RE: LeoThread 2025-08-21 18:48

The core of the retirement strategy involves relying on dividends to sustain life in retirement. An investment of $100 is expected to yield approximately $3 annually in dividends, with these payouts typically rising above inflation over time, safeguarding income's purchasing power.

Dividends' predictability makes them a perfect retirement income source, offering confidence in the expected income for future years. Comparatively, share prices are highly unpredictable.

Moreover, over time, a portfolio should appreciate beyond inflation levels.

Share prices don't always increase consistently, occasionally experiencing extended periods of stagnation like the early 2000s.

The strategy includes continually investing, reinvesting dividends, and witnessing natural growth until reaching a financial independence milestone where income surpasses expenses. This is achieved through savings rate, returns, and time.

Qualified dividends are favorably taxed compared to ordinary income and short-term capital gains. Tax planning strategies with deferred accounts can also optimize these advantages.

Dividend Growth Investing provides a reliable framework throughout the accumulation and distribution stages. With investments in leading American blue-chip companies, this approach allows resilience during market fluctuations.

The income and principal growth exceeding inflation aids in maintaining and enhancing retiree purchasing power. The stable dividend income stream simplifies retirement planning, further supported by tax benefits.

Well said and that's why 80% of my stocks portfolio is based on companies paying dividends, while only 20% are on companies with high potential, but also higher risk.