Is an automatic income stream in retirement unrealistic?

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AUTHOR: R Quinn on 6/25/2024

It’s easy for someone like me with a pension and Social Security as income to harp on the need for a steady income stream in retirement. The thought of coming up with a withdrawal strategy from investments combined with the possibility- even unlikely – of  running out of money scares me no end. The complexity of strategies I read about is just as disturbing. I doubt I could do it.

On the other hand, quite unintentionally I have built an income stream with two dividend paying stocks and a few bond funds. Combined  they would generate income of about $40,000 a year – half tax free –  yet there is still a measure of risk with both. 

If I were saving for retirement today I would be thinking about what income can be generated from dividends, interest and reasonable capital gain distributions. 

I would be saving on both a pre and post tax basis with the goal of using at least a portion of after tax money to buy an immediate annuity with income equal to basic living expenses to assure I won’t be homeless or hungry and can pay health insurance. 

My goal would be living in retirement as I desired without needing a complex withdrawal strategy beyond what is automatically distributed to me from earnings each month or quarter. My RMDs, if any, would be reinvested to add to the cash flow and to make sure there is always a cash reserve for emergencies and large one off purchases.

This approach could also provide survivor benefits. 

Am I being unrealistic? 

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