The Reserve Bank of Australia (RBA) is making it very difficult for retirees to live comfortably.
In the past retirees would have been able to live comfortably on the income produced by term deposits. But no longer, particularly with the RBA cutting interest rates down to 1.25% with more expected over the next year.
The best thing to do might be to invest in relatively defensive ASX shares to boost income like these:
Rural Funds Group (ASX: RFF)
I think one of the best options for at least the medium-term is Rural Funds, which is a real estate investment trust (REIT) which owns farmland and leases it to high-quality tenants.
Farmland has been useful for centuries, so I suspect it will continue to be a solid choice for the next few decades.
Its rental agreements with tenants includes rental indexation linked to either inflation or a fixed 2.5% increase, which is why Rural Funds predicts its distribution can grow by 4% a year for the foreseeable future. It is also investing in its current farms to increase the rental income.
The REIT continues to diversify its portfolio by geography and farm type, making it potentially more reliable as the years go by.
It currently offers a distribution yield of 4.5%.
WAM Leaders Ltd (ASX: WLE)
WAM Leaders is a listed investment company (LIC) which invests in large-cap ASX shares, which is useful as that provides relatively less volatile returns than small cap shares.
The top end of the ASX is looking up after the surprise Liberal election win, with the banks looking like they will be in better shape after the RBA cut and a proposed change to the interest rate buffer by APRA.
WAM Leaders aims to provide a growing fully franked dividend, it has a grossed-up dividend yield of 6.8% and it’s trading at a discount to its underlying assets.
Magellan Global Trust (ASX: MGG)
I think it’s important for some of every Australian’s portfolio to be invested in overseas shares. I believe Magellan Global Trust could be one of the best choices because of how consistently its manager outperforms the global index benchmark.
Magellan Global Trust invests in the highest-quality shares in the world like Alphabet, Facebook, Microsoft, Berkshire Hathaway, Visa and MasterCard.
One of the useful things about the Magellan Trust is that it targets a 4% distribution yield, which is a good level for income for today but leaves enough for growth for the future.
Whilst WAM Leaders is the only one trading at an attractive discount to its underlying assets, I think Magellan Global Trust could provide the best returns over the long-term due to the focus on quality global businesses.
Other ASX shares that could be suitable for a retiree investor’s portfolio are these leading ASX shares with growing dividends.
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Motley Fool contributor Tristan Harrison owns shares of MAGLOBTRST UNITS and RURALFUNDS STAPLED. The Motley Fool Australia has recommended RURALFUNDS STAPLED. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.