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Dividend Stocks Vs. A Safe Distribution Rate

Aug. 05, 2015 1:42 PM ETGPC, PEP, JNJ, KO, PG
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One of the most interesting investing questions is "How much can you safely withdraw each year from your retirement portfolio?" In 1995, Peter Lynch wrote that a 7% annual withdrawal rate would be prudent for an all-stock portfolio. He later retracted his analysis when financial columnist Scott Burns proved that a 7% withdrawal rate could put you back into the work force just to make ends meet.

There is not a lot of research in this area since most people spend their time contemplating capital accumulation, not spending it. However, there are a few studies on "safe" withdrawal rates. Let's look at a few of them and consider what could be a better alternative...

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