Consider all options for new income
While any one of the three ETFs above will satisfy most retirees’ needs for dividend income, you always have the option of constructing your own “fund” and avoiding expenses by simply buying the stocks held within each ETF. This strategy is more complicated but can save you a bit on expenses and achieve nearly the same dividend results — if you have the time, energy, and inclination to do so.
Alternatively, you can focus on total return (capital gains plus dividend income) when thinking about how to invest your retirement savings. With that said, it’s wise to not rely too much on dividends when thinking from a “total portfolio” perspective. Before concentrating your portfolio too heavily on one income generator, consider all streams of income — Social Security, pensions, IRAs, part-time work — when devising a broader strategy (and tax plan) for your retirement years.
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