In the mean time, Randy and Eleanore, you can take Sara Gamtt's question
Hi Sara - Low interest rates are great if you want to borrow, but lousy if you want income. It may be like this for a while, so alternatives may be in order. Unfortunately, higher income potential may mean higher risk. May people are looking at preferred stocks that pay 4-6%. You can search online for individual preferred stocks or an ETF such as PFF (yields about 6%). Preferred stocks carry the same risk of common stocks. Untility stocks may also be worth considering along with MLP's (master limited partnerships). Don't take these as actual recommendations You need to explain more of your situation with a financial advisor who can get a better picture of your needs and tolerance for risk.
To Sara Gamtt: Yours is a problem that many folks are experiencing these days. There are no easy answers. A focus on "income" rather than "cash flow" restricts thinking about investments and may limit you to fixed-income (bond-type) products. There is a way to both provide the appropriate amount of annual cash you need while growing the investments at the same time. This requires an adjustment in thinking about investments and may "feel" more risky because it involves moving into the equity (or stock-based) markets. In fact, such a new approach will likely be less "risky" than all bonds. If you are open to this "new" approach, a good starting point would be to either engage a fee-only advisor and to learn as much as possible about basic investment strategies. For example, I teach a course in very basic investments at our local adult schools, which is designed for beginner-investors; maybe there is one like that in your area.
Thanks all. When you're ready, here's our next question from David
David - The analysis by Bill Bengen (a fellow NAPFA member) that started the 4% safe withdrawal rate concept assumed a 60% equity, 40% bond allocation and a 30 year time horizon. If you continue to save for the next 8 years along with the growth in your account, you may be able to invest more conservatively to meet your goals.
Hi David - A gentleman name Harry Browne developed the "permanent portfolio" that consists of 25% stocks 25% Treasury Bonds, 25% Currency (Swiss Franc) and 25% metals (gold). The concept is to provide "non-correlating" assets that will do alright during most any economic situation. There is a mutual fund called "Permanent Portfolio", PRPFX that mimics much of the strategy. Any mutual fund is a prospectus item, so please read the funds prospectus before investing in it

To David Curran: The investment asset allocation of 60% equities/40% fixed-income products would probably meet your long-term needs and provide your target returns. My concern for you would be whether you are prepared for eventualities prior to retirement that might sideswipe your investment plans. For example, what if either of you is disabled--do you have LTD insurance? Can either of you survive the other with what resources are available to them? Do you have Long-term care insurance? What about medical insurance before and after retirement? Does your company provide medical insurance, or will you both carry your own after retirement at age 62? And, lastly, is it your wish to leave your investments to heirs or do you plan to spend it on yourselves? Are there family members, such as parents, that might need your assistance? So you see, what seems like a simple question to y ou, becomes a complex one for a professional advisor. You have planned and done well to this point and I send you my good wishes for continuing to do so in the future.
David, based on your pension and investment info, you may also wish to consider postponing Social Security until age 70 allowing your benefit to grow by 8% every year between ages 66 and 70. Additionally, when your spouse turns 66, you could claim and suspend your benefit and your spouse would file a restricted application for spousal benefits only, receiving 50% of your full retirement benefit until her age 70, when she will claim her own higher retirement benefit.
Thanks, all. Some great suggestions!
Here's our next round of questions from Rebecca Baldwin

FrankM, With low interest rates and low bond yields, future bond returns will most likely be lower than they have been in the past. That being said, it is important to have some bonds in your portfolio to reduce the volatility of stocks. As interest rates rise, you will lose some value in your principal of your bond funds, but over time your yields will rise. If you are reinvesting your interest, you will be buying cheaper shares of your bond fund. It is very important to make sure you have the right asset allocation. People always get into trouble when they make their portfolio too aggressive. If you are just retiring, you could easily have another 30 years to invest this portfolio. To make the portfolio too aggressive in stocks and then suffer the losses of a bear market at the beginning of retirement could jeopardize the amount of money you can withdraw from your portfolio. Stick with the basics… the correct allocation, a diversified portfolio, low cost and tax-efficient investments, rebalance on a regular basis.
Thanks, Rich! some great advice for Frank
Bob, a number of studies have stated that 4%, thereabouts, is a safe withdrawal rate for a portfolio. That of course will translate into a specific dollar amount, depending on the size of your portfolio. And, is that specific dollar amount enough to meet your expenses?
I'm not sure what you are expressing with your 200% and 135% numbers - I'm not sure how you can spend more than 100% of investment income without also taking principal - can you clarify?
Bob, if you're still there, let us know. Thanks!
Here's our next question from Flyboy
Flyboy, If you have the ability to live on your investments and military pension until age 70, and you live past the breakeven age, it seems like a good strategy. I would suggest withdrawing from taxable accounts first and leaving your Roth IRA to grow if possible.
Pat, you can take this one from Randy in the mean time
Randy, there is one downside that I think investors don't always consider, which is the health of the insurance company that underwrites the annuity. If you obtained this annuity from a fee only advisor I'm assuming that the advisor checked out the stability of the insurance company, as that company is the backstop for any guarantees that apply to your annuity. One of the features of this annuity is the protection from downside risk (guaranteeing 8%, and then 6%), and the insurance company must be financially healthy to be able to provide this guarantee.
And Pat, here's one from Suzanne
Suzanne, this would not be due to the Fed buying mortgage securities as the payments, which consist of interest AND principal, are guaranteed. However, many borrowers are refinancing at lower rates, so if there is a lot of prepayment going on, with new mortgages coming on board at lower rates, that will affect your dividend. GNMA funds give the best returns when interest rates are stable; right now you are seeing the effect of lower interest rates working their way through the system. And the net asset value of GNMA funds can still go up and down based on interest rate conditions, although not usually as much due to their unique features.
Rich, here's another one for you from Gregg
Social Security is pretty complex.
Below is a web site that you can go to for details on your unique situation. It does cost $20 but is priced to be a service to anyone that wants to use it. Don't worry about phoning or emailing to customer support people there. They are super helpful.
Mob2, be wary of chasing yield in the quest for higher income. You will be adding risk without the higher expected return of equities. I prefer to follow a total return approach.
There are several ways to get income from your portfolio. One is the didend paying, high yield bonds, REIT option. Another, that is more recent and now has been strongly research is the "Systematic Sustainable Withdraw Rate" method. This is taking a certain % of a diversified portfolio.
The most recent research has indicated that using a diversified retirement portfolio including small company stocks, international stocks and bonds, corporate bonds may in the long run result in a longer run net benefit.
Advisors, when you're ready, here's a question from Brad