3 Great Retirement Investments (and 2 Ticking Time Bombs to Avoid)

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By Brett Owens

Today weaEURtmre going to talk about the single biggest risk you face in your golden years.

But donaEURtmt worryaEUR"IaEURtmll also show you how to clobber that risk and set yourself up for an easy $40,000 in cash in every year of your retirement. More on that below.

First, the risk IaEURtmm talking about is the very real chance youaEURtmll outlive your nest egg. Because a sweeping study says you could be very wrong about the length of your retirement.

A Hidden Danger

HereaEURtms what the numbers say: in 1992, the University of Michigan asked 26,000 Americans 50 years of age and older how long they thought theyaEURtmd live. The results, collected 25 years later, are staggering.

When first asked, 7% of participants said they had zero chance of making it to 75. But despite their pessimism, 49.2% did just that. Of the folks who gave themselves a 50/50 shot, 75% went on to do so.

So now might be a good time to rethink your expectation of how long youaEURtmll liveaEUR"because youaEURtmll likely be around a lot longer!

DonaEURtmt Buy Wall StreetaEURtms Retirement aEURoeSolutionaEUR

HereaEURtms where Wall Street comes in, with a aEURoesolutionaEUR only it could cook up.

ItaEURtms called the 4% withdrawal rule, and it recommends supplementing your dividend income by withdrawing 4% from your capital every year in retirement.

Trouble is, every few years you get a situation like this:

The 4% PlanaEURtms Fatal Flaw

In fact, weaEURtmre seeing one right now due to the marketaEURtms sharp selloff! Any retirees holding Microsoft ( MSFT ) in late aEURtm08 or aEURtm18 are withdrawing money at exactly the wrong time. MicrosoftaEURtms dividend is fine, but if you need income, you must sell even more shares with the price low.

Remember dollar-cost averaging, which you may have used to build your nest egg? This is the same phenomenon but in reverse! In this scenario,A youaEURtmre selling more shares when prices are low and fewer when prices are high.

ItaEURtms a straight path to prematurely running down your savings. And it pains me that so many folks take it as gospel.

But donaEURtmt despair, because thereaEURtms an easy solution: build a retirement portfolio with an outsized dividend yield. IaEURtmm talking an 8% average payout or better . ThataEURtms enough to live on dividends alone with as little as $500,000 saved up.

IaEURtmll show you the two asset classes (and three specific buys) that can get you there just a little further on.

But bear with me, because before we build our high-yield retirement portfolio, we need to purge our nest egg of the aEURoesacred cowsaEUR that look safe but actually drain your returnsaEUR"including these two:

Fixed Income

As I write, 10-Year Treasuries yield 3%. You could get a similar rate from a CD aEUR

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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