Ep.140 – Rising Dividends
At retirement, your whole financial life essentially collapses down to one binary question: will your money outlive you, or will you outlive your money?
Volatility in the market is often seen as a risk, but it's important to differentiate between the two. The real risk lies in not having a plan that can sustain your financial needs throughout retirement. It's not about meeting a benchmark; it's about developing a plan and staying committed to it.
The dominant factor in long-term financial outcomes isn't just your investment performance – it's your investment behavior.
ADDITIONAL RESOURCES YOU MAY LIKE
1 Big Idea to Think About
The critical factor in retirement planning is ensuring that your income keeps pace with rising costs over time due to inflation. Neglecting this aspect can unknowingly lead to a plan that risks running out of money.
1 Way You Can Apply This
Develop a retirement plan that accounts for increasing income needs to match inflation rates. Consider investments that offer dividend growth potential to counteract the erosion of purchasing power over a 30-year retirement period.
1 Question to Ask
How can I adjust my retirement plan to ensure my income growth keeps up with inflation over a multi-decade period?
Key Moments From the Show
[00:00:00] Introduction: Retirement boils down to one critical question—will your money outlast you or vice versa?
[00:01:00] The Impact of Inflation: Inflation raises the cost of living significantly over 30 years; failure to increase income accordingly can lead to financial shortfall.
[00:02:36] Compounding and Dividends: Companies in the S&P 500 have raised dividends faster than inflation, aiding retirement income growth.
[00:03:45] Equity vs. Bonds: Equities historically outpace bonds due to higher compounding rates, offering a margin of safety over time.
[00:05:05] Investment Behavior: Long-term financial success is more about behavior than the actual performance of investments; sticking to a plan through market volatility is crucial.
Resources Featured in This Episode:
Funded Contentment: Am I Going to Be Okay?