My friend needs some advice:

Scenario:

$90K cash
$13K/yr needed to live off for as long as possible.
How to invest money in something basically no more risky than a MM account to get some sort of better return?

thanks

not planning to include any specific details, but the financial situation is basically that this is the ONLY income that exists.

Is the $13k/yr needed immediately?

yeah. $1100/month needed to cover expenses.

For 90k to generate a 13k income would require an annual return of 14.5%.
Its just not possible to accomplish that while staying no more risky than a MM account . If someone offers you a return of 14.5% on your money , please run in the opposite direction .

How long does s/he need it to last? 5 years at $13K, 50 years at $13K, or 5 years at $13K adjusted for inflation each year, i.e., Yr 1: $13K, Yr 2: $13.3, Yr 3: $13.8...

I don't think it's going to last very many years... They could put it in a money market account or short term CD (I'd suggest short term since interest rates appear to be headed higher) they could probably earn 3-4% APR. If we assume inflation (or an increase in your friend's cost of living) of 3% each year, then they will use up the $90K in 7 or 8 years. Here are the calculations I worked up in a spreadsheet:

Using a 4% rate of return:

. . .Beginning
Yr . Balance. . . Expenses
== . ========== . .========
1 . . 90000.00 . . 13000.00
2 . . 80080.00 . . 13390.00
3 . . 69357.60 . . 13791.70
4 . . 57788.53 . . 14205.45
5 . . 45326.40 . . 14631.61
6 . . 31922.59 . . 15070.56
7 . . 17526.10 . . 15522.68
8 . . .2083.56 . . 15988.36 <-- $14,461 short

Using a 3% rate of return:

. . .Beginning
Yr . Balance. . . Expenses
== . ========== . .========
1 . . 90000.00 . . 13000.00
2 . . 79310.00 . . 13390.00
3 . . 67897.60 . . 13791.70
4 . . 55729.08 . . 14205.45
5 . . 42769.33 . . 14631.61
6 . . 28981.85 . . 15070.56
7 . . 14328.63 . . 15522.68 <-- $1229.87 short


Even if they manged to find a safe 10% rate of return, they would run out of cash in 9 years:

. . .Beginning
Yr . Balance. . . Expenses
== . ========== . .========
1 . . 90000.00 . . 13000.00
2 . . 84700.00 . . 13390.00
3 . . 78441.00 . . 13791.70
4 . . 71114.23 . . 14205.45
5 . . 62599.66 . . 14631.61
6 . . 52764.85 . . 15070.56
7 . . 41463.71 . . 15522.68
8 . . 28535.14 . . 15988.36
9 . . 13801.45 . . 16468.01 <-- $2933.21 short


Of course these numbers are even more depressing if taxes must be paid on the earnings.

Well, from that, you are looking at Bonds. Which are a bad investment right now because of the rising rate scenario we are in right now. But they preserve your capital investment pretty well.

You might want to look into some bond funds which try to keep the NAV as steady as possible. But these rates will only be in the 4-6 range.

gotcha. so basically, hold in an MM account or one year CDs and wait for rates to actually rise? yeah... that's what it seemed like, money would last around 7yrs in a straight MM account.

NARC, any specific recommendations? 6% seems pretty great compared to CDs right now.

these is the ONLY income that will exist, so I think taxes will be slim to none.