A “Dividends Only” Retirement Plan (Just $500K Needed)


I was waiting in line at the California DMV recently, idly flipping through my phone, when I ran across this headline:

There Are More 401(k) and IRA Millionaires Than Ever …

Fidelity Investments–apparently happy to share its customers’ financial info anonymously–says it has more than 750,000 seven-figure 401(k) and IRA accounts.

A chunk of money is great, especially when we can leave it untouched and let it grow. That was no doubt the “secret” of 99%+ of these retirement millionaires. They socked away money for decades and rode the market higher. (They didn’t chase the crypto du jour!)

Soon it will be time to convert the pile of cash into cash flow that can pay the bills. Many retirees buy stocks and “hope” they’ll go up in price.

Problem is, hope is not an ideal retirement strategy, especially as we roll into 2022, a year in which stocks face a high bar after posting double-digit gains in both 2020 and 2021.

It was dollar-cost averaging that built these Fidelity fortunes. These investors bought a set amount of stocks and funds every two weeks, every month, every year. They did this systematically, which secured them more shares when prices were low and fewer when they were dear!

Traditional retirement “advice” would say that you can live comfortably doing the exact opposite. Sell 4% per year and hope that you don’t outlive your money.

Wait, what?

This is reverse dollar-cost averaging. It is the inverse of the wealth-building technique that minted these millionaires!

By selling a set dollar amount of shares every month, quarter, or year to pay the bills, these investors are being advised to sell more shares when prices are low and fewer shares when prices are high.

What a disaster.

A better bet? A strategy to retire on dividends alone that leaves that beautiful pile of cash alone.

This is why money manager Tom Jacobs and I wrote the book on this. In How to Retire on Dividends: Earn a Safe 8%, Leave Your Principal Intact, we outline our “no withdrawal” approach to retirement:

  1. Save a bunch of money. (“Check.”)
  2. Buy safe dividend stocks with big yields
  3. Enjoy the income while keeping the original principal intact.

Step number two is a tricky one for many investors. A million bucks is great, but after all those price gains I just mentioned the S&P 500’s dividend yield has been whittled down to just 1.2% today. A seven-figure nest egg in the popular “low cost” S&P 500 index fund, the SPDR S&P 500 ETF Trust (SPY), will land you in the low-income bracket with just $12,000 a year.

That will keep your taxes low. And your quality of life!

Blue-chip dividend payers like Pfizer (PFE) are better, but not by much. PFE yields 2.7%, so it will dish the millionaire $27,000 in annual income.

To make that million last, and our working life worthwhile, we really need yields in the 7% to 8% range. We don’t typically see these stocks touted on Bloomberg or CNBC, but they are around.

Of course, there are plenty of landmines in the high-yield space. Some of these stocks are cheap for a reason. Which is why we need to be contrarian when looking for income.

We must identify why a yield is incorrectly allowed to be so high. (In other words, we need to figure out why the stock is priced so cheaply!)

As I write, the top 14 yields in my Contrarian Income Report service’s portfolio average 7.6%. This 14-pack is spinning off $76,000 for every million dollars invested.


And you don’t have to be a millionaire to take advantage of this strategy. A $500K nest egg will create $38,000 in annual income (better than a million bucks in PFE!). Or $200K will generate $15,200 in yearly dividend income. You get the idea.

The important thing is that these yields are safe, which creates stability for the stock (and fund) prices attached to them. We want our income, with our principal intact. It’s really the only way to retire comfortably, without having to stare at stock tickers all day, every day.

My Favorite 7%+ Dividends Pay You Every Single Month


My top 7%+ paying picks go one better, paying you every single month, not every quarter like “regular” stocks do! That 100% predictable drip, drip, drip of monthly income into your account nicely aligns with your bills, too, making your finances as predictable as they were when you drew a regular paycheck!

And if you don’t need all your dividend income to fund your lifestyle, monthly payers still work great for you because they let you reinvest your cash faster, amplifying your gains in the long run.

So with these stout income plays, we’re talking about $3,000+ in dividends every month on that $500K. Or $6,000+ per month in income on the seven-figure accounts Fidelity brags about.

Click here and I’ll reveal how to get my favorite 7%+ monthly dividend payers, including specific stock and fund names, tickers, current yields, a deep dive into their portfolios and everything else you need to know.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



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