Retirement Income Strategies: How to generate high monthly income with low risk

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Key Takeaways:

  • Americans are unprepared for retirement. Savings rates are low and retirees need to generate high monthly income for living expenses on those savings – in an overvalued stock market.
  • In addition, the age-old recommended 60-40 retirement portfolio (60% stocks and 40% bonds) doesn’t work. Per Goldman Sachs, “Today, a 60/40 portfolio yields less than 2%—a far cry from 5%+ offered in the ‘70s, ‘80s, and early ‘90s.”
  • There are many investment strategies for generating high income. Unfortunately – most of these are also high risk.

What You Will Learn

  • I’ll show you a “little-known” strategy for generating high monthly income with low risk in today’s overvalued stock market.
  • With these new investments that have come to market, you can enjoy high monthly income, downside protection, low fees for a set-it-and-forget-it retirement strategy.

List of investments for high retirement income with pros/cons for each:

1. Individual stocks for high income

Example: AT&T      Pros: High Yields            Cons: Too Risky

  • Several individual stocks pay dividends, some of them high. For example, AT&T (ticker symbol T) pays ~7-8% per year.
  • Buying an individual stock for high income is inherently risky. For example, AT&T stock is down 14% year to date.
  • There is an inherent risk in investing in a single stock. The company could have a new competitor, COVID could reduce its revenue (think commercial real estate), the world is moving to electric from gas (think Exxon Mobil). You could incur huge losses if macro trends change.

2. Bonds (non-corporate)

Example: BLV (Vanguard Long Term Bond)     Pros: Low fees  Cons: Yield is fairly low (2.5%) for medium risk

  • Bonds pay very little in terms of monthly income. Less than the inflation rate.
  • Long-term bonds are not without risk.  BLV is down 2.4% so far this year.

3. Bonds (corporate)

Example: SPBO (SPDR Corporate Bond Portfolio)    Pros: low fees  Cons: Yield is fairly low (2.5%) for medium risk

  • The yield (interest rate) is again low and less than the inflation rate.
  • Corporate bonds are not without risk. SPBO is down 0.4% so far this year.

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4. Dividend income ETF’s or mutual funds

Example: NOBL (Dividend Aristocrats)   Pros: Good return in bull markets     Cons: Risky in bear markets

  • Dividend income ETF’s have a yield of anywhere from 2-4%
  • They do well in bull markets – NOBL has returned 19% so far this year.
  • They don’t do so well – when the broader market goes down. For example, NOBL lost 25% from Jan 2020 to March 2020 (during the COVID pandemic).

5. MLP’s or Master Limited Partnership

Example:  EPD (Enterprise Product Partners)       Pros: High Yields         Cons: Risky in bear markets, complex

  • A master limited partnership (MLP) is a company organized as a publicly traded partnership.
  • MLPs combine a private partnership’s tax advantages with a stock’s liquidity.
  • An MLP must generate all but 10% of its revenues from commodities, natural resources, or real estate activities.
  • MLP’s can give retirees high monthly income (7-9%).
  • However, they are risky investments in down markets. For example, EPD lost ~45% from Jan 2020 to March 2020 (during the COVID pandemic).

6. REIT’s or Real Estate Investment Trusts

Example: VNQ (Vanguard Real Estate Index Fund)       Pros: Medium Yield      Cons: Risky in bear markets

  • A real estate investment trust (REIT) is a company that owns, operates, or finances income-producing properties.
  • REITs provide an income stream for investors (2-3%).
  • REITs invest in most real estate property types, including apartment buildings, cell towers, data centers, hotels, medical facilities, offices, retail centers, and warehouses.
  • REITs are risky in down markets.  For example, VNQ lost ~30% from Jan 2020 to March 2020 (during the COVID pandemic). It lost over 60% during the 2008 crisis.

7. BDCs or Business Development Corporations

Example: MAIN (Main Street Capital Corp)       Pros: High Yield      Cons: Risky in bear markets

  • A business development company (BDC) is similar to a REIT.
  • BDC’s are publicly traded and they provide high yields but they also use leverage making them high-risk.
  • BDCs offer investors high dividend yields and some capital appreciation potential.
  • BDCs’ heavy use of leverage and targeting of small or distressed companies makes them relatively high-risk investments.
  • BDC’s are risky in down markets.  For example, MAIN lost ~50% in 3 months – from Jan 2020 to March 2020 (during the COVID pandemic).

8. CEFs or Closed-End Funds

Example: IHD (Voya Emerging Markets High Dividend Equity Fund)  Pros: High Yield    Cons: Risky in bear markets

  • Closed-end funds are a type of investment company whose shares are traded in the open market like a stock or ETF
  • Like stocks, shares are traded on the open market
  • A CEF’s share price is almost always different from its net asset value
  • Investors need to be aware of the resulting premium or discount
  • Just like BDC’s, CEF’s are risky in down markets but provide a high income. For example, IHD lost ~30% in 3 months – from Jan 2020 to March 2020 (during the COVID pandemic) and is in a long-term downtrend.

9. Covered Call ETF’s

Pros: High Yield     Cons: Some covered call ETF’s are risky. However, I show you the best ones.

  • Some covered call ETF’s have downside protection included – so they don’t go down as much in a bear market.
  • My recommendation is to buy covered call ETFs with built-in downside protection given the overvalued stock market we are in. This gives you a high income with low risk.


High Income Investment Types Risk – if the market turns from bull to bear Yield (Monthly income) Any downside protection?
Individual stocks for monthly income (e.g. Verizon, Apple) High Low ~1-4% no
Bonds (non-corporate) Low  Low ~1-2% no
Bonds (corporate, high yield, long term) Medium to High 3-4% no
Income ETF’s Medium Low-Medium no
MLP’s High High ~7% no
BDC’s High High ~7% no
CEF High High ~7% no
Dividend ETF’s (e.g. Vanguard High Dividend Yield ETF) Low to Medium Low to Medium ~2-3% no
Covered Call ETF’s Medium High ~7-11% Yes for some


  • The best investment type for high retirement monthly income are covered call ETFs that provide high monthly income, low risk, and downside protection. 
  • Covered calls were once extremely complex, but with new instruments on the market, it is as easy as buying a stock.
  • Downside protection is important – with the stock market hitting all-time highs and the risk of a large correction high. You can get this safety with the best covered call investments.
  • There is a NEW ETF that recently came on the market that is perfect for retirees (high monthly income, downside protection, low fees, and growth) for a simple set-it-and-forget-it retirement income strategy. See it here.
  • You can follow the simple step-by-step high monthly income retirement strategy here. No prior financial expertise required.
  • You can also work with our recommended financial advisors to create a personalized high monthly retirement income plan. Access it here (scroll down to “consult with a top retirement advisor”)

See also:

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