No. of Recommendations: 3
At least according to Larry Stein:

If you need to generate $100,000 in annual income, the current 1.8% yield on 10-year Treasury notes would require a portfolio of roughly $5.6 million — not exactly chump change.

Let's go up the yield curve: How about investment grade corporate bonds? A typical portfolio of investment grade corporate bonds with a 12-year maturity may get you a 3% yield. That's not much yield for the risk of having long maturity corporate bonds. Besides, to produce $100,000 in annual income, your bond portfolio would have to be worth about $3.3 million.

Equity yields are attractive, but ...

Looking to higher-dividend equities, a typical fund may yield about 3.7%. At that yield, you only need about $2.7 million in your portfolio to drive the $100,000 income needed. But again, there is no free lunch.

Although dividend-paying equities tend to be less volatile than growth stocks, there's still downside risk, perhaps more than many believe. For example, the iShares Dow Jones Select Dividend Index ETF DVY -0.46% reached a high of about $74 in May 2007. In less than two years, DVY fell to about $27 — a 63% decline. Interestingly, the Vanguard Dividend Appreciation ETF VIG -0.07% currently has a lower yield than DVY, and lost less from 2007 to 2009, about 46%. Either way, a decline of such magnitude could jeopardize your retirement...
[Emphasis added.]

In other words, "darned if you do, darned if you don't."

Of course, the market yield and risk concerns of the prospective retiree are completely off-the-radar of about 60% of retiring Americans, since they are content with relying upon the "Social Security Lockbox" to fund their future.

For about 60% of the retiring population, Social Security retirement benefits provide the majority of their retirement income, according to the Economic Policy Institute...

Food for thought.

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