A few weeks ago I wrote a fairly popular article that discussed the rising possibility that the federal government will change the cost of living (COLA) index that social security payments are tied to. I wanted to follow up with more information on just how large of an impact this change can have.

When looking to build a long-term portfolio of stocks that pay high dividends, investors usually come up with a mix of stocks that either have high dividend yields or high dividend growth rates. It is difficult to find good companies that have both. This means that there is often a choice to be made. All else equal, should one invest in the company that has that enticing high dividend yield, but a low dividend growth rate, or does one exude patience and invest in the company with a relatively low yield, but a high dividend growth rate? To help answer this question I looked at two companies that offer these different alternatives: Verizon (VZ) and Coca-Cola (KO).

As we get closer to the “fiscal cliff” more politicians have been discussing how to reduce the coming crushing burden of entitlements. That means Medicare and Social Security are in the crosshairs. Of course most of those in Congress do not want to be the ones who actually cut anything for fear of losing votes. But one way they can social security payments without calling it a cut is to change how social security payments are indexed to inflation.

The power of growing dividends over time continues to be underestimated by many investors. Many are concerned with another decade of slow growth and low to negative equity returns. However, one way to prepare for another decade of slow economic growth is to invest in high dividend yield stocks that have shown they can weather tough economic times and even increase their dividends while it happens.

One of the best ways for advisors to help clients with their retirement portfolios is to change their asset allocation strategy. Sometimes this means reallocating their investment mix to a more aggressive approach and sometimes this means reallocating to a more conservative mix.