Retiring today is no small feat. With inflation nibbling at your nest egg, market volatility around every corner, and interest rates that still fall short of most retirees’ income needs, you may be wondering: Is it even possible to generate a safe, steady income in retirement—without taking wild risks?
The good news? Yes, it is. And not only that—you can potentially earn 8% or more annually from a well-diversified retirement income portfolio.
In this post, we’ll walk through some of the most powerful—and often overlooked—income-producing investments retirees are using to lock in high yields. These include Real Estate Investment Trusts (REITs), Business Development Companies (BDCs), Pipelines (also known as MLPs), Preferred Stocks, and Closed-End Funds (CEFs). Used together, they can create a steady monthly income stream that may help you retire with confidence.
Why 8% Is the Magic Number for Retirees
Let’s face it: the traditional 4% withdrawal rule is under pressure. With bond yields having been historically low for over a decade, and stock markets prone to sharp corrections, relying solely on capital gains or interest from Treasuries just isn’t cutting it anymore.
But with 8% yields, your portfolio doesn’t have to shrink. Instead of selling shares to pay your bills, you can live comfortably off the income alone—leaving your principal intact. That’s the holy grail for most retirees: dependable income without running out of money.
Now, let’s dive into five key building blocks of a high-yield retirement portfolio.
1. REITs (Real Estate Investment Trusts)
REITs allow you to invest in income-generating real estate—like apartment buildings, medical offices, and storage units—without owning property yourself. Legally, REITs must pay out at least 90% of their taxable income as dividends, which means they often sport dividend yields between 5% and 10%.
Many REITs pay monthly, and because rent tends to rise with inflation, they can be a natural inflation hedge.
Examples of popular REITs and funds:
- Realty Income (O) – Known as “The Monthly Dividend Company”
- STAG Industrial (STAG) – Focuses on industrial and warehouse properties
- Vanguard Real Estate ETF (VNQ) – A diversified REIT fund
2. BDCs (Business Development Companies)
BDCs lend money to small- and mid-sized businesses that banks often overlook. In exchange for taking on that risk, BDCs typically earn high interest rates and pass most of the income to shareholders.
Some well-managed BDCs yield 8% to 12% and pay monthly or quarterly dividends. They’re required by law to distribute at least 90% of their income, just like REITs.
Investor tip: Look for internally managed BDCs with a long track record of dividend stability.
Examples:
- Main Street Capital (MAIN)
- Ares Capital Corp (ARCC)
- Eagle Point Income (EIC)
3. Pipelines (MLPs and Energy Infrastructure)
Pipelines transport oil, natural gas, and other energy products across North America. Their income comes from long-term contracts—not the price of oil—so their cash flow is often very stable.
Many are structured as Master Limited Partnerships (MLPs) and yield 7% to 10%, sometimes more.
Even better, much of the income is tax-deferred thanks to depreciation, which makes them especially attractive for taxable accounts.
Examples:
- Enterprise Products Partners (EPD)
- Energy Transfer LP (ET)
- MPLX LP (MPLX)
4. Preferred Stocks
Preferred stocks are a hybrid between common stocks and bonds. They usually don’t grow much, but they offer higher income and more safety than regular stocks.
Many preferred shares yield 6% to 8%, and prices tend to be more stable than the common stock of the same company. They’re often issued by utilities, banks, and large REITs.
You can buy individual preferreds or go with diversified ETFs and funds.
Examples:
- iShares Preferred and Income Securities ETF (PFF)
- FFC – Flaherty & Crumrine Preferred Income Fund
5. Closed-End Funds (CEFs)
Closed-End Funds are a powerful, often misunderstood tool for income investors. Unlike ETFs, they don’t create or redeem shares daily. Instead, they trade like stocks—often at a discount to their net asset value.
That means you can buy a basket of income-producing assets (bonds, preferreds, REITs, etc.) for less than they’re worth, and many CEFs pay monthly distributions in the 7% to 10% range.
Top CEF categories for retirees:
- Municipal bond CEFs (tax-free income)
- High-yield bond CEFs
- Covered call CEFs
Examples:
- Nuveen AMT-Free Municipal Credit Income (NVG)
- Eaton Vance Tax-Advantaged Global Dividend Income (ETG)
- Cohen & Steers Quality Income Realty Fund (RQI)
Real-Life Example: How 8% Income Can Work for You
Let’s meet Tom and Carol, a retired couple in their late 60s. They’ve saved $500,000 for retirement and want to generate steady income without constantly worrying about stock prices.
They decide to build a diversified income portfolio using the strategies above:
- $100,000 in REITs (average yield: 7%)
- $100,000 in BDCs (average yield: 9%)
- $100,000 in Pipelines (average yield: 8%)
- $100,000 in Preferred Stocks (average yield: 7%)
- $100,000 in CEFs (average yield: 9%)
Total income at an average blended yield of 8%: $40,000/year—or $3,333/month
That income comes in the form of dividends, interest, and distributions—paid monthly or quarterly—and their principal remains untouched.
Tom and Carol now sleep better at night, knowing their monthly bills are covered, and their savings can last for decades.
Key Tips for Building Your Own 8% Income Portfolio
- Diversify: Don’t put all your eggs in one basket. Use a mix of income assets to reduce risk.
- Watch for red flags: Avoid chasing unsustainable yields above 12%—they often signal danger.
- Reinvest during the accumulation phase: If you’re not yet retired, reinvesting income can turbocharge your compounding.
- Use retirement accounts wisely: MLPs and CEFs can create tax headaches in taxable accounts. Use IRAs when appropriate.
You Can Retire With 8% Income—Without the Stress
The days of relying solely on CDs and bonds for income are long gone. But with the right mix of high-yield investments, you can build a steady, resilient income stream that lets you retire in comfort—even in today’s uncertain world.
You don’t have to be a Wall Street pro or a millionaire to take advantage of these opportunities. Just a willingness to learn, diversify, and choose wisely.
This blog post is excerpted from my book:
9% Retirement Paycheck: How to Generate Steady, Worry-Free Income for Life
Available now at Amazon.com in Kindle and paperback formats.
Inside the book, you’ll find even more strategies, ETF ideas, and real-life examples to help you build a reliable income stream—without the stress of watching stock tickers all day.
Disclaimer: For Educational Purposes Only
The content on this website is intended for general educational use and should not be considered personalized financial, legal, or tax advice. Always consult a qualified professional before making financial decisions. All investments carry risk, and past performance is not a guarantee of future results. The author assumes no liability for actions taken based on this content.