Wes Moss' $1.6 Million Portfolio Rule Quietly Beats Government Pensions for Affluent Retirees

"“I like to take an annual amount and translate that to what it would be in money sitting in an account. So just divide it by 5%. So if you have a pension that's $50,000 a year, as an example, $50,000 divided by 5% is a million dollars.”"

"If a $50,000 pension is worth $1 million in bond-equivalent wealth, then a $1.6 million portfolio yielding 5.5% is worth roughly the same as an $88,000 lifetime pension. For a 62-year-old retiring without a government job, the question is whether your portfolio throws off that income reliably, or whether you will outlive it."

"The verdict: for affluent retirees, the rule holds. Moss is right. A retiree leaving work at 62 with $1.6 million across IRAs and a 401(k), invested for a 5.5% blended dividend yield, produces $88,000 of annual cash distributions. The average CSRS pension for a GS-13 with 30 years of service runs near $80,000, and full-career CalPERS retirees land in the same neighborhood."

"To reach 5.5% without junk bonds, layer quality dividend growers. Johnson & Johnson carries a 2.3% yield, but the growth matters. JNJ raised its quarterly payout to $1.34 in April 2026, its 64th consecutive year of increases. A retiree who bought in 1999, when the quarterly dividend was $0.25, is now collecting more than five times that payment per share."

Annual pension income can be converted into an equivalent account value by dividing by 5%. A $50,000 pension corresponds to about $1 million in bond-equivalent wealth. A $1.6 million portfolio earning a blended 5.5% dividend yield can generate roughly $88,000 in annual cash distributions, comparable to many public-sector pensions. Portfolio income can be more flexible because assets remain liquid for emergencies and can pass to heirs. Dividend growth can also increase distributions over time, rather than relying on cost-of-living adjustments. Achieving a 5.5% yield without junk bonds can involve combining quality dividend growers such as Johnson & Johnson with monthly dividend payers like Realty Income and adding a Treasury yield for a cash-flow floor.

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