Hi! Several years ago, I saw a post on an interest-only retirement plan, where you live off the interest of your primary investments. I still have 20ish years to go until I retire.
Does anyone practice this in their retirement years? What are your thoughts on this plan, and what's something you would have done same/different?
Interest only retirement plans
byu/positiveNRG_247 ininvesting
Posted by positiveNRG_247
4 Comments
You may want to check r/dividends, and yes it is a thing. The biggest pitfall is that people are greedy, and there are lots of investment vehicles with unsustainable return rates to feed their greed. If your aim is the standard 4% yearly distribution, it is doable while maintaining a modicum of capital appreciation. The further up you go from there, the more trouble you can get in.
You obviously need a lot more to live off the interest only.
I think its a great idea if you have accumulated the wealth to do it. What I have seen is that people need to take minimum distributions from some retirement accounts. So if that is your goal, maybe have a plan for how to handle the minimum distribution and then reinvest in a taxable account or something? There are probably good resources out there for this type of tax planning.
What if interest is .5%? How will you handle inflation?
I mean, it’s a plan, but imo there an are far more elegant and smart ways to draw down your life savings. Can interest be a part of that? Or maybe a laddered treasury plan? For sure.