Close to half of Americans say that financial stress has a negative impact on their mental health. For retirees, the combination of not having a job and needing to make savings stretch for the rest of their lives, plus fears of a market crash, can make stress an everyday experience. So, let’s talk about an investment strategy that can greatly reduce the stress of worrying about your retirement income.

A recent Bankrate.com survey suggests the following…

• 82% of American adults say money negatively impacts their lives.
• 56% of women and 47% of men experience mental health issues due to financial stress.
• 29% of adults say they worry daily about money.

The survey covers every demographic, with most of the respondents employed and of working age.

When you approach retirement, you must cope with different financial realities. First, the regular paycheck stops. Your income becomes Social Security, possibly a pension if you are lucky, and a lump sum of any retirement savings such as a 401(k) and your personal savings.

Most retirees need to get an income from their lump sum of savings (including their 401(k) amount) to allow a comfortable retirement. The money must last the rest of their lives, which could be 30 years or longer.

Traditional financial planning guidance recommends a balanced portfolio of stock and bond funds and a retirement income withdrawal of no more than 4% per year. However, that approach has several issues.

First, 4% may not be enough income to support your retirement plans. Four percent of a million dollars is just $40,000. Most people with a million in retirement savings would hope for more income.

Second, a stock market bear market means lower income from your portfolio. If the market is down 30%, your retirement income would also be down by 30%. Plus, you would be selling shares during a crash, which is when you want to buy stocks “on sale,” not sell them at a loss.

Finally, studies show that with the traditional balanced portfolio and a 4% withdrawal rate, you have at least a 20% chance of running out of money before you run out of time.

My Dividend Hunter service offers a different strategy for generating a larger income in retirement and ensuring that you will never run out of money.

The Dividend Hunter system comes with a recommended portfolio of high-yield investments, with an average yield running from 8% to 10%. The portfolio is diversified across individual stocks, ETFs, bond funds, and preferred stocks. I manage the portfolio to maintain the stability of the dividend payments.

Remember, financial planners recommend a maximum 4% withdrawal rate from your retirement savings. With the Dividend Hunter 8% or more yield, you can easily fund your retirement at a higher withdrawal rate. I recommend reinvesting at least a portion of your dividend income, but you could easily take out 6% per year and reinvest at least 2%, ensuring your income will increase every year.

The best part is that dividends are much more assured and predictable than stock prices. Knowing that your retirement income will be secure and growing definitely provides peace of mind.

If you are not yet ready for retirement, following the Dividend Hunter portfolio with dividend reinvestment will grow your income by the same 8% to 10% per year, making it easy to plan for when you will be ready.