I Wouldn’t Want To Retire Without These 3 Investments
May 30, 2026, 7:05 AM ETGLD, SLV, GDX, IAUI, LQD, BIP, BEP, SCHD, UTG, AMLP, XLU, VNQ, O, MPLX, NEE, BEP.UN:CA, BIP.UN:CA
Samuel Smith
Summary
- A common misconception is that generating enough dividend income to cover living expenses is all that you need to retire.
- I detail the three investments that I would use as the foundation of my retirement strategy.
- I discuss how these three work together to cover a wide range of macro scenarios and help me sleep well in retirement.
- Looking for a portfolio of ideas like this one? Members of High Yield Investor get exclusive access to our subscriber-only portfolios.
Many investors who are focused on building up a passive income stream from dividend- and interest-paying investments focus solely on yield. In fact, they may even focus on what they would deem to be sustainable yield, namely, yields that come from blue chip stocks, preferreds, and even bonds that they believe they can count on to be paid out consistently through thick and thin. While this is certainly important, it is not a complete approach to retirement income investing because it fails to account for some key considerations.
We Are Living in Historically Dangerous Times
In fact, we are currently in more dangerous times than we have seen since perhaps World War II, with breathtaking budget deficits, national debt levels in Europe, China, Japan, and the United States reaching levels that are nearing the point of no return, and the geopolitical situation is as fragile as ever, with the US-led global order appearing to have increasingly large cracks in it, and a threat of major economic and/or military conflict between the US and China, and Europe and Russia seemingly growing by the day. Thus, it is more important than ever for investors to ensure that they are adequately protecting their income stream from downside risks.
With this in view, in this article, I detail the three investments that I would not want to retire without to make sure that I could sleep well at night knowing there was a high probability that my investments would fund my living expenses in retirement, even if the macro situation deteriorates significantly.
Pillar #1: The Ultimate Safe Haven
The first investment that I would want to have before any other is gold (GLD). The reason I put so much emphasis on gold is that it has a longer track record than any other economic asset out there, besides perhaps land, and it has zero counterparty risk.
Additionally, given that it has survived every financial collapse, every currency failure, and every major war that has occurred throughout human history, and still retained its value, I view gold as an indispensable downside hedge, with silver (SLV) playing a similar, albeit secondary, role. There are numerous reasons why I feel especially bullish on gold today:
- The aforementioned runaway debt and deficit spending in the US and throughout much of the rest of the developed world will inevitably lead to more inflation and more money printing by governments, as well as an increasing loss of confidence in fiat currencies. Remember that, throughout history, fiat currencies have inevitably all gone to zero, and it appears that the dollar, the euro, the yen, and the yuan are all well on their way toward that fate.
- Additionally, de-dollarization is accelerating, especially with global foreign exchange reserves shrinking consistently, with central banks like China and others diversifying away from dollar holdings, and instead snatching up gold as an increasingly popular reserve asset.
- The geopolitical risk that was already mentioned, with potentially major conflict over Taiwan or even an expansion of Russia’s aggression in Europe as the US pulls out and Europe continues to race to get its defenses unified, could also lead to a major risk-off movement in markets, which would undoubtedly benefit gold.
- Finally, gold tends to outperform during economic downturns and is also relatively non-correlated with the broader stock market, making it a good portfolio diversifier and stabilizer.
The other good thing about gold in a retiree’s portfolio is that while you can simply hold the bullion (that’s the safest way to do it, especially if you have a secure yet accessible storage place), you can also invest some of it in ways that generate income, whether that be gold mining stocks (GDX), options writing ETFs like the NEOS Gold High Income ETF (IAUI) that throw off attractive monthly distributions while still maintaining some upside exposure to gold, or even investing in gold and silver bullion leases that give you full ownership of the underlying bullion, full upside potential, and a pretty nice yield paid monthly.
Ultimately, the role of gold is to provide decent returns and even potentially some income in good times, and serve as the ultimate hedge during bad times, so that when all your other investments crash and/or go to zero, you have an asset that likely will be shining and outperforming significantly, that can still deliver you the returns you need to fund your living expenses in retirement.
