Living Off Dividends in Retirement--Not so Fast

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4K shares of SCHD here! Just retired at 44.

I like to have SCHD. 20% of each ROTH IRA Portfolio. Yield: 3.75% 60% SPY. 20% Various Income Funds, PFF, ILTB, TLT.....What are more interesting buys for long term growth? I want to get in with about 100k in cash savings lying waste to inflation

I started investing in dividends with my taxable account. I used the buy and hold strategy in my Roth, adding some Berkshire B stock, SCHD, and an S&P 500 and total market exchange-traded fund.

Like Warren Buffet said, dividends are only good if the business you’re investing into can’t make good use of that capital. So if you’re trying to invest into businesses with actual growth, looking at dividends is a waste of time. Why are you investing into a company if they’re returning capital to you because they think you can make better use if it than they can. It’s not much different from bond investing. The way I see it if you have a $1 million at some point, that’d be enough to create a portfolio that would pay you between 50k-70k in dividend income...

Well, I have been retired for 7 years, and I've been living off dividends and SS. I have more income than I need, so I use a lot of my dividends to buy more stock. I think my portfolio is pretty conservative, and it yields 3.98% - I wouldn't touch high-yield with a ten-foot pole. Yes, it is a dividend portfolio - I have 41 different stocks. I am aiming to keep my financial assets and income growing by at least 5% a year. So far, so good!

So buy both funds, growth and dividend . When you retire and you need to withdraw, take from the growth fund when the market is high. Take from dividend fund when it's low.

If this mythical dividend investor is using 100% of their dividends to cover living expenses, then this implies that they are spending all of their social security income as well as all of their dividend income just to make ends meet. If someone is actually in that position in retirement and has no way of reducing their expenses, then the problem isn't their choice to do dividend investing, their problem is that they have zero safety margin and therefore have enormous risk. Ultimately, this really means that they don't have enough in their portfolio and it's too risky for them to be retired. It doesn't matter which investment method they chose, they simply lack the investment money to make it work over time. Either they make enough in dividends to pay the bills and risk dividend reductions, suspensions, or inflation, but don't have anything left over to reinvest, or they sell enough stock to pay their bills and don't have any means of replacing the shares they sold. Such a portfolio is very likely to decline in value over time unless some rare event gives it a big boost. Since this video was made at or near the market peak in late 2021 or early 2022, and it's now the beginning of 2023, it's even more clear how dividend investing can offer better downside protection and risk management. From the vantage point of early 2023, your method requires the investor to sell shares that have fallen in value by 20% or more in an inflationary enviroment where their expenses have likely increased. On the other hand, the dividend investor is likely doing better since they may not need to sell any shares unless their dividends don't fully cover the increase in their expenses from inflation. It may well be that their dividends increased enough to cover the higher expenses. I'm not saying that total return isn't the way to evaluate things, I'm saying that you've failed to account for risk in your analysis, and, as this last year has demonstrated, you can't ignore risk when making investment choices.

I don’t think anyone intending to live off dividends is investing in VTI, VOO or any other broad market index. Sort of a silly thing to start your video with.

THINKING OF LIFE AFTER RETIREMENT is really a pain in the ass…. What’s the best advice for someone worried over Retirement

My experience many ppl psychologically have a tough time selling shares, living off div can help solve that problem. This solution is not math based is SWAN based. Good div growth stocks are much more stable than SPY and div do not fluctuate nearly as much as the market.

I’m desperate to preserve and grow my portfolio of $800k, What retirement investment approach should I take to create a comprehensive portfolio allocation that balances the concerns of risk aversion and returns that meet yearly inflation

hi Rob, the flaw I see here is you are focusing on dividend funds instead of a basket of high quality dividend stocks that you can pick up when are under valued giving you a high yield

I think a lot of dividend investors will be using much higher yields respective to those first few examples. Plus, even in retirement you can reinvest what you dont need which will help out the portfolio through the years.

all I know is that I wasn't really investing for dividends, and since I switched up, I am now earning $3,051.17 per month YTD. I still have another 10 years until retirement, so I keep reinvesting it for now.

Just my 2 cents. if your retired and using the dividends as added income then your probable don't need to have the growth.

A comment I've recently heard that resonated with me is that value is growth. What most people think of as growth is in reality speculation on overvalued assets, and while these assets can grow prodigiously over short periods of time, they aren't going to beat the growth of underpriced and fundamentally strong value companies over the long run.

As many others have pointed out there are quite a few blue chip stocks with dividends in the 4-6% range and many of those stocks consistently raise their dividends annually and have done so for many years. Furthermore qualified dividends are taxed at 0% until the income for a retired couple goes above about $119K in 2023. You do need to buy individual stocks though.

I’ve been loving your videos! Solid information. Keep it up.

Enlightening, as always, thank you. Given the current situation, would you modify this advice, or does it still apply?