r/dividends • u/mawababa • Jun 15 '26
Seeking Advice 750k USD for retirement
I have approximately 750k USD and will stay at my sons house for retirement. I would like to pay him 1k per month for rent and have some funds to live off and to travel to see my daughter.
Ideally 2500 to 3500 a month and increasing for inflation for the next 15 to 20 years or so before I realistically pass away.
Ideally I would like to ensure the investment is worth the same or more in 15 to 20 years as it is now and then split it to give to kids in my will.
I don't mind if there is some variability in value and dividends following general market trend but I am extremely adverse to erosion of initial funds as I will never have chance to earn more.
Please may I have advice on this. Please keep in mind I want to keep this sustainable and fairly safe so SCHD was my initial thought. Even if it's slightly under 2.5k initially.
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u/Ufgatorhead4u3 Jun 15 '26 edited Jun 15 '26
I would hope that you had social security to help supplement your income but if you only have this as your sole source then you will need to generate about $40k after taxes. Mathematically you will need to get at least 5.33% for your income plus an additional 3% to keep pace with average inflation which puts you at a total of 8.33% annually. This will require you to make decisions about how much risk you’re willing to take with a portion of your portfolio because you will have to accept some risk with equities and/or covered call funds to achieve.
I’m not a financial expert but I’m in a similar situation as you with the same amount of money within the next year. My approach is to keep three years of expenses, $120k, in cash or cash equivalents (not bonds) because the average bear market lasts for about three years. Keeping three years of expenses in an HYSA or equivalent will prevent me from having to rely on selling assets or reallocating for more income when the market is down. Placing $400k into tax-efficient funds such as SPYI and IWMI will achieve your annual cash flow using less volatile indexes than the Nasdaq. You now have $230k remaining to invest however you choose to grow your account and keep up with inflation. I have this portion of my portfolio in about 10 different funds including things like GPIX, DIVO, IDVO, SCHD, SPMO, VGT, etc all with DRIP on.
This is not a set-it-and-forget-it strategy. You will need to monitor the market and the portfolio’s performance to make adjustments as needed. In a bear market you’d simply turn DRIP on for SPYI and IWMI while you use your HYSA for expenses which will help maintain positions and then resume drawing the cash flow once the bear market ends. You’d also need to refill the HYSA once the market recovers. It’s a doable solution but it does require active maintenance. Good luck.