14 HONEST Retirement ETFs - What They Actually Pay at 65

Added: 2026-06-02

[00:00:00]Pull up any retirement form on the internet and you will see the same fight on a loop. Someone yelling about owning SCD for life. Someone else swearing Jeepy is the only honest paycheck. And underneath every comment, the same buried question that nobody is actually answering. If you sit down at age 65 with $100,000 in each of 14 of the most talked about retirement ETFs in America, what does each one actually pay you over the next 10 years after the tax man takes his cut? I spent the last decade running this exact math and what I found is going to make some people uncomfortable. The fund with the 11.8% headline yield comes in seventh on the only score that matters. The fund paying you under 2% today quietly finishes first. And the contrarian pick at number 14 is not even a dividend ETF.

[00:00:54]So today, no marketing, no yield chasing, the honest map of what these 14 retirement ETFs actually pay you at 65.

[00:01:03]Here is how I built this. $100,000 per fund. age 65, 22% federal bracket, which is where most [music] US retirees actually land once social security, and a small pension are layered on. 10-year horizon, no reinvestment because we are modeling a retiree taking the income as cash. Qualified dividends taxed at 15%.

[00:01:29]Options premium income from covered call ETFs taxed at 22% as ordinary income because that is how the IRS treats it.

[00:01:38]Foreign dividend funds get a small adjustment for foreign tax withholding.

[00:01:42]And for the contrarian pick at number 14, we use the original 4% rule from William Bangan's 1994 paper with annual inflation adjustments at 2.7%.

[00:01:53]That is the same math behind the Trinity study. Quick disclaimer, I am not a financial adviser and nothing in this video is financial advice. Every projection you hear is based on historical averages [music] and past performance has never guaranteed future results. Please do your own research before you act on any of it. What I ranked these by is not just yield. Yield by itself is a lie. I ranked them by what I call the blended score, which is total after tax cash in your hand over 10 years plus half the ending portfolio value at age 75.

[00:02:30]That number tells you both how much you got paid and how much money you have left. If you only got paid and your principal cratered, you did not win. If you finished with a huge portfolio but never spent a scent of it, you did not retire. The real answer lives in the middle. I excluded four funds before I even started. [music] SPHD, FDV, SD, and IDVY. Each has a methodology issue or a track record that makes them a problem for a 65-year-old looking at a 10-year window. None of the 14 on this list have those issues. The lineup splits into three chapters. The pure [music] income five at the top, the classic dividend ETFs every retiree already knows. The hybrid four in the middle where you are renting out the stock market through covered calls to push your monthly check higher. Then the specialty four and the contrarian one at the end where the answers stop being obvious and start being surprising. Hold on to that because by the time we hit number 14, you will see why the honest answer almost nobody recommends out loud is the answer that wins on the score that actually matters. Let us start with the pure income five. These are the funds your brother-in-law has been telling you about for 10 years. SCHD, VM, DGRO, HDV, and NOBL. the pure dividend equity [music] funds. They all pay qualified dividends. They all sit comfortably in a taxable brokerage account and they all do roughly the same job. What you are about to see is how dramatically they actually differ once you put real money behind them. Item number one, SCHD, the Schwab US Dividend Equity ETF. This is the one that lives in almost every dividend portfolio in America right now. $90 billion under management, [music] sixth largest dividend ETF by assets, six basis points expense ratio, which means 6 cents per year on every $100 you have in the fund.

[00:04:29]About 103 companies inside it currently anchored by Qualcomm, Texas Instruments, United Health, Coca-Cola, and Chevron at the top. The honest numbers right now trailing 12-month yield sits at 3.34% on $100,000 that is $3,340 per year landing in your account as cash. After tax in the 22% bracket because qualified dividends are taxed at the lower 15% rate, you keep $2,839.

[00:05:01]Over the last 10 years, SCHD [music] has historically returned somewhere around 13% annually with dividends reinvested. The 5-year dividend growth rate sits near 7.3%.

[00:05:13]Now, imagine an investor at 65 with that $100,000 position. Over the next 10 years, [music] if those historical averages even roughly hold, the dividend stream alone could potentially pay out around $46,000 in gross cash. after the tax man about $39,785.

[00:05:34]And because SCD's underlying companies have historically grown earnings and dividends together, the position itself could potentially grow to around $253,000 by age 75, even with the cash payouts taken out as income. That is the SCHD picture in one paragraph. Solid yield qualified for the 15% tax rate, [music] growing payouts, growing principle. It is not the highest paying fund on this list, not even close. It is the most balanced and that is why it is the foundation of more retirement dividend portfolios than any other product in the country. Hold that number 253,000.

