If you're like me, you've probably read articles by investment experts saying you should draw anywhere from 2% to 4% per year of your total investments during retirement to make your money last. I was thinking about this over my morning coffee and did some quick calculations in my head and figured out, with my dividend investments, I could draw 5% a year of the total value of my investments and never run out of money! The reason being is that 5% of my total investments is only 70% of my annual dividend income. Which means that not only would I never run out of money but, by reinvesting the 30% of dividends, I can continue to grow my dividend income in retirement with no money out of pocket!
The real kicker is, I could start taking the 5% right now, if I wanted or needed to. Of course I have no intention of doing so, because I'd rather grow my income as much as possible while I'm still working. I also plan on drawing only from my taxable account and my ROTH IRA initially, allowing my 401k to and my IRA to continue to grow until I have to start taking payments from them.