61-Year-Old Retiree Uses Barbell Portfolio to Generate $42,000 Annual Income

A 61-year-old looking to replace their monthly take-home income of around $3,500 needs to generate about $42,000 per year from a portfolio. This is a common goal for pre-Social Security retirees who want to cover essential expenses such as housing and healthcare premiums.

Two popular ETFs that can help achieve this goal are the Schwab U.S. Dividend Equity ETF (SCHD) and the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ). SCHD focuses on dividend growth, while JEPQ prioritizes cash yield today by writing covered calls against a Nasdaq-100 equity sleeve.

Blending these two funds creates a 'barbell' portfolio with growth on one side and cash on the other. This approach can provide a more stable income stream and reduce the risk of inflation eroding fixed income returns.