Generating Retirement Income When Interest Rates Are Low and Fixed-Income Assets are Overpriced

This is a topic that I’ve been struggling with as well. I’ll be taking a look at the potential strategy laid out in this article.

The Small Investor

Note:  This is a continuation on the series on retirement investing.  See the first post here.

Generating enough income to pay for expenses in retirement is a fairly simple thing (provided that account is large enough) when interest rates are reasonably high and bond and dividend paying stock prices are consequently low.  One can just select a set of dividend paying stocks such as utilities, buy a few bonds, and then collect the dividend and interest checks. If the income from these investments is large enough one will never needed to sell stocks to raise cash or touch most of the holdings at all.

When interest rates on quality corporate bonds are in the 8-10% range, and stocks paid 5-8% dividends, one can easily generate $50,000 per year on dividends and interest with a million dollar account.  Many people – foolishly, I believe – even invest their entire retirement…

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