Should I invest in high dividend ETFs for retirement?

I agree with Robert that high dividend ETFs can be a successful long-term investment strategy, although its important to point out that not all high yield ETFs are created the same.  Most high yield funds invest in junk bonds, mortgage REITs, MLPs, preferred stocks, or some other unconventional investing category. 
You should make sure you are also balancing out those higher risk assets with traditional stocks and bonds to ensure proper diversification and lower overall volatility.  I recently wrote an article talking about some favored ETFs for investors under age 40 that you might find useful:  https://fmdcapital.com/5-best-index-funds-for-investors-under-40/
We also opined on some top funds to hold in a ROTH IRA, which includes several high yield funds as well: https://fmdcapital.com/best-funds-to-hold-in-a-roth-ira/

High dividend ETF's can be an excellent investment option. However, the problem you face i this situation, is that a large portion of your returns will be in the form of dividends. So if they are in a taxable account, you will be paying taxes on those dividends every year.
If the funds are in a tax-deferred account (IRA, 401K, etc.), then it is a non-issue.

Congrats on taking some solid first steps and asking some good questions early on.

I think the answer to your question, like many things in the world of financial planning, is that it depends. Any time I see a question about investing 80% of a portfolio in one type of asset, or one sector, industry, etc., it gives me pause. But within the realm of "high dividend ETFs" you could probably still build a fairly well diversified portfolio.

Which leads to the idea that it probably depends on where the dividends are coming from. If they are coming from junk bonds, MLPs, and things along those lines, you may be getting a high dividend from them, but you may also be taking a larger amount of risk with the underlying investments. If the dividends are coming from blue chip stocks like Johnson & Johnson, AT&T, etc., then the dividend payout may be slightly less, but you will also proabbly be taking less risk as well.

I would suggest that you create a plan of where you want to be in 30-40+ years and determine what it is going to take to get there. I normally suggest that people target a 20% overall savings rate, and if they can achieve that for the bulk of their careers, it should go a long way in setting them up for a pretty secure retirment. Not knowing your overall income I don't know if $20,000 reaches that 20% target, but I suspect it is a good start.

Once you have a plan in place, figure out what a proper asset allocation is that will help you achieve those goals without exposing you to more risk than you are comfortable with (you don't want to take too much risk and find yourself in a position where you account(s) decline(s) so much that you let emotion cause you do make bad decisions at bad times), but that also doesn't shy away from risk so much that you don't reach your goals.

After that, build a well-diversified portfolio of stocks, bonds, commodities, precious metals, real estate, etc. - there are ETFs that will help you get broad exposure to all of those. Within the stock part, you can find high dividend payers, usually from blue chip stocks. On the real estate side, you can invest in REITs, which usually have a high dividend because they are required to pay out a certain amount to shareholders. There are lots of options.

Once you have done that, and this is probably the most important part, stick to your plan. Don't get fooled by the media noise about the next crash that is going to be worse than anything we've ever seen. Don't chase returns trying to follow a hot stock or fund. When things are going well or poorly, step back from it, don't let your emotions get the best of your (whether that is fear or greed), and always remember that what does down will likely come back up and what goes up will likely come back down (no matter how well, or how poorly, things are going, the markets have an uncanny way of regressing to their long-term mean). Don't listen to your friends or colleagues brag about their returns (people will often brag about their successes but gloss over, or completely omit, their failures) and only believe the numbers they tell you if you are looking directly at their statements.

If you do all of that that, it will not be without its ups and downs along the way, and it may not be great all of the time, but if your goal is to build a solid portfolio over the next 30+ years that will help you have a secure and comfortable retirement, well, you could do a lot worse.

There are a lot of resources out there you can use if you are interested in putting the plan in place yourself and handling all of your own investments. However, the wealth of resources is a double edged sword, because you have to be cautious about where you get your information and you have to be careful not to put too much "stock" in the constant doom and gloomers OR the constant sunshine pumpers (the "truth" lies somewhere in the middle).

If you don't have the time or the inclination to pursue that undertaking you can always hire someone. You can work with fee-only planners if you want a plan that you will implement yourself, or you can hire someone to do the financial planning and the investment management for you.

Regardless, you are taking some great first steps by starting young and as long as you find a plan that works for you and stick to it, it sounds like you will probably do all right for yourself. Best of luck!

The historic average annual return on the S&P 500 index is above 7%. If that return is higher than the yield (dividend payout divided by share price) of the ETF's you are considering, I can't make a strong case for your strategy.

Albert Einstein is purported to have said that compund interest is the eighth wonder of the world. If you can compund a high return in a tax avored account, you have the best of both worlds.

Hope this helps.

It is best to diversify your retimement account and investing in ETFs is good way to accomplish this; especially with sector, ETFs.

MySolo401kFinancial