TRUESHARES

TRUESHARES

Monthly Dividend Income in Retirement

Roughly two-thirds of Americans who will reach retirement age between now and 2030 will struggle to meet their financial needs in retirement.1 They will have less than $500,000 saved by the time they turn 65.1 

The 80% rule is a popular method for determining how much money one needs in retirement. It recommends saving 80% of one’s pre-retirement income for each year of their expected retirement.2 Another method is the 4% rule, which suggests withdrawing 4% from an investment portfolio each year to make it last 30 years.2

Social Security makes up the majority of retirement income, with over two-thirds of retirees relying on it as their primary source of income.3 However, the average monthly social security benefit was only $1,919.40 in July 2024.2 Social Security only makes up an average of 40% of a person’s pre-retirement income.1 The rest has to come from…somewhere else. 

20% of Americans 65 and older are working or are looking for work,3 which suggests that they either have yet to retire or they still need (or want) to generate active sources of income to supplement their Social Security and savings. Others may be able to supplement with some combination of an employer pension plan, life insurance, annuities, 401k and Roth IRA accounts, short-term cash investments, a paid off house, bonds, and stocks.3

Dividends are a specific type of stock that can act as a source of income in retirement. Dividends are payments made by certain companies to their shareholders as a portion of company profits.4 They are most commonly offered by large, stable, well-established companies and offer specific benefits5 compared to other types of stocks or sources of retirement income:

  1. Cash Flow: Dividends are provided to shareholders in the form of regular cash payments, offering liquidity, reliability, and flexibility.
  2. Added Appreciation: The value of a dividend stock may also increase over time on top of the regular dividend payments.
  3. Inflation Protection: Dividend stocks can rise over time to counteract inflation. In fact, dividend growth in the S&P 500 outpaced inflation over the 150-year period from 1871 to 2021. During that time, dividends rose 3.7% per year compared to inflation’s 2%.6
  4. Market Agnostic: Stable dividends continue being paid out regardless of movements in the stock market. In extreme cases like the 2020 pandemic, dividends may be decreased for put on hold temporarily.

While dividends are typically paid out quarterly, two of TrueMark’s funds offer the above benefits as monthly dividend income to help supplement clients’ financial needs in retirement. The TrueShares Active Yield ETF (ERNZ) aims to provide above-average dividend yield compared to the broader market with a focus on consistent cash flow. The TrueShares Opal Dividend Income ETF (DIVZ) is a concentrated portfolio that focuses on high-quality dividend payers and fundamentals.

Both funds can help supplement other sources of income on a payment schedule that makes sense for real life. They are optimized for those who need consistent cash flow, particularly retirees, while still participating in the market.

  1. https://www.protectedincome.org/peak65-economic-impact-forum/ 
  2. https://www.investopedia.com/retirement/retirement-income-planning/ 
  3. https://money.usnews.com/money/retirement/articles/10-essential-sources-of-retirement-income 
  4. https://www.investopedia.com/terms/d/dividend.asp 
  5. https://www.forbes.com/sites/investor-hub/article/how-to-retire-dividends-how-much-you-need/ 
  6. https://www.blackrock.com/ca/investors/en/market-insights/dividend-growth-and-inflation
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