Considering where to park cash for 10-15 years -- basically create cash flow in early retirement to mitigate SORR. I know many will say put it in the market for that time period, but let’s assume for someone looking for reliable income. I’ve considered HYSA/MM, CDs, MYGAs, Treasury ladder, TIPS ladder, SMAs, etc. seeking return with somewhat reliable cash flow. Not worried about liquidity / early withdrawal — so willing to tie up the funds if that improves return. Am willing to take a little more risk (vs. using treasuries). This also lands in the years where there are no TIPS maturing.
in my early thinking I'm considering:
- MYGAs – downside is max 10 years. highest return I’m finding on A or higher rating is around 5-5.4%. I’m also considering breaking it up across multiple smaller MYGAs in each maturity year and considering companies rated B++, diversifying across a bunch of MYGAs to mitigate solvency risk of the provider (can then get rates up to 5.75%)
- Secondary market annuities (SMAs) – still trying to learn more about these. upside is the rate and they go out further than MYGAs. available from reputable companies, so while they are not covered by state guarantee, there is some solace in the quality of the companies. The biggest risk from my research is the freezing of payments if something is challenged legally. But I can’t figure out how common this is, vs. scary example stories. Here again, I would consider breaking it up across a bunch of small SMAs (each not more than 0.5% fo portfolio, and most less than half of that) to mitigate that risk.
I’d welcome thoughts or other ideas, or any other investment options I’m missing. Particularly from those that are at/very near FI and have thought through transitioning from accumulation to taking income from portfolio.
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