Mike Hennessy, CEO and founder of financial advisory firm Harbor Crest Wealth Advisors in Fort Lauderdale, Florida, spoke with CNBC for their July 2020 article "Dividend cuts may mean rethinking your retirement income strategy."
The first three months of the year were strong for dividends, but this is because it was before the COVID-19 pandemic. During the second quarter — which ended June 30 — 639 companies cut or suspended their dividends. Investors will likely see lower dividend income in the second half of the year.
Retirees might want to structure their portfolio so their cash flow comes from total returns rather than solely income-producing investments. Investors will have to change their mindset about what it means to generate income from their portfolios.
Mike Hennessy, CFA, CFP®, said that retirees also could use the bucket approach — using fixed-income investments, such as U.S. Treasury bonds — to plan for income over a multiyear period.
“You effectively cover your living expenses for five or seven or 10 years by buying the appropriate fixed-income investments to match that time horizon,” he said. “Then, the remaining funds in your retirement account can be invested to capture long-term equity growth.” Read more retirement income strategies in the CNBC article here.
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