they also trade on the stock market.
3. Inflation. We have no idea how inflation will affect us every year. However, the higher the inflation, the more you will need to withdraw each year.

Let’s make a withdrawal. Let’s say you have $1 million in a standard taxable 401K. If you withdraw your money after 59 ½ years old, you won’t pay the penalty, but you’ll have to pay taxes.

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Let’s say you have $600,000 left after taxes—now it’s time to build a long-duration portfolio where you completely control your future.

1. Emergency Fund. Put $100,000 into an emergency fund consisting of cash, high-yield savings, CD Ladders, and Series “I” Bonds.
2. Treasury Bonds. Put $100,000 into 4-5% bonds if they are available. 
3. Index funds. Put $100,000 into index funds for growth. They also pay a tiny amount of dividends.
4. Dividend Growth Investing. Put $100,000 into DGI stocks. This will give you growth and income.
5. Income Portfolio. Put $200,000 in an income portfolio that could yield you $20,000/year.

Adjust as required. You can adjust as required for your needs. Also, remember you can create more income outside of your investment portfolio. If this is not enough cash flow, consider renting rooms, cars, parking space, or land.

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More control, less stress. Yes, it looks nice to have $1 million in a 401K; however, that is static wealth. We want functional wealth that we can grow each year by ourselves. 

You can reinvest your bond income into high-yield products if you fear inflation. If you fear a recession, you can reinvest your high-yield dividends into bonds. 

Although you are in retirement, your income should increase every year. Your DGI portfolio should increase because these companies are raising their dividends.

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Reinvest 30% of your income portfolio’s revenue to ensure your payments increase each year to beat inflation. The first years may be a little tight, but your portfolio will continue to compound. 

More education, less stress. Fear comes from the unknown. If you plan to trust a financial advisor with your million dollars, prepare for sleepless nights.

You have the brain power and the time to make your own judgment calls. You have an emergency fund and bonds to assist you if the economy tanks. 

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You can also start an online business or start creating content as a way to hedge against the unknown.

You should not live a life of fear during retirement. Take control of your resources, and protect them, but also learn how to grow the assets around you.

Social Security. You want to get to the point where you can invest your entire social security paycheck—ensuring you’ll never worry about money again.

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If you can get to the point of investing your entire social security check, you can build a pretty hefty income or DGI portfolio for your kids and grandkids.

Again, the first few years will be tight when building your all-weather retirement portfolio. But once you reinvest 30% of your income, you’ll see the impacts immediately.

You can also continue building your emergency fund directly from your portfolio’s revenue. The only barrier is your fear.

Conclusion. Investing in your 70s should be the most fun in your life. There is nothing to fear because you have put measures in place to hedge against the unknown.

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The most important tool at your disposal is your education and knowledge of finances, business, and markets. 

The stock market is not a wealth generator. Therefore, you should make the majority of your revenue from the real world. You do this by adding value in business, content, rentals, and teaching.

If your retirement plan is just to sit around watching Netflix and playing golf, you may have a hard time. If you plan to keep learning, investing, and helping others, good things MUST come your way.

Show grace for everything you have, always look to the future, stay grounded in the present, and you will have an excellent Happy Cash Flow Retirement. Dividends will play a remarkable role in your future endeavors. Good Luck!

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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it.  I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing