Growing wealth through long-term index investing is straightforward, but selling shares monthly to fund retirement income carries sequence of returns risk that can permanently damage a portfolio. Income-generating assets like private infrastructure, real estate, and structured notes can provide distributions without requiring the underlying portfolio to be sold down.
Growing Money Is the Easy Part
Anyone can grow money. Buy a diversified index fund or a basket of blue-chip stocks, hold for decades, and never sell. Time does the heavy lifting. If you had invested $100,000 in the S&P 500 at the start of 1985 with dividends reinvested, that account would be worth roughly $6 million today. No trading, no stress, just patience.
The hard part is what happens when you need to live off that money.
Why Selling Shares Monthly Is Risky in Retirement
Many people assume the same logic applies in retirement. Sell a little stock each month to cover expenses. In theory it sounds reasonable. In practice it is one of the most dangerous approaches a retiree can take.
Understanding Sequence of Returns Risk
The culprit is sequence of returns risk. If the market drops sharply early in retirement and you are selling shares every month to pay bills, you lock in those losses permanently. You cannot wait for a recovery. You are forced to sell low, and the math starts working against you at exactly the wrong moment. Portfolios built this way can run dry far sooner than any projection suggested.
Building a True Income Infrastructure
This is why building a true income infrastructure matters far more than simply having a large balance. We recommend utilizing income portfolios that pay you without requiring you to sell. That might include a private infrastructure fund offering returns near 10% that are largely non-taxable, a private real estate fund yielding around 7 percent with similar tax advantages, and private mortgage funds delivering approximately 10 percent with partial tax sheltering. Structured notes with 40 percent downside protection can pay around 9 percent, with gains taxed at long-term capital gains rates.
These assets pay you. You do not need to dismantle the portfolio to generate income. The asset base stays intact and keeps compounding while distributions flow to you regularly.
Why the Stock Market Wasn’t Built for Retirement Income
The stock market is a powerful wealth-building engine over decades. It was not designed to be a reliable income machine in retirement. Its volatility, irrelevant during accumulation, becomes a real threat the moment withdrawals begin.
Growing money is something almost anyone can do. Making that money last for the rest of your life requires a very different strategy.
Singer Wealth Advisors is a registered investment advisory firm. Discuss with your financial/tax professionals before investing. Investing involves risk. Past performance does not guarantee future results. Material provided for informational purposes only. Yields discussed for private infrastructure, private real estate, private mortgage funds, and structured notes are historical or targeted ranges as of the time of writing and do not represent the performance of any specific fund or Singer Wealth Advisors strategy; actual returns will vary and are not guaranteed. Tax treatment described, including references to non-taxable or tax-sheltered income, depends on the specific fund structure, current tax law, and individual circumstances; investors should consult a qualified tax professional to determine applicability. The hypothetical S&P 500 growth example is for illustrative purposes only and does not reflect fees, taxes, or the experience of any actual investor.
FAQ Section
What is sequence of returns risk?
Sequence of returns risk is the danger that a market decline early in retirement, combined with ongoing withdrawals, can permanently damage a portfolio’s ability to last, even if long-term average returns are otherwise favorable.
Why is selling stock monthly risky in retirement?
Selling shares to cover expenses during a market downturn locks in losses permanently, since there’s no opportunity to wait for a recovery. This can cause a portfolio to be depleted faster than initial projections suggested.
What are income-generating alternatives to selling stock in retirement?
Alternatives may include private infrastructure funds, private real estate funds, private mortgage funds, and structured notes, which are designed to generate regular distributions without requiring the underlying portfolio to be sold down.
Are private income funds tax-advantaged?
Some private income funds, particularly those investing in infrastructure or real estate, may offer tax advantages due to depreciation and other structural benefits, though tax treatment depends on the specific fund and an investor’s individual circumstances.
Keith Singer
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