How to Invest Your Max Social Security Benefit of $4,194 in REITs

Many seniors lament that Social Security does not pay them as much money. But this is not the case universally.

Today, the maximum monthly benefit is $4,194. That’s no 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 strong enough that you can live solely on withdrawals from your nest egg, you might want to consider investing the benefits you receive from Social Security. This could turn those payments into a larger sum and give you more flexibility during retirement. And while you have several options for investing your profits, it pays to look at REITs.

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Why REITs are good for retirees

Many retirees prefer to hold investments that generate stable income, such as stocks and dividend bonds. And REITs fit this bill perfectly.

REITs, or real estate investment trusts, are companies that own and operate different properties. Owning REITs can make you richer in two ways. First, the value of your REIT shares can increase over time, similar to how you can buy shares and watch your shares go up in value.

Additionally, REITs are required to pay out at least 90% of their income to shareholders as dividends, which is a stable income you can expect. And you may find that your REITs offer higher dividend yields than other stocks you own.

How to choose the right REITs

Determining which REITs to buy with your Social Security benefits means evaluating your needs and goals. If your priority is to get the greatest amount of stable income, you might want to look specifically at REITs with higher dividend yields.

On the other hand, if you are less concerned about dividend yields and more eager to continue generating wealth in retirement (perhaps to use yourself later or to pass on to your heirs), then you you may want to focus on REITs with the most growth potential. There are several options to consider in this regard, but one area to focus on is industrial real estate.

The pandemic has changed the way consumers shop, and now digital sales are exploding. This has caused an increase in demand for warehousing space, and this need is expected to continue over the years, making industrial REITs a solid bet. But also look at other REIT sectors, because there may be a better one that fits your goals and strategy.

Take advantage of your benefits

Many people need their Social Security benefits to pay for their retirement expenses. If so, it’s important to make sure your needs are covered before you go out and invest a large portion of your earnings.

But if you’re collecting the maximum monthly Social Security benefit and not spending it all, it’s worth considering investing in REITs. It could make your retirement even more comfortable and allow you to leave even more of a legacy for the people you care about.