Pillar #2: Dependable Current Income
The next investment I would not want to retire without is investment-grade fixed-income investments (LQD) or something that appears to be the equivalent, such as a well-diversified and actively managed fixed-income fund. The reason why I would want to have this in my portfolio while in retirement is that it should serve as the core of my current income engine to meet my living expenses today. Fixed income tends to pay higher yields than common equity, since it does not have a growth component. The investment-grade rating on it means that it should be able to withstand periods of economic distress without the company having to default on its debt. In fact, even in major downturns like COVID, where they may take precautionary measures to cut their dividend, the balance sheet will likely remain sound, and they’ll be able to continue servicing their debt.
Additionally, companies often cherish their investment-grade credit ratings, therefore being more likely to circle the wagons around their balance sheet in the event that their credit rating comes at risk. They would want to do everything they can, even if it is at a major expense to the common shareholders, to protect their debt investors. Therefore, investment-grade fixed income is a great way to generate attractive yet low-risk passive income in retirement. The best part of it is that you don’t even need to sacrifice much and take only a low- to mid-single-digit yield. You can actually get 7% to 8% yields on your investment while still getting access to investment-grade securities, whether it be in the preferred, baby bond, or even the corporate bond world.
I especially like real asset-backed opportunities, as these tend to have more stable cash flows and more defensive business models and can also liquidate assets more easily and get good value for them in order to protect their balance sheets. In particular, I like the Brookfield Infrastructure Partners (BIP) and Brookfield Renewable Partners (BEP) preferreds (BIP.PR.A) (BIP.PR.B) (BEP.PR.A), as they combine attractive yields with investment-grade credit ratings and durable and defensive real-asset-focused underlying business models.
Pillar #3: Inflation-Fighting Income Machines
The third investment I would not want to retire without is dividend growth stocks, especially those that pay out decent dividends and are backed by durable and defensive business models and strong balance sheets. I think a great place to start is investing in a fund like the Schwab U.S. Dividend Equity ETF (SCHD) because it combines a dividend yield of over 3% with a dividend growth track record of over 10% per year on average over the past decade. It is filled with over 100 blue-chip dividend growth stocks diversified across a broad swath of industries.
I would want to complement that with some other attractive dividend growth sectors where it lacks much in the way of exposure, including:
where you can find powerful dividend growth names like Realty Income (O), MPLX LP (MPLX), NextEra Energy (NEE), and several others.
The reason these investments are so important to me in rounding out the other two pillars is that dividend growth stocks combine current income, which can augment the income from the fixed income pillar to meet current expenses, with the growth that helps offset the long-term corrosive nature of inflation. They are also backed by durable and defensive business models and strong balance sheets, and also tend to be able to sustain their dividends better during economic downturns, thus making this pillar more sustainable as well.
Why All Three Pillars Work Together, and How to Cycle Between Them
I still think it’s important to have a fixed income pillar in addition to dividend growth stocks as a retiree because you can increase your yield a bit and also still keep your downside risk protected to a greater extent than you get with many dividend growth stocks. Thus, combining the two enables you to cover all your bases, especially alongside a disaster hedge position like gold. During strong bull markets and periods of economic expansion, having that equity exposure can give you capital appreciation and ultimately significant total return potential, which is also nice to have over the long term. This is especially true, because, in epic bull markets where valuations perhaps are getting a bit stretched, and if the Fed is having to raise rates to try to help fight an overheating economy and inflation getting too high, you can recycle some capital opportunistically into fixed income, thus locking in your income and your profits with a more defensive position, or potentially even recycling it into gold if it is out of favor.
Whenever fixed income and/or gold are in favor, you can opportunistically recycle some of that capital into dividend growth stocks that may be out of favor, to continue growing your income stream and ultimately your net worth over the long term.
The Retirement Strategy That Lets You Sleep Well at Night and Still Beat the Market
While focused primarily on dividend growth stocks, I also have significant allocations to fixed income in our retirement portfolio and to income-generating gold investments in both my core and retirement portfolios at High Yield Investor. Opportunistic capital recycling between all three of these pillars has enabled me to not only sleep well at night but also generate significant long-term total return outperformance along with below-market beta since launching our portfolio over five and a half years ago.
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