Quick Read
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A 71-year-old needs roughly $2.08 million invested at a 5.0% blended yield to generate $8,650 a month across six holdings.
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JEPI's 8.0% trailing yield delivers the largest income slice at $30,015 a year, but its options premium is taxed as ordinary income.
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RMDs kick in at 73, and if portfolio payouts fall short, selling shares permanently shrinks the income base.
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Building a portfolio and living off one are two completely different skills, and almost nobody teaches the second. This problem is what The Definitive Guide to Retirement Income helps, and it is free today. Read more here. (Sponsor)
If you're 71 and want to collect $8,650 a month, your portfolio has to generate $103,800 a year. Here's how a six-holding income portfolio gets there, using mid-October 2026 yields. The blended yield comes to about 5.0%, so hitting the target requires roughly $2.08 million. For comparison, the 10-year Treasury yielded 5.2% in early October.
Schwab's Dividend Fund Anchors the Portfolio With Qualified Income
Schwab U.S. Dividend Equity ETF( NYSEARCA:SCHD ) holds U.S. companies selected for dividend quality. Qualcomm was its largest position at about 7% of assets. A 30% weight puts about $624,000 here, and a 3.2% forward yield produces about $19,981 a year.
The best evidence of its durability is the trend: the September 2026 payout of $0.2665 exceeded the $0.2604 paid a year earlier. Its dividends are largely qualified, which gives them lower tax rates and makes the fund a good fit for taxable accounts.
Vanguard's Dividend Growers Trade Current Yield for Rising Payouts
Led by Broadcom, Apple and Microsoft, the Vanguard Dividend Appreciation ETF( NYSEARCA:VIG ) owns companies with long records of raising dividends. Its 10% weight equals about $208,000, and at a 1.5% yield it adds just $3,223 a year.
The fund is in the mix for growth: its third-quarter payout rose to $0.9295 from $0.8647 a year earlier, and its distribution record goes back to 2006.
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Realty Income's Monthly Rent Checks Cover the Dividend
Realty Income( NYSE:O ) leases commercial property to tenants on long contracts and pays a monthly dividend. With about $250,000 invested and a 12% weight, its 5.9% yield generates about $14,854 a year.
For a real estate investment trust (REIT), AFFO (adjusted funds from operations) is the right coverage test, because depreciation cuts reported earnings without reducing cash. The annualized $3.258 dividend equals about 73% of the center of 2026 AFFO guidance of $4.44 to $4.45. Most REIT payouts are taxed as ordinary income, so the shares fit better in an IRA.
Main Street Pays a Regular Dividend Plus Supplementals
Business development companies, or BDCs, lend to and invest in smaller private businesses and have to pass most of their income through to shareholders. Main Street Capital( NYSE:MAIN ) is one, and it has a 12% weight, with roughly $250,000 here. The regular monthly dividend alone yields 5.9%, or about $14,796 a year.
Supplemental dividends add to that and totaled $1.20 per share over the trailing 12 months. Second-quarter distributable net investment income of $1.08 a share covered regular dividends about 136%. BDC distributions are mostly ordinary income.
Preferred Share Income Swings From Month to Month
The portfolio's 18% stake in the iShares Preferred and Income Securities ETF( NASDAQ:PFF ), about $375,000, buys preferred shares, hybrid securities that pay dividends before common stock dividends. A trailing yield of 5.6% produces about $20,930 a year.
The monthly payout moves around. In 2026, it ran from $0.031167 to $0.177226 per share, and the fund's price tends to fall when interest rates rise.
Covered Call Income Supplies the Largest Slice
JPMorgan Equity Premium Income ETF( NYSEARCA:JEPI ) owns large U.S. stocks and sells options on them, trading some potential gains for monthly income. At about $375,000 (an 18% weight), its trailing yield of 8.0% delivers about $30,015 a year, the largest slice of the portfolio.
Payments in 2026 ran from $0.34134 to $0.44761 per share. Options premium is taxed as ordinary income, so the fund suits a sheltered account.
Required Distributions Arrive in Two Years
IRS Publication 590-B sets the required minimum distribution age at 73. The required amount comes from dividing the prior year-end account balance by an IRS life-expectancy factor. At age 75, for example, a $100,000 balance requires $4,065, whatever the holdings pay. If distributions fall short, the retiree must sell shares, permanently reducing the income base, while the rules cover traditional IRAs and 401(k)s, not Roth IRAs during the owner's lifetime or taxable brokerage accounts.
Which Payouts Can Outrun 25 Years of Inflation
Realty Income's June dividend was its 115th consecutive quarterly increase. Main Street raised its regular dividend 4% from a year earlier, and SCHD and VIG also grew their payouts. PFF and JEPI have no built-in raise, yet they supply the two largest income portions. A flat payout loses buying power every year. For reference, the 2027 Social Security cost-of-living adjustment looks headed toward 3%.
What This Income Really Rests On
The steadier income comes from Realty Income's leases, Main Street's covered regular dividend, and the stock baskets in SCHD and VIG. PFF, JEPI, and Main Street's supplementals can change from month to month. Each year, compare each holding's trailing 12-month payout with the income this plan assumes, and work out each traditional account's required distribution from its December 31 balance to see whether shares will need to be sold. The mix, payout calendar, and withdrawal order are the three things that turn a lump sum into something that acts like a paycheck, and we laid all three out in a free guide here.
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