Key insights
- A retiree is considering reinvesting dividends and interest income into an S&P 500 index fund while drawing down cash reserves for living expenses. While psychologically appealing to receive income, reinvesting and using cash reserves is likely a better long-term strategy for growth, especially given a multi-year cash runway. This could lead to increased investment in equities.
Hello there - my husband and I are newly retired and I’ll need to supplement social security with withdrawal from our accounts. I’d like to limit withdrawal to roughly our div/interest income from our non retirement accounts. We sold a house 2 years ago will spend only a third on our next house which means we have cash on hand to dip in for years. Does it make sense to dip only into this cash and instead of taking div/interest directly, reinvest the div and invest in and S and P index fund? Psychologically it feels better having this drip into our bank account but in terms of smart decision, it’s prob better to just draw down the cash - correct?