Title: Calculate Carol's $1.8M IRA Return: Is Dividend Investing Beating Inflation? Tagline: $1.8M IRA Inheritance: Is Dividend Stock Investing Generating Enough Return After Inflation? Problem: After the passing of her husband, Carol, a 68-year-old retiree, inherited his $1.8 million Traditional IRA. She's considering investing the entire amount in a diversified portfolio of dividend-paying stocks. Carol aims to live comfortably off the dividends, but is concerned about inflation eroding her purchasing power and whether the dividend yield is sufficient to justify the risk compared to safer alternatives like high-yield savings accounts or CDs, especially after accounting for required minimum distributions (RMDs). She needs to determine if her investment is truly generating excess income after accounting for her cost of capital and the rising cost of living. Solution: By using the Residual Income Calculator, Carol can determine if her dividend stock portfolio is generating sufficient residual income. She can input the expected annual dividend income (after taxes and RMDs), the initial investment amount ($1.8 million), and her required rate of return (which should factor in inflation and her risk tolerance). This calculation will reveal if the investment generates positive residual income, indicating a return above her hurdle rate. If the residual income is negative, Carol should explore alternative investment strategies or adjust her spending habits. Additionally, using the Inflation Calculator she can project the future value of her expenses and assess the sustainability of her portfolio over time. ROI: If Carol's dividend portfolio generates a residual income of, say, $18,000 per year (after taxes, RMDs, and accounting for 3% inflation), it suggests her investment is exceeding her required rate of return and she is on track to maintain her purchasing power. Conversely, if the calculation shows a negative residual income of $5,000 annually, it implies she needs to re-evaluate her investment strategy or reduce her anticipated spending to avoid depleting her IRA prematurely. Identifying this now could save her from a 10% penalty on early withdrawals if she dips below the RMD minimum. Description: Calculate if your dividend portfolio truly outperforms your cost of capital and inflation, maximizing your retirement income. Category: Lead Gen