61-Year-Old Investor Targets $42,000 Annual Income Through SCHD-JEPQ Barbell

A 61-year-old investor aims to replace their $3,500 monthly income through two ETFs. The target is $42,000 per year, covering housing, healthcare premiums, and basic living costs. Two popular choices are Schwab U.S. Dividend Equity ETF (SCHD) and JPMorgan Nasdaq Equity Premium Income ETF (JEPQ). SCHD prioritizes dividend growth with a 3% yield, while JEPQ focuses on cash yield today with an 8.5% yield.

The combined portfolio, known as a barbell, balances growth and income. A conservative build with all SCHD requires around $1.4 million in capital. A more balanced approach with 50/50 SCHD and JEPQ needs about $737,000. Investing solely in JEPQ would require the smallest capital stack at approximately $497,000.

However, a high-yield portfolio like JEPQ can be volatile, and its distribution varies month-to-month. A 61-year-old investor should consider a barbell strategy to balance growth and income, rather than relying on one high-yield fund alone.