Many seniors bemoan the fact that Social Security doesn't pay them all that much money. But that's not the case universally.
These days, the maximum monthly benefit is $4,194. That's not a small amount of money, especially when combined with other sources of retirement income, like withdrawals from an IRA or 401(k) plan.
In fact, if your savings are robust enough that you're able to live on withdrawals from your nest egg alone, then you may want to consider investing the benefits you collect from Social Security. Doing so could turn those payments into a larger sum and give you more flexibility during retirement. And while you have several options for investing your benefits, it pays to look at REITs.
Image source: Getty Images.
Why REITs are a good fit for retirees
Many retirees prefer to hold investments that lend to steady income, like dividend stocks and bonds. And REITs definitely fit that bill.
REITs, or real estate investment trusts, are companies that own and operate different properties. Holding REITs can make you wealthier in two ways. First, the value of your REIT shares can grow over time, the same way you can buy stocks and see your shares appreciate in value.
Also, REITs are required to pay at least 90% of their income to shareholders as dividends, so that's steady income you can look forward to. And you may find that your REITs offer higher dividend yields than the other stocks you own.
How to choose the right REITs
Figuring out which REITs to buy with your Social Security benefits means assessing your needs and goals. If your priority is to secure the largest amount of steady income, then you may want to specifically look at REITs with higher dividend yields.
On the other hand, if you're less concerned with dividend yields and are more eager to keep generating wealth in retirement (perhaps to use yourself later on or pass along to your heirs), then you may want to focus on REITs with the most growth potential. There are several options to look at in that regard, but one sector worth focusing on is industrial real estate.
The pandemic has changed the way consumers shop, and now, digital sales are exploding. That's caused an uptick in demand for warehousing space, and that need is likely to continue through the years, making industrial REITs a solid bet. But definitely look at other REIT sectors, too, as there may be a better one that aligns with your goals and strategy.
Put your benefits to work
Many people need their Social Security benefits to pay their expenses during retirement. If that's the case, then it's important to make sure your needs are covered before going out and investing a large chunk of your income.
But if you're collecting the maximum monthly Social Security benefit and aren't spending it all, it pays to consider investing in REITs. Doing so could make it so your retirement is even more comfortable, and that you're able to leave even more of a legacy behind for the people you care about the most.
