03-08-2014, 08:43 AM
(03-08-2014, 08:05 AM)hendi_alex Wrote: Here is the main problem as I see it. For current workers over the age of 45 or so, your assumptions are nearly meaningless. Three fourths of U.S. Households have less than $300k in retirement savings. Less than half of the other quartile have as much as $600k. For these limited amounts of savings, the average yield on a typical DG type of portfolio will simply be inadequate to cover cash flow needs. IMO most families nearing retirement will have no choice except to chase yield and/or dip into principal. For those fortunate enough to have a pension or who have over $500k in savings, the DG type of portfolio could represent an attractive option. Once again, this represents a small and shrinking part of the population.
Yes, that is a problem, but does not mean dividend growth cannot be an attractive option - though not the only option in a multi-pronged approach to fund retirement.
The bigger barrier for most folks, in my view, is a lack of financial and investing knowledge. Even with a relatively small portfolio of, say $150k, a nice income supplement can be had. The current yield of our portfolio is 3.9% - that would provide about $480 a month in income - nothing to sneeze at as a supplement to SS payments, but....
Building and maintaining such a portfolio, of say 30-40 dividend stocks is a monumental task for most folks.