A retired marketing manager left a $98,000 salary after 35 years of maximizing retirement accounts and building a taxable brokerage account. She accumulated a $1.4 million dividend portfolio that, at a blended 7% yield, produces more annual cash income than her prior paycheck. When Social Security begins at age 67, household income rises to about $128,000, creating an effective 30% increase without working. The income replacement approach relies on arithmetic across yield tiers. A 3% to 4% dividend growth lane requires about $2.8 million to replace the salary, emphasizing durability and inflation-beating growth. A 5% to 7% income lane uses about $1.4 million at 7% yield, but depends on instruments like REITs and other higher-yield strategies with different risk and growth characteristics.
"This is where most income-replacement portfolios sit. REITs, preferred shares, covered call ETFs, and high-dividend equity funds dominate. At 7%, $98,000 divided by 0.07 lands at exactly $1.4 million, which is why the marketing manager's math works. Realty Income is the textbook anchor here. Shares trade near $62, the stock has returned about 12% year to date, and the REIT has declared 670 consecutive monthly dividends."
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