The Average American Retires at 62. Buying These 3 Investments Now Could Make Your Retirement Much More Comfortable

As the average American retires at 62, it's crucial to plan for a comfortable retirement. With inflation on the rise, it's essential to invest in assets that can keep up with or even outpace the rate of inflation. In this article, we'll explore three investments that could make your retirement much more comfortable.

1. Dividend Stocks

Investing in dividend-paying stocks can provide a consistent income stream, which is particularly important for retirees. One fund to consider is the Vanguard Equity Income Fund Investor Shares (VEIPX). This actively-managed fund invests in large-cap value stocks and provides a source of current income. As of March 31, 2022, the fund had a 30-day SEC yield of 2.47%, which can provide a steady stream of income for retirees.

2. Bonds

Bonds can provide a steady income stream through interest payments. The Vanguard Total Bond Market ETF (BND) is an option to consider. This fund invests in a broad range of investment-grade bonds and has a low expense ratio of 0.035%. However, it's important to note that bonds are sensitive to interest rate changes, and their prices may decline when interest rates rise.



3. Income Funds

Income-oriented balanced funds, like the Vanguard Wellesley Income Fund Investor Shares (VWINX), provide exposure to both investment-grade bonds and equities. This fund has a low expense ratio of 0.23% and has outperformed its benchmark index. As of March 31, 2022, the fund's one-year and 10-year returns were 3.52% and 6.87%, respectively.

Inflation has a significant impact on the purchasing power of the income generated by these investments. As prices rise due to inflation, the value of the income received from investments decreases. To maintain the same purchasing power, you would need to receive more income to offset the effects of inflation. This is why it's important to consider the impact of inflation when investing for retirement and to choose investments that have the potential to keep up with or exceed the rate of inflation.

In conclusion, investing in dividend stocks, bonds, and income funds can help retirees maintain a comfortable lifestyle during retirement. By choosing investments that provide a steady income stream and considering the impact of inflation, retirees can better prepare for the future. It's always a good idea to consult with a financial advisor to create a personalized investment plan tailored to your specific needs, risk tolerance, and time horizon.