The basic steps for getting to and living in retirement look something like this:
--Invest that money wisely.
--When you have enough money, retire.
--Live comfortably by drawing down on what you have saved and invested over the years.
The conventional wisdom used to be that you could safely draw down about 4% of your portfolio in retirement without worrying about running out of money over a period of 30 years.
That wisdom is no longer conventional. It has fallen out of favor, in large part due to low-interest rates. When short-term treasury bills were yielding more than 4%, guaranteed, it was a lot easier to pull off. Now, at more like 1%, not so much.
Live The Dream
The dream scenario for a retiree is a guaranteed source of passive income, like a salary that you don't have to work for. Something that, through thick and thin, will always kick out monthly or quarterly checks for you. That way, you don't have to worry about low-interest rates or stock market fluctuations.
Now, "guaranteed" is a tough hurdle, and isn't a word you can often use when you're talking about the stock market. In fact, about the only thing that's guaranteed is that stocks will go up and down, and you won't be able to predict when, especially in the short term.
But with some stocks, you can get reasonably close to guaranteed about one other thing: Dividends. There are a lot of blue-chip names out there that have paid dividends--and annually increased their dividends--for many years, and even decades. Past performance is no guarantee of future results, as you may have heard, but dividends from some stocks might be as close to a sure thing as you can expect out of the markets.