"The 30-year long bond. At a 4.94% yield, you need $1,012,146 to generate $50,000 a year. This is the most capital-efficient way to lock in the income, because the long end of the curve pays the highest rate."
"The 10-year note. At 4.35%, the math works out to $1,149,425. You give up roughly $137,000 of capital efficiency compared to the 30-year, but you get your money back in a decade and can reinvest at whatever rates exist then."
"A five-rung ladder. Buying equal amounts of 1-, 3-, 5-, 7-, and 10-year Treasuries blends to roughly 4.08%, requiring $1,224,890 in capital. The ladder yields less than a single long bond, but a rung matures every year or two."
Treasury interest provides a straightforward method to replace a $50,000 salary, with capital requirements varying by maturity. The 30-year bond at 4.94% requires $1,012,146, while the 10-year note at 4.35% needs $1,149,425. A five-rung ladder of Treasuries yields 4.08% and requires $1,224,890. Each option presents different trade-offs in terms of yield, reinvestment risk, and commitment duration, with the long bond offering the highest rate but exposing investors to inflation risk.
Read at 24/7 Wall St.
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