The maths is simple: capital needed = annual income wanted ÷ yield. For $12,000 a year, that is $600,000 at a 2% yield, $400,000 at 3%, about $300,000 at 4%, $240,000 at 5% and $200,000 at 6%. The cashflow calculator above runs the same table for any target.
| Portfolio yield | Capital needed for $1,000 a month |
|---|---|
| 2% | $600,000 |
| 3% | $400,000 |
| 4% | $300,000 |
| 5% | $240,000 |
| 6% | $200,000 |
Read the table the right way round. The expensive rows are not a rip-off and the cheap rows are not a bargain — they are the market pricing risk. A broad index fund yields around 1.5–2% because buyers are paying for growth. A screened dividend fund reaches 3–4%. Push past 6% and you are usually looking at a fallen price, a payout the market expects to be cut, or an options fund paying a distribution rate that includes return of capital — your own money handed back, shrinking the asset as it pays you.
The variable the table hides is dividend growth. A 3.5% yield whose payout grows 7% a year doubles your income in roughly a decade without you adding a cent — the same rule of 72 that governs compound interest. So the realistic route to $1,000 a month is rarely ‘find a 6% yield’; it is contributions plus a moderate yield plus raises, compounded over years. The retirement calculator works backwards from an income target exactly this way.
One last dose of realism: $1,000 a month before tax is not $1,000 a month in hand, and dividends are never guaranteed — companies cut them, usually at the worst times. Build the plan on a yield you can defend, and let growth, not hope, close the rest of the gap.