How to Save Yourself from Social Security’s Failure

You have to get started now… [TradeSmith Daily logo] [TradeSmith Daily logo] June 14, 2024 How to Save Yourself from Social Security’s Failure By Keith Kaplan, CEO, TradeSmith Social security is failing. And no, that’s not an exaggeration meant to scare you. The Social Security Board of Trustees itself recently celebrated that it now expects to run through its cash reserves by 2035 — its centennial — rather than the earlier projection of… 2034. That doesn’t mean Social Security will go away entirely. It just means that — again, according to the government — payouts will go down to 83% of where they are now. If that happened today, the average check of $1,905 for retirees would drop to $1,581. That’s the impact facing over 52 million American retirees and their families struggling with inflation and high lending rates. And it’s just the beginning of the potential insolvency. What can the government do to fix this? Three things, none of which are great… and none of which any politician of today seems willing to do: - Raise income taxes - Raise the age when you can start to receive Social Security - Cut Social Security benefits All this is to say… you’d better have a “Plan B” if you don’t want to spend your retirement working. The government is not coming to save you from Social Security’s collapse. Luckily, we at TradeSmith have thought through this problem. And even if you’re just getting started today, we have a plan for you to supplement the extra income you’re going to need in retirement when, not if, Social Security goes bust. SPONSORED AD [Expert: The most important message you’ll see in 2024]( No matter how much money you have… How well-connected… Even if you’re retired with a comfortable nest-egg… The message I’m sharing today could be the most important message of 2024. In short, America is being invaded… But not by immigrants at the border. The invasion spreading across America is coming from the ports, highways, and railroads. AND it’s being invited in by the White House. Many will be blindsided, but if you prepare today, you could come out far ahead. [Click here to see how before it’s too late.]( Your Three-Step “Plan B” for Social Security’s Collapse Creating a “Plan B” for your retirement is simple in theory, but potentially difficult in practice. Luckily, the hardest step is the first one. So let’s start there. 1. Eliminate all high-interest-rate debt and ideally be debt-free. Don’t sit on any short-term, high-interest-rate debt (basically, everything but your mortgage and maybe your car loan). It demolishes your monthly income… and hands your hard-earned money over to the banks for no good reason. If you have debt, especially credit card debt, make paying it off your top priority before you move on to steps 2 and 3. I’m serious. You can’t proceed until this is done. Because quite simply, no passive income stream you build will be enough to offset a credit card balance growing at a 24% annual rate. Downsize… stop relying on credit cards… and make a smart spending plan where you pay off the debt, period. 2. Build up your rainy-day fund. This looks a bit different for retirees than it does for working people, but it’s just as important. You need a chunk of cash saved away for emergencies — whether it’s necessary home or car repairs, unexpected medical expenses, or anything like that. This is the middle ground between the three steps for a reason. You can’t have too much debt… but you also can’t be so invested that you don’t have any cash on hand. How much cash you’ll need will vary on your situation. If you’re working, three to six months of living expenses is a good bet. But if you’re already retired and looking for an estimate, just think about the most likely kind of major unexpected expense you’d face, figure out what that would cost, and then double it. That’s the cash you need on hand, and ideally in a high-yield savings account you can tap into at any time. 3. Invest in a mix of US Treasurys and high-quality, dividend-paying stocks. Now that your debt and savings are squared away, we get into the part where TradeSmith really can help: investments. To build the core of your “Plan B,” you need to invest in assets that generate income while you sleep. This is so important to anyone’s wealth plan, and it should be done as early in your financial journey as humanly possible. Think about Warren Buffett. Right now, he’s earning almost $8 billion a year in short-term Treasury bills, rolling them over and taking the proceeds month after month. He’s one of the richest people in the world and perhaps the most successful investor of all time. But he’s using the same tools you and anyone else can use to stay ahead. Treasurys should be roughly 10% to 20% of your income portfolio, depending on how much risk you want to take on with the remainder. Go for the shortest terms and the highest rates, to minimize your risk and maximize your returns. And as for the remainder, that’s where we start to talk about dividend-paying stocks. SPONSORED AD [Is Artificial Intelligence the Biggest Bubble in History?]