Home Forums Hunting & Shooting Hunter's Campfire 5 types of retirement savers - which one are/were you?

Barron's Article

1. Uncertain strugglers
2. Ambitious risk-takers
3. Cautious preparers
4. Optimistic dreamers
5. Purposeful planners

Keep Calm And Collect Dividends

Dec. 23, 2020 8:35 AM ET
Includes: AY, CEQP.PR, ECC, ECCB, ECCX, ECCY, NEWT, NEWTI, NEWTL, RLJ, RLJ.PA, SAF, SAK, SAR

Rida Morwa
High Dividend Opportunities
The #1 Service on www.seekingalpha.com for Income Investors and Retirees, 9-10% dividend yield.

Summary
- We hate being pigeonholed, yet we love to categorize things.
- There are five major types of savers.
- All five can find success in the market if they are wise.

Co-produced with Treading Softly

As part of our investment community, we like to welcome all types of investors, retirees, and savers among our diversified ranks. It makes for a very exciting place to be. Someone has the life experience to help answer your question, from CEOs to electricians to farmers, every single member is a valuable part of our growing community.

People, I've learned, often hate to be pigeonholed. They don't want to be categorized, yet we often love to categorize things, don't we? Sometimes those categories help us know how best to interact with people of different walks of life.

A recent study has shown there are five major types of retirement savers. The group behind the study is one that actively promotes annuities as a retirement plan. While I disagree with them there, in my opinion most retirees do not have sufficient capital to get an annuity that's paying a halfway decent income yield. What we can learn from this study is how these varied types of savers can all benefit from good old-fashioned dividend income investing. The Income Method is not limited to one type of saver or investor! Let's jump in.

Dazed and Confused - The Largest Group
In the study, they discovered the largest group and titled them "uncertain strugglers". This group expects to survive off of Social Security and the goodwill of their family members or children. They have no firm financial plan and their retirement planning is just as foggy.

Unfortunately, this group made up 29% of the study. Women disproportionately made up this grouping as well - 61% of it to be exact. These individuals have little to no immediate savings to draw off of and need to get their plan in action and house in order.

We see these individuals joining High Dividend Opportunities on a regular basis, they come in, start learning, and get to work. Why? They're driven by the reality of an uncomfortable and challenging retirement and want to change the path they are on.

These individuals would be best benefited from maintaining a healthy 40% allocation to fixed income. Focused more on preferred stocks, bonds, and baby bonds as those often offer a higher yield for a much lower risk if you are a conservative income investor. If you are an income investor like me, you need to get your hands on RLJ Lodging Trust, $1.95 Series A Cumulative Convertible Preferred Shares (RLJ.PA) which yields 7.5%, and Crestwood Equity Partners LP, 9.25% Preferred Partnership Units (CEQP.PR) which yields 11%. Both of these preferreds have a high degree of coverage but both also offer higher yields due to being part of unloved sectors – hotels and energy (note: CEPQ.PR issues a K-1).

Now, these two picks alone should not make up their portfolio, but they should be present to help maximize the income your money can make without outsized risk being present. If you don't have a plan for retirement, I strongly encourage you to get started on creating one, get money into the market to start working for you - even if only a little at a time – and learn more about how wealth is really made.

The "I've Got This"-ers - Dreamers and Risk Takers
The second group we'll address is a pairing of two of the five groups identified in the study. These groups were titled "Optimistic Dreamers" and "Ambitious risk-takers." Both of these groups are made up of mostly younger men and women. The dreamers are over half women (57%) while the risk-takers are 54% men, 43% of whom rely on an advisor. These groups feel confident in their retirement plans, while both do not show a high level of knowledge regarding retirement topics or financial planning. The Dreamers go on their gut instinct and expect to have active healthy retirements, while risk-takers feel they are retirement experts but also heavily rely on their advisors.

When moving to become an income investor, these savers will likely have a smattering of random holdings that will need to be trimmed or adjusted over time vs. immediately. Risk takers will love to learn how to use options to maximize their income potential from lower-yielding holdings while dreamers will enjoy knowing their holdings are leading to a better tomorrow.

Consider picking up Atlantica Sustainable Infrastructure (AY) which yields 4.5% for example. This company is working to grow and develop renewable energy and sustainable infrastructure around the world. Its dividend yield is growing, meaning younger investors buying it now can see a growing income stream without any additional steps. Likewise, AY makes a good target for learning options trading. If you get the shares called away or put to you, it's easy to jump back in or well worth keeping!

