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Strategies & Market Trends : Young and Older Folk Portfolio

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To: chowder who wrote (7796)	8/9/2024 6:23:10 PM
From: SeeksQuality	Read Replies (1) of 22066

The more the income need drops, the more it makes sense to "bridge" to the lower level of income rather than stretching for the higher yield immediately. If there were reason to believe that $100k (plus Social Security) would suffice in a few years, for example, then the portfolio could be constructed with a 5% yield (such as it is now) on $2M of assets, with $300k available to bridge the gap from here to there. There's a cost of stretching for a 7% yield and a risk that things turn badly, especially if that whole amount is being spent with basically no margin of safety. But if the income needs were to drop from $150k-$175k plus one-off expenses to $130k ($100k plus Social Security) then that dramatically simplifies the picture. That was my initial suggestion! I don't know the details of the timing or the budget, which is why I suggested a session with a financial planner. I do know that a 5% yield point is MUCH easier to achieve, and ultimately safer, than ramping up to a 7% yield point. When the needed income will drop off within a few years, it almost always makes sense to target the lower income and bridge the temporary need.

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