Artsdoctor wrote: ↑Wed Jun 16, 2021 3:22 pm
A few people will have so much money that they can live off of dividends no matter how small of a percentage that might be. Most people will need more than that and the Vanguard paper walks you through what those options might be. I think that they covered the topic thoroughly.
I beg to differ, Artsdoctor.
I think the paper was surprisingly clear and informative on the subject of unexpected risks associated with stubbornly insisting on only cashing out the dividends, when those dividends alone aren't enough. So they cover why that's not a great idea, and do so thoroughly.
However, there's barely even a mention of what the other options might be, given a primary concern folks have in the withdrawal stage is withdrawing too much from a limited portfolio and going broke.
I found the phrase, "when accompanied by a prudent spending rule," just once. But there wasn't even a hint of what, exactly, that "prudent spending rule" might be. Nor do they explain why they feel so sure a "prudent spending rule" will work out so well, without too great a risk of running out of money, even while spending all the dividends and then starting to dip into the principal.
The PDF I downloaded was 15 pages. Did I miss something?
In fairness, depending on how much detail is covered, the subject of a prudent spending rule is a big one, and it could fill a separate paper. That's fine. How about maybe a reference to a paper on that, or at the very minimum a more substantial acknowledgement of the issue than a single phrase mentioned in passing?