The recent oil spill that has tragically occurred in the Gulf Coast has unfortunately been a lesson to many investors that diversification really does matter. Many people that own BP shares and rely on dividends for retirement are in serious trouble. If anything can be taken out of this horrible situation by someone who was not a BP stock owner, the importance of diversification would be the key. Everyone usually thinks that the one company they have invested their money into and rely on in the future will always be stable, until they are not. The bottom line of the story is to diversify within each class that you own. This includes dividend paying stocks as well as municipal bonds. On top of this you should also diversify your retirement income. Diversification might not always protect you from financial crises such as those seen in 2008, but it will definitely help you to avoid the troubles of those who are solely invested in a single stock like BP right now.