16/02/2023
In a Traditional Retirement Plan, the aim is to sell a portion of your stock or bonds each year to fund your expenses. But what happens during a market recession?
A retiree will have to sell twice the number of stock/bonds to get the same amount of cash for that year. Lets say he needs $40k per annum, he will have to sell more of his stock/bonds to get his ideal retirement funding.
In comparison, a retiree with a Dividend Portfolio paying out 8-10% would be less affected. Although lower dividends are paid during recession, CAPITAL remains INTACT and there is no need to sell during a recession.
If you are invested in Dividend Paying Funds or ETFs, the stream of income is relatively predictable.
