Retirement often ends up costing more money than seniors anticipate. Because of this, there's been an uptick in seniors going back to work after retiring and calling it quits.
As of 2019, 40% of workers aged 65 and older had previously retired at some point, according to data from Rand Corporation. And that's actually not so surprising.
Many seniors learn the hard way that they can't get by on Social Security alone. And even those who bring savings with them into retirement often find that their nest eggs don't provide enough income to cover their many expenses.
But a big reason for the latter is that some seniors largely dump their stocks heading into retirement, thinking they're too risky to hold onto. The reality is that unloading stocks completely could lead to very minimal growth in an IRA or 401(k) plan, creating a scenario where returning to work to generate income becomes necessary.
If you're worried about landing in a similar boat, you should know that the right investments could make it so that you're done with working for good once you tender your resignation. In fact, there's one specific type of stock you should look at holding during your senior years.
It's all about the dividends
Dividend stocks aren't necessarily less risky than other stocks. But it pays to load up on dividend stocks for retirement because they have the potential to pay you a steady stream of income, as well as gain value through the years.
Granted, dividends are never guaranteed. A company could pay dividends for several years and then stop that practice as its financial situation takes a turn.
But companies that have steadily paid and increased their dividends for decades are unlikely to halt that practice after so much time. So if you focus on those stocks, you might enjoy a steady stream of dividend payments throughout your retirement.
When you're younger and hold dividend stocks, it's generally advisable to reinvest your dividend payments in order to grow more wealth. But during retirement, you may want to cash out those dividends and use them to cover living expenses. There's nothing wrong with going that route -- especially if it prevents you from having to reenter the workforce, assuming that's something you don't have the desire to do.
Give yourself options
Some seniors end up un-retiring, so to speak, because they find that they're bored without a job and need the stimulation and social interaction. But for others, the decision to return to work after retiring often boils down to financial necessity.
If you don't want to end up in that particular boat, consider loading up on dividend stocks ahead of retirement and hanging onto them once your time in the workforce comes to an end. Although all stocks carry a degree of risk, the great thing about dividend stocks is that they tend to still make those payments during periods when their share prices fall. And that's something that should give you some added peace of mind.