(A Letter from Sue)

Let’s talk about retirement rules, shall we? You know that famous 4% rule everyone keeps talking about? Well, I broke up with it. And just like any good breakup story, this one comes with its share of drama, revelations, and ultimately, a happy ending!

First, What’s This 4% Rule Everyone’s Raving About?

Picture this: You’ve saved up a nice nest egg for retirement. The 4% rule suggests you can withdraw 4% of your savings each year, adjust it for inflation, and supposedly have a 95% chance of not running out of money. Sounds pretty sweet, right? It’s like having a financial GPS telling you exactly how much you can spend without getting lost in the “running out of money” wilderness.

But Here’s Where Things Got Interesting…

As I dove deeper into the FIRE (Financial Independence, Retire Early) movement, I started noticing something that made me raise my eyebrows. You see, while everyone was focused on this magical 4% number, I was watching the stock market do its usual roller coaster impression. And let me tell you, when you’re actually retired, that roller coaster feels a lot scarier than when you’re still working!

The Numbers Don’t Lie (But They Do Make You Think)

I’m a bit of a data nerd, so I started looking at the S&P 500’s history since 1957. Sure, share prices have grown more than dividends over time. But here’s the kicker: the market has gone down about 30% of the time year-over-year. That’s like planning a picnic where there’s a 30% chance it’ll rain on your parade!

Meanwhile, dividend cuts? They happen less than 10% of the time. Now that’s more like my style of picnic planning!

Why I Chose Team Dividend

Here’s why I jumped ship from the 4% rule to dividend investing:

1. I’m Done Playing Market Timing Roulette

With the 4% rule, selling shares during a market downturn is like trying to catch a falling knife while juggling. No thanks! With dividend investing, I just collect my regular payments and let my portfolio do its thing.

2. It’s My Kind of Stress-Free

Look, retirement for me isn’t about sipping martinis on the beach (okay, maybe sometimes). It’s about not having to check the stock market every day like I’m watching a horror movie. When a recession hits, I don’t want to be thinking, “Guess we’re having rice and beans this month!“

3. The Family Legacy Factor

This one’s close to my heart. With dividend investing, I’m not just building a retirement fund - I’m creating a legacy for my son. The beautiful thing about living off dividends is that the principal can stay intact. It’s like planting a money tree that can keep growing fruit for generations!

But Let’s Keep It Real

Now, I’m not saying dividend investing is perfect. Sometimes fund companies cut their dividends (though it’s rare with well-established dividend ETFs). And yes, when the market’s having a party during bull runs, my dividend portfolio might not be the life of that party. Tax planning can be trickier too - it’s like trying to predict how many cookies your kids will actually eat at a birthday party.

The Plot Twist

Here’s something cool that wasn’t available when the 4% rule became popular: Covered Call Income Funds. These fancy newcomers tap into the options market that used to be off-limits to regular investors like us. Think of them as the Swiss Army knife of income investing - they might give up some upside in strong markets, but they can be lifesavers when markets are flat or falling. Not only that but a sustainable 12% yield is common and achievable which beats the heck out of the 4% rule.

The Bottom Line

Here’s what I’ve learned: There’s no one-size-fits-all in investing. Just like there’s more than one way to bake a cake, there’s more than one way to build a comfortable retirement. The 4% rule isn’t wrong - it’s just not right for me.

I chose dividend investing because it gives me more control, lets me focus on a dependable income rather than watching stock prices bounce around, and helps me build something lasting for my family. Plus, it lets me sleep at night knowing I don’t have to sell my investments at the worst possible time just to buy groceries.

Remember, investing is like choosing a dance partner - you need to pick the style that matches your rhythm. For me, dividend investing is my perfect dance partner. We might not win “Dancing with the Stars,” but we’re having a great time, and we’re in it for the long haul!

Stay invested, Sue