( (Millions of Retirements to be Cut in HALF?) Is it any surprise 31 billionaires (including: Warren Buffett, Elon Musk, Jeff Bezos, and more) are quietly unloading their OWN stocks at record pace? [They’re getting OUT of AI (and Tech Stocks) before it’s too late](. But why? And WHERE are they moving their cash for the biggest profits, in 2024? [Click here to discover all the details](. Dividend Payers Are Your Retirement Lifeline Dividends are a slice of a company’s earnings, paid directly to shareholders. They’re an essential component of any retirement portfolio. After all, while Treasurys might help you stay ahead of inflation… stocks can do much better, especially when you combine capital gains with high dividends. Now, not all dividends are created equal. Many dividends, especially those with attractively high yields, are not sustainable. Even reasonable dividends may not be, either, if the company has not been issuing them for a long time or has a volatile business model. That’s why it’s so important to focus on quality companies when you go to build a long-term dividend portfolio. You want companies with positive growth rates and low volatility — two of the four factors that make up our Business Quality Score (BQS). The rockstars of the dividend world are Dividend Aristocrats. These are companies that have not only issued a dividend for at least 25 years, but they consistently raised the dividend for every one of those years. Winners tend to keep on winning. And if you combine these two factors — quality and long-term dividend payers — you’ve done half of the work of creating an effective dividend income portfolio. The remaining half would be gathering up all the names that meet these criteria and figuring out how much to invest in each. Normally, this would require a lot of research and math. But here at TradeSmith, we’ve built two incredible tools that help you manage all of this in seconds. The first is our Screener. With it, you can quickly screen for stocks that meet the right criteria to help us build our watchlist. For example, here’s how I set up a Screener to look for high-quality, dividend-growing stocks: This will give you stocks in our Dividend Growers strategy, which singles out companies that boast consistent dividend raises. We only want stocks with a dividend yield above 1% and a Business Quality Score over 60. Most importantly, we want stocks in the Green Zone — our proprietary measure of positive momentum. Sorted by market cap — larger stocks are generally more stable and less volatile — we get the following 10 stocks at the top of the list: With just these few parameters, we have a list of high-quality, mostly low-volatility, diversified dividend payers and growers. The average yield across these positions is 3.5% — currently above the pace of inflation. Altria (MO) even pays 8.4%! So the dividends alone on this portfolio should be enough to keep you ahead. Now that we have this list, let’s take it over to the second tool we’ll need to get this portfolio working: Pure Quant. We’ve shown you the power of this tool [several]( times [before](. With Pure Quant, you tell our system what you want in a portfolio and how much cash you have to put in. Then, seconds later, it recommends a unique portfolio based on your specifications, along with a clear action plan. So, let’s go ahead and design a low-risk, high-quality, dividend-paying portfolio with Pure Quant today using the stocks above: This portfolio assumes you have $10,000 to invest and prioritizes lower-volatility stocks. As you can see, it allocates the most capital toward the lower end of the VQ spectrum and some of the highest dividends (MO, ABBV, and CL). Of course, there are a million different ways you can slice this. You can optimize the portfolio for smaller market-cap stocks if capital gains are a bigger part of your plan. Or you could focus on a specific sector you happen to be long-term bullish on. Or you can follow billionaires like Warren Buffett with our Best of the Billionaires dataset. Whatever you choose, just understand how important it is to invest in high-quality stocks to build a comfortable retirement. Whatever form Social Security takes 10 years from now, chances are good you don’t want to depend on it to keep you afloat through your golden years. You have to take action, and we’ll keep showing you our favorite ways to do this here in TradeSmith Daily. All the best, [Keith Kaplan]Keith Kaplan CEO, TradeSmith Get Instant Access Click to read these free reports and automatically sign up for research throughout the week. [25 Doomed Blue Chip Stocks]( [3 Stocks to Build Your Wealth in 2024]( [5 Unapologetically Profitable Stocks for 2024]( © 2024 TradeSmith, LLC. All Rights Reserved. P.O. Box 340087 Tampa, FL 33694 To unsubscribe or change your email preferences, please [click here](. [Terms of use]( | [Privacy Policy](