Want expert insights on REITs and BDCs? Join Colorado Wealth Management Fund’s email list—widely regarded as the top REIT analyst on Seeking Alpha. Stay ahead of the market with exclusive updates! [Sign Up Now]
There’s a popular misconception that you need $2 million (or maybe $3 million, depending on who’s trying to scare you) to retire in 2025. Fortunately, that’s not true. If you’ve built up $700K and you’re not trying to rent a private island, there’s a perfectly reasonable path forward.
It doesn’t require massive stock market gains, perfectly timed trades, or some untested annuity product. But it does require a focus on income (real income) delivered by investments built for the job. That’s where REITs, BDCs, and preferred shares shine. They’re not flashy. But they work.
Income > Speculation
We’re not building this plan around the common shares of (NLY) or (AGNC) . Those are trading vehicles. Great for a trade, not something you hold through retirement. The preferred shares, however - like (NLY-I) , (NLY-F) , or (AGNCN) are a different story.
They offer higher yield, reduced volatility, and in many cases, trade below call value. If you want to build a cash flow machine, that’s the toolbox to start with.
BDCs That Show Up for Work
Business Development Companies aren’t new, but they’re finally getting the attention they deserve. A well-run BDC like (MAIN) , (ARCC) , or (TSLX) can provide consistent income through economic cycles. They lend to small-mid sized businesses that don’t have access to cheap capital elsewhere. In return, they get high interest payments and pass a chunk of that along to shareholders.
Not all BDCs are created equal, so due diligence still matters. But if you’re looking for monthly or quarterly income without depending on capital appreciation, BDCs deserve a spot on the roster.
REITs That Don’t Fall Apart
Equity REITs had a rough stretch when rates shot higher, but some came through with strong balance sheets and stable dividends. That’s what we’re looking for. We want REITs that don’t just own property - they own the right property.
Retail names like (FRT) and (ESS) still have solid cash flow. Net lease players like (ADC) and (NNN) provide stability. And while (WPC) spun off part of their portfolio, they still belong on the radar depending on your objectives.
This isn’t a grab bag of whatever yields the most. It’s a hand-picked basket of REITs that hold up when rates move and still have pricing power.
Preferred Shares Still Hiding in Plain Sight
We touched on this earlier, but it’s worth repeating: preferred shares are one of the most underappreciated income tools available to retail investors. Especially now.
Look at fixed-to-floating preferreds from mortgage REITs or BDCs. You’re often getting yields in the 7% to 9% range, discounted prices, and a built-in hedge if short-term rates stay higher for longer.
Examples like (TWO-B) and (CIM-C) provide excellent risk-adjusted return potential. Just make sure you understand the call features, dividend terms, and the difference between fixed-rate and fixed-to-floating structures. This isn’t one-size-fits-all, but the right ones can do a lot of heavy lifting.
Social Security Still Matters
There’s no shortage of articles pretending Social Security is going to disappear entirely. It’s not. And unless you’re retiring extremely early, it’s going to be part of your plan.
For many retirees, Social Security covers 30% to 50% of expenses. That means you only need your portfolio to produce the rest. A well-structured mix of REITs, BDCs, and preferred shares can handle that comfortably - especially with $700K to work with.
Add in a modest cash buffer, possibly a small annuity for stability (depending on your situation), and you’re not just surviving - you’re thriving without relying on growth stocks that don’t pay a dividend.
Final Thoughts: Don’t Panic. Plan.
Retiring in 2025 with $700K isn’t a fantasy. It just requires a shift in focus - from total return theories to consistent income generation. You don’t need to hit the jackpot in tech. You don’t need to obsess over inflation-adjusted withdrawal formulas. You need a durable, cash-flow-producing portfolio that lets you ignore short-term headlines and focus on long-term results.
If you’re building that around monthly dividend payers like (MAIN) , preferred shares like (AGNCN) or (TWO-B), and equity REITs like (ADC), then you’re already ahead of most people.
No panic required. Just good planning.
Join The REIT Forum by Colorado Wealth Management Fund, trusted by over 60,000 investors for expert analysis on REITs, BDCs, and preferred shares.
This article was compiled by my assistant. If there are any mistakes, blame him - I certainly will.
Disclosure: No position in any stock discussed in this article . I may frequently trade in the preferred shares of any mortgage REIT and occasionally in the common shares.
/Amazon%20-%20Image%20by%20bluestork%20via%20Shutterstock.jpg)
/Salesforce%20Inc%20HQ%20building-by%20JHVEPhoto%20via%20Shutterstock.jpg)
/Semiconductor%20close%20up%20by%20Yosi%20Azwan%20via%20iStock.jpg)
