Here comes the silver tsunami.
According to the United States Census Bureau, there are nearly 56 million Americans aged 65 or older. By the numbers, retirees make up 17% of our total population.
But this group is expected to grow rapidly this decade as the Baby Boomer generation hits retirement age. Based on the Census Bureau’s latest projections, there will be more than 73 million people aged 65 or older by 2030. That’s a 30% increase in retirees over the next seven years.
The aging of our society puts new demands on our economy. A smaller number of working age people will be expected to support a larger group of older folks who have left the labor force.
We can already see signs of the strain in projections for Social Security. Since the program is funded by payroll taxes, a smaller number of workers and a larger number of beneficiaries means that there is less money go to around.
In fact, the program is expected to deplete its trust fund by 2034. After that, the government would either have to reduce Social Security’s payouts or increase taxes.
That’s a scary thought for anyone hoping to rely on the program in retirement.
Here at the Intelligent Income Daily, my team and I look for the best income producing investments that can help retirees secure their future. If you can’t be sure the government will support you, it’s time to take matters into your own hands and build an investment portfolio that will.
Today I’ll show you how to use our country’s aging trends to your advantage and add reliable income producers to your portfolio.
Healthcare System Spending Projection
My body just doesn’t work the way it used to. I have more aches and pains that won’t go away. I started getting a cortisone shot in my toe every few months.
It’s no secret that as people get older, they tend to require more support from the healthcare system. Aging bodies are more prone to injuries and chronic diseases.
That means that spending on healthcare is likely to keep increasing as our country’s population gets older.
The Centers for Medicare & Medicaid Services projects that America’s spending on healthcare will rise from about $4.7 trillion this year to $6.8 trillion by 2030. That’s a 46% jump over the next seven years.
The same trends that are casting doubt on Social Security are also creating an attractive investment opportunity – in healthcare.
And that’s not the only reason to invest in healthcare. Since health services are essential, they are insulated from the ups and downs of the economy.
That makes them a strong, stable, defensive play in times of recession and market volatility.
One Way to Profit from the Silver Tsunami
My favorite way to invest in healthcare is through healthcare real estate. As demand for healthcare increases, the need for these types of buildings will grow.
These include hospitals, senior housing, skilled nursing facilities, and medical office buildings.
I’ve been telling you about the many challenges facing the office sector. But medical “office” buildings are nothing like traditional offices.
They’re part of major health centers and have tenants that provide services like radiology, cardiology, orthopedics, and ambulatory surgery.
Those aren’t things that can be done over Zoom.
And they’re part of a major healthcare trend of shifting to outpatient care. Instead of treating patients in a hospital, doctors are sending them to specialists in medical office buildings.
And one example of a strong healthcare real estate company focusing on medical office buildings is Physicians Realty Trust (DOC).
DOC is a real estate investment trust (REIT) that owns a portfolio of 290 medical office buildings. Its properties are 95% leased. And most of its tenants are high-quality, investment-grade companies.
DOC yields 6.3% and trades at 15x cash flow. That’s a 21% discount from its historical multiple of 19x cash flow.
As Americans grow older, there is sure to be more demand for healthcare services. Who knows, maybe you’ll need them someday…
Dividend-paying healthcare companies could support not only your physical wellbeing, but also your financial security.
Happy SWAN (sleep well at night) investing,
Editor, Intelligent Income Daily
P.S. Physicians Realty Trust is a great example of a SWAN, or sleep well at night, stock. And I’ve created a portfolio full of plays just like this for my paid-up subscribers at Intelligent Income Investor. To join us and get the full list, click here.