A little thought and planning can go a long way, overcoming what Social Security isn't likely to do for you.
It's official: Social Security's cost-of-living adjustment (COLA) for 2025 has been announced. Come January, current beneficiaries will be receiving 2.5% more than they're getting now, mirroring 2024's overall inflation rate.
Somehow, however, it doesn't seem like enough. Although it's a purely mathematical matter, most people -- and retirees in particular -- seem to be struggling more than they have in the past to keep up with rising costs. The little extra expenses can really add up in the aggregate.
With that as the backdrop, although I'm not retired yet, those days are on my radar. Here's what I'm planning to do, based on what I'm seeing now. Feel free to borrow my inflation-beating retirement strategies for yourself.
Buying proven dividend growers
Broadly speaking, the older you are, the less exposure to the stock market you're supposed to take on. When you need safety and certainty, more reliable investments like interest-bearing bonds and even higher-yielding cash balances are prioritized. And understandably so.
Here's what I've decided, though: With interest rates finally at least a little higher, the trade-off for owning markedly more fixed income and fewer equities isn't worth it any longer. No, I'm not going nuts -- I'm still going to want and even need reliable investment income. I'm also going to need at least some growth (price appreciation) from the stocks paying my growing dividends.
This will be best achieved by names like The Coca-Cola Company (NYSE: KO) and Procter & Gamble (NYSE: PG). They may not have the biggest dividend yields, but they offer above-average yields of 3% and 2.2%, respectively, and their dividends' growth rates outpace average long-term inflation rates. Both companies have raised their payouts every year for decades. Both stocks also make respectable price progress, given enough time.
One prospect I'm no longer interested in owning? Treasury Inflation-Protected Securities, or TIPS. While these government-issued bonds achieve their intended goal of adjusting their interest payments in step with inflation, they never actually beat inflation. Sooner or later, you're going to want a little bit more of an edge.