Retirement can turn the search for investment income into a delicate balancing act. A portfolio needs to generate enough cash to support withdrawals, but reaching too aggressively for yield can expose retirees to credit risk, price swings, dividend cuts or investments that fail to keep pace with inflation.
"It's essentially a trade-off between the income versus risk," says Roland Chow, financial planner and portfolio manager at Optura Advisors in Burlingame, California. A 10% distribution may look attractive on paper, but income is only useful if it's sustainable, tax-efficient and paired with a level of risk you can live with.
