Quick Read
A $910,000 IRA rollover can generate $5,650 monthly by blending five holdings across three yield tiers targeting a 7.45% blended yield.
Higher-yield holdings like ARCC (9.9%) and SPYI (12%) carry the income load but risk NAV erosion, making a cash buffer via SGOV essential.
Place ARCC and SPYI inside the rollover IRA since their ordinary-income distributions are taxed less favorably than qualified dividends from HDV or WPC.
Two retirees, same $1 million, same 4% rule, buy one finished with $1.4 million, the other hit $0 in 12 years. Our free reader guide explains the flaw that separated them, and the income-first method built to avoid it.
A 60-year-old who rolls a $910,000 401(k) into an IRA and wants a $5,650 monthly paycheck is asking the portfolio to produce $67,800 a year, a number that works out to a blended yield near 7.45%. It is achievable without handing the balance to an insurance company, but only if the retiree accepts that the highest-yielding sleeves carry principal risk that a fixed annuity does not.
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The math is unforgiving in either direction. Aim too low on yield and $910,000 falls short of the paycheck. Reach too high, and the account can shrink even while the checks arrive on time. The right answer is usually a blend across three tiers.
Three Yield Tiers, One Income Target
Conservative (3% to 4%). Broad dividend-growth equity funds and quality-screened blue-chip baskets. To produce $67,800 at 3.5%, the retiree needs roughly $1,937,000. At 4%, about $1,695,000. At $910,000, this tier funds only about $32,000 to $36,000 a year. iShares Core High Dividend ETF (NYSEARCA:HDV) sits here, with a rock-bottom 0.08% expense ratio and a portfolio tilted toward energy, healthcare, and staples. HDV has returned 22% over the past year, illustrating the tier’s appeal: lower current income, more room to grow.
The 4% Rule is Broken, Built On A World That No Longer Exists
Every retiree knows about the 4% rule, but it frames retirement as a slow liquidation and still causes retirees with seven-figure accounts to agonize over a dinner out.
There’s a different way to run the math that makes more sense today. Build an income floor — dividends, interest, and Social Security that cover your essential bills every month — and you never have to sell shares into a down market just to pay them.
Our free reader guide, The 4% Rule Is Broken, walks through it in about 15 minutes. Access the report here.
Moderate (5% to 7%). Net-lease REITs, preferreds, and high-dividend equity funds. $67,800 at 6% requires about $1,130,000. W. P. Carey (NYSE:WPC) yields about 5.4% and raised its quarterly dividend to $0.94 per share, a 4% year-over-year increase. Management guided 2026 AFFO to $5.19 to $5.27 per share, with 48% of annualized base rent linked to CPI escalators. That is a growing income stream, not a static one.
Aggressive (8% to 14%). Business development companies and covered-call funds. At 12%, $67,800 needs only about $565,000. Ares Capital (NASDAQ:ARCC) yields roughly 9.9% on a $1.92 annualized dividend, funded by a $29.35 billion portfolio earning a weighted-average 10% on debt securities.
The tradeoff shows up in the numbers: NAV per share slipped to $19.35 from $19.94 at year-end 2025, and non-accruals rose to 2.4% at amortized cost. NEOS S&P 500 High Income ETF (CBOE:SPYI) pays monthly, with a trailing 12-month distribution of $6.87 against a $53 share price, near a 12% distribution rate. The fund caps upside in rallies to fund those checks.
How the Blend Actually Hits $5,650
Splitting $910,000 across the five tickers roughly equally, weighted toward the higher-yielding sleeves, gets close. HDV and WPC anchor a growing-income core. ARCC and SPYI carry the yield load. iShares 0-3 Month Treasury Bond ETF (NYSE:SGOV) holds one to two years of spending in cash-equivalent T-bills, with the 4-week bill averaging a 4% yield as the fed funds upper bound sits at 4%.
The barbell matters, as when SPYI’s distribution drops in a range-bound market, or ARCC trims its payout, the SGOV sleeve funds withdrawals so the retiree does not sell a yield holding at a bad price. SGOV has returned 4% over the last year with essentially no drawdown.
Sequencing the payouts across the month so the checks arrive on a schedule is its own exercise, and we walked through the full mix, calendar, and withdrawal order in a free guide to building a paycheck out of savings.
Why a Slower-Growing Sleeve Still Earns Its Seat
A 3.5% yield growing 8% a year doubles the income in roughly nine years. A 12% yield with flat distributions stays flat, and if NAV bleeds 1% to 2% annually, real income falls. HDV compounding beside SPYI hedges against the retiree living to 90 with a paycheck that never grew. WPC’s CPI-linked leases serve the same purpose inside the moderate tier.
Three Actions Before the Rollover Settles
Right-size the paycheck. $5,650 is a target, not a floor. Add up actual monthly spending, subtract Social Security and any pension, and reset the yield the portfolio must produce. A lower true need moves the blend toward the conservative tier and away from principal-erosion risk.
Stress-test each sleeve. Model ARCC cutting its $0.48 quarterly distribution by 15% and SPYI’s distribution falling 20% in a flat year. If the combined shortfall exceeds one year of SGOV holdings, the cash sleeve is too small.
Keep the ordinary-income yield inside the IRA. BDC dividends and covered-call distributions are taxed as ordinary income. The rollover IRA is the right home for ARCC and SPYI. HDV and WPC’s qualified dividends and return-of-capital treatment work harder in a taxable account if one exists alongside.
Before Your Next Withdrawal, Run One Number ( It’s Not The 4% Rule Everyone Knows)
Take your essential monthly expenses and subtract your guaranteed income — Social Security, plus any pension. What’s left is your income gap, and how you close it determines whether retirement runs on share sales or on a paycheck your portfolio writes you every month. Our free reader guide, The 4% Rule Is Broken, shows exactly how to close that gap with portfolio income: a worked example (one retiree needed about $480,000 in income-producing assets to cover his essentials for good), an eight-point conversion checklist, and the 20-year numbers comparing dividends to withdrawals. It’s free and takes about 15 minutes to read. Get the guide here before you take your next withdrawal.
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