{"id":376048,"date":"2025-12-29T15:15:10","date_gmt":"2025-12-29T15:15:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/376048\/"},"modified":"2025-12-29T15:15:10","modified_gmt":"2025-12-29T15:15:10","slug":"1-retirement-rule-to-rethink-in-2026-and-a-10-9-dividend-that-changes-the-math-contrarian-outlook","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/376048\/","title":{"rendered":"1 Retirement \u201cRule\u201d to Rethink in 2026 (and a 10.9% Dividend That Changes the Math) \u2013 Contrarian Outlook"},"content":{"rendered":"

Millions of investors are making a critical mistake that could leave their finances vulnerable\u2014and at the worst possible time, too.<\/p>\n

That error? Clinging to so-called \u201crules of thumb\u201d that sound useful, but are so broad as to be almost irrelevant\u2014even dangerous, depending on your personal circumstances.<\/p>\n

Consider the so-called \u201crule of 25,\u201d which is as simple as it is deceptive. It simply states that, before we retire, we should have saved up 25 times the yearly amount we plan to spend in retirement.<\/p>\n

That\u2019s a lot! The chart below matches up how much a retiree plans to spend (setting aside inflation to make things a bit simpler) to see how much they\u2019d need to save, going by this \u201crule.\u201d<\/p>\n

\"\"<\/p>\n

Now let\u2019s say our hypothetical investor earns $100,000 a year and saves 20% (much more than the average American does) to get to retirement quickly. At that rate, assuming an 8.5% return from stocks (around the market\u2019s historical rate of return), it\u2019s going to take a bit over 29 years to get to retirement.<\/p>\n

If you\u2019re young, that might sound like a long time, and if you\u2019re older, you might think you don\u2019t have enough time to get there. In both cases, though, this anxiety is built on a false premise, because the \u201crule of 25\u201d has been debunked by none other than its original author.<\/p>\n

William Bengen invented the related \u201c4% safe-withdrawal rate\u201d based on historical research in 1994. What it basically means is that you need to have 25-times your retirement spending saved up for retirement. If you have less, you face the risk of running out of money when you\u2019re very old, exactly the worst time to be broke.<\/p>\n

However, Bengen updated his rule to 4.7% in 2022<\/a>, based on updated data. So problem solved, right? Nope.<\/p>\n

I mean, I guess that\u2019s a little reassuring, as we\u2019re now looking at something more like the \u201c21.27-times rule.\u201d Not a nice whole round number, to be sure, but at least it\u2019s more grounded in actual data. But be that as it may, there are still a lot of assumptions in Bengen\u2019s model.<\/p>\n

There is, however, a much better alternative.<\/p>\n

CEFs: The Key to a Faster Retirement<\/p>\n

There are many closed-end funds (CEFs)<\/a> designed to translate the long-term roughly 8.5% annualized historical returns of the stock market into a regular income stream that retirees can use to replace a salary.<\/p>\n

For one example, let\u2019s take the Liberty All-Star Equity Fund (USA), a broad-based equity CEF holding stocks like Microsoft (MSFT), Visa (V), Amazon.com (AMZN), Wells Fargo & Co. (WFC), Broadcom (AVGO) and other stalwarts of the US economy. As I write this, USA \u201ctranslates\u201d its profits from these stocks into a 10.6% current yield.<\/p>\n

On that basis alone, we could say that an investor needs just $943,397 saved, which would take about 17 and a half years to get for someone making $100,000 and saving 20%, compared to the previously mentioned 29 for the so-called \u201crule of 25.\u201d<\/p>\n

Now I know that there are naysayers out there who attack CEFs, saying that these high payouts aren\u2019t sustainable. And yes, USA\u2019s dividend does float some, tied as it is to the fund\u2019s underlying net asset value, or NAV. So let\u2019s look at the history.<\/p>\n

USA has been around for 39 years, and has paid about 82.4 cents per share per year on average in payouts in that time. That\u2019s about 11.6% of the $7.13 at which its shares traded back in 1987, while the fund\u2019s lower market price (since it gives out all of its profits as dividends) meant investors could get in or out of USA whenever they wanted.<\/p>\n

USA\u2019s Price Chart Looks Worrying \u2026
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Now that lower market price may look like a concern. But USA gave retirees enough passive income to maintain their financial freedom throughout the end of the Cold War, the dot-com bubble, the housing bubble and Great Recession, and of course the slow recovery of the 2010s and the pandemic and its aftermath.<\/p>\n

And here\u2019s the real takeaway: This chart shows us what would\u2019ve happened if an investor had reinvested their dividends back into USA.<\/p>\n

\u2026 Until You Add the Dividends Back In
\"\"<\/p>\n

That\u2019s a staggering 1,840% profit over several decades, thanks to this fund\u2019s ability to \u201ctranslate\u201d profits into dividends that investors can either put back into the fund or use to pay the bills. USA, and funds like it, give us that choice.<\/p>\n

4 MORE CEFs That \u201cTranslate\u201d Gains Into CASH (They\u2019re Top Picks for 2026)<\/p>\n

I don\u2019t know about you, but I\u2019d rather not have to risk selling any shares into a selloff to keep my bills paid. That not only shrivels your income stream but your upside, as well.<\/p>\n

That\u2019s why we love CEFs like USA. With their 9%+ yields, these funds pay us enough in dividends to pay our bills, no matter what the market is doing.<\/p>\n

This is exactly what my top 4 CEFs for 2026 are designed to do. Together, they yield a rich 9.2%, and they hold the top blue chip stocks, bonds and real estate investment trusts (REITs).<\/p>\n

All 4 of them are ripe for buying now, as the calendar flips to the new year. Click here and I\u2019ll walk you through each of these 4 solid income (and growth!) picks and give you a free Special Report revealing their names and tickers<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"Millions of investors are making a critical mistake that could leave their finances vulnerable\u2014and at the worst possible…\n","protected":false},"author":2,"featured_media":376049,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39],"tags":[28,147,530],"class_list":{"0":"post-376048","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-personal-finance","10":"tag-personalfinance"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/376048","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=376048"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/376048\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/376049"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=376048"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=376048"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=376048"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}