Dividends from index funds might be 2%? The S&P overall generates about 2% dividends. Capital gains may double that, but are not reliable as the market goes through its cycles.

Interest from cash is likely 1% at best.

From the spending analysis, he's spending ~$6,000/month, or, $72,000/year. With a $3,000,000 net worth, his minimum cash return is 2.4%.

Assuming he's keeping up with inflation, which I'd say is really important given that he's likely got another 30+ years of retirement to fund, he should budget another 2%, and target 4.4%.

I've been stymied, like many investors seeking fixed income, by this protracted low interest rate period. Municipal bond yields are poor, all cash and govm't bonds have very poor yields. I tried peer lending, but was let down by the service company. So I had to get creative.

Over the last 3 years, I built a dividend portfolio that currently yields 6%. All the stocks in the portfolio have a history of at least 10 years of increasing dividends, and I expect that the 6% will increase by about 0.2% annually as they raise their dividends.

With all that said, it seems like he could get a better cash yield with a different mix of investments.