Prepared For Action - Cautious and Purposeful
The last two groups are the most conservative of the bunch. They are the "Cautious Preparers" and "Purposeful Planners." These two groups have planned and calculated retirement needs and in the case of the Purposeful Planners have ample retirement savings. Cautious Preparers stick to the tried and true retirement advice and as such some find themselves below their desired targets.

For income investing, these two groups can unlock large sums of income by moving their highly-conservative portfolios to a more income-oriented direction. The Cautious Preparers would be most comfortable holding high-quality baby bonds – they yield much more than "blue chip" stocks but also provide the security blanket they enjoy. Purposeful Planners may not need the added income, and often are the target of annuity companies, but could still see their income easily grown via buying debt from smaller firms. These two groups could easily allocate large sums - upwards of 80% of their portfolio to fixed income, and while lower yielding still see strong income that would likely never waiver.

Eagle Point Capital 6.6875% Notes (ECCX) yielding 6.7%, Saratoga Investment Corp., 6.25 % Notes (SAF) yielding 6.2%, or even Newtek Business Services Corp., 5.75% Notes (NEWTL) yielding 5.7% all offer prime opportunities to see yields above the market with risk lower than most high yielding choices offer.

Taking funds and adding to these various fixed-income securities can turn a low-income portfolio into a higher one with little effort and no less conservatism.

Conclusion
As we all make our way through the market on our journey to retirement. Studies show that five types of savers exist, all of which could benefit from an immediate income, high-yield approach. The Income Method that High Dividend Opportunities follows can enable all types of saver and investors to see more income from their portfolios without dialing up the risk.

As we looked over them, fixed income securities play an important role in anchoring your portfolio while other companies and investments flesh it out. If you have more saved and need less yield from your holdings, shifting that money into baby bonds, bonds, and mostly preferred stocks to provide an easy way to get more income from your portfolio without additional risk. Our Model Portfolio is the best resource for preferred investors. Why? Because my own retirement portfolio is composed 40% in preferred stocks. I only recommend what I buy!

Take a moment and consider how well you've planned for your retirement, how much you have saved, and how much you'll need your portfolio to generate. Re-read the types of savers and use the guidance attached to help you get your portfolio in order.

None of the above....

I am all of the above....
With a strong dose of rebel entrepreneur mixed in......

Wing and a Prayer Group

Somewhere between 5 and 10.

We're in the number 5 category. Planned and invested for 30 years, between real estate and investments have done well. Would hate to see a crash like 08 again, getting to old for that chit to happen again.

I've been saving and investing for retirement since i was 21. It pays off, no pun intended.

Why retire? Work hard and get promoted until all you do is stand around. I've seen Matlock, I'd rather go to work. I also watched what happened to my Dad and Father in law and neighbor when they retired. I hope I work until I die. I hope I die at work, to be more precise. That said, I'm a #5. I don't know if I trust the stock market so I have real estate investments as well.

Done well. Planning, the long game, a few risks here and there.

This market seems bubble-ish to me. Riding the hits from the fed stimulus and not much else.

#5 My wife and I planned. I retired at age 55 and my wife at 56. In May I'll have been retired for 10 years.

No plan whatsoever.

#5

Psychobabble wrote by a woman.

My in-laws are freakin loaded.

#6 - save just enough to OD on whores and coke a year or two after i retire. leave a semi decent looking corpse.

In my late 20's I began to realize that the best way to make money is to have money. When I finally realized what the term "compound interest" really means, it became time to start building some sort of portfolio. Glad I stuck with it and now I'm better off than I figured I would be at age 70. Having a good financial advisor that I trust for the last 30 years sure has helped.

We live off SS and rental income, and so do our cattle. Trump's policies have been hard on the farmers and fisherman, but I thought it was worth it, now it appears that it wasn't. The FRLA claims over 50% of the restaurants and motels are operating in the red.
If the checks quit coming for all the retired civil servants, freeloaders and deadbeats the other half will know how it feels to be kick in the guts by the government.

That’s a plan in and of itself. It’ll all work out.

Or not.

There should be another category.

Somewhere between flippant and glib.

I don’t know if I’ll ever retire. I’m almost 50, self employed and like my job. Started slowing down a few years ago. Prior to Covid I was up to about 8 weeks a year of time off for hunting and travel with the family. Had cancer when I was in my late 30’s and tumor markers never went back to zero. I can’t see putting off things I want to do in order to save for later. It might mean I have to work a couple days a week if I make it until my 70s but I’m good with that.