[00:06:13]We will come back to it when we hit number 11 because the fund I am about to walk you through eight items from now ends with more money than SCHD does while paying you less today. That is not a typo. Item number two, VM, the Vanguard high dividend yield ETF. VM is the cheaper, broader cousin, four basis points expense ratio, [music] over 600 holdings, which makes it nearly six times as diversified as CHD. The trade-off is yield. VM pays 2.25% right now. On $100,000, that is $2,250 per year. [music] And after the 15% qualified dividend rate, you take home $1,912.

[00:07:01]Over 10 years, the gross dividend stream historically clocks in near $29,000.

[00:07:06]After tax, about $25,000.

[00:07:09]The principal at age 75 sits near 196,000 on historical averages. So you got paid less per year than SCHD and you ended with less wealth than SCHD.

[00:07:22]That is the honest summary. The case for VM is not the income. It is the overlap rule. 86% of SCHD's [music] holdings live inside VM, but VM has hundreds of additional companies that SCD's strict screen leaves out. If you already own SCD and you want a touch more breadth without a second layer of fees, VM works as a compliment. [music] If you are choosing between them as a one fund anchor, the math says SCD almost always wins. Item number three, DGRO. The isshares core dividend [music] growth ETF. DGRO is the growth dividend product. Eight basis [music] points expense ratio around 400 holdings with Microsoft, Apple, Johnson and Johnson, JP Morgan, and Berkshire Hathaway at the top. The trailing yield is 2.3% putting it nearly even with VM on income. But DGRO is built on a different screen. It tracks companies that have raised their dividend for at least five consecutive years and excludes the highest payers, which means it tilts toward growers rather than yielders. On $100,000, DGRO pays you about $2,300 per year. After tax, $1,955.

[00:08:40]Over 10 years, the gross dividend stream comes in near 34,000. After tax, about 29,000. Where DGRO earns its keep is the dividend growth rate which has historically sat near 8.5% annually.

[00:08:54]That is faster than SCHD's 7.3.

[00:08:58]The honest framing on DGRO is that it is the bridge between dividends and growth.

[00:09:03]It does not pay you as much today. It quietly pays you more every single year if the historical pattern holds. By year 10, DJRO investors could potentially see their per share payout meaningfully higher than where they started. The principle grows alongside it. Ending value at 75 around 241,000 based on historical averages. If you remember the rule I laid down at the top, what matters is the blended [music] score payment plus what is left. DJRO sits a notch below SCHD on that score, but it is in the same conversation. Worth knowing. Item number four, HDV, the EyesShares core high dividend ETF. This is where the story turns. HDV is the high yield value play. Eight basis points expense ratio. Only 75 holdings heavily concentrated in energy and consumer staples. Exxon, Johnson and Johnson, Verizon, Chevron, Abby. The yield is the headline 2.9% right now, which on $100,000 is $2,900 a year. After tax, $2,465, higher than SCHD, higher than VM, higher than DGRO.

[00:10:23]So why is HDV not the obvious winner of this chapter? Here is the Harry vignette that ties this fund to real money. Harry retired in 2014 with $100,000 [music] to put into a dividend ETF.

[00:10:39]He sat down with SCHD and HDV side by side. SCHD at the time was paying about 3%. [music] HDV was paying about 3 12%. He chose HDV because the yield was higher. The brochure made it look like a clear win.

[00:10:56]$500 more per year in his pocket on day one. 10 years later, in 2024, his nephew picked up the same $100,000 and quietly put it in CHD instead. The HDV position had compounded at roughly 8 1.5% annually with dividends reinvested. The SCHD position compounded at roughly 13% annually. By the end of that decade, the two positions were not close. The HDV side could potentially have ended near $230,000.

[00:11:28]The SCHD side could potentially have ended somewhere around $350 to $380,000.

[00:11:36]The half% of extra yield that looked free in 2014 historically cost the retiree more than $100,000 in lifetime wealth. The truth on HDV is that it does what it advertises. It pays a higher current yield. It just does so by sitting heavier in slower growing sectors. Over 10 years, the gross dividend stream lands near $34,800.

[00:12:01]After tax, near 29,500.

[00:12:05]Ending portfolio value near 10072,000.

[00:12:09]The blended score is the lowest of the pure income 5. HDV is not a bad fund. It is a sector tilt dressed up as an income fund. And at 65 with a 10-year horizon, that distinction matters. Item number five, Nobiel. The ProShares SNP500 dividend aristocrats [music] ETF. Nobel is the prestige product of the dividend world. It only holds companies in [music] the SNP500 that have raised their dividend every single year for at least 25 consecutive years.

[00:12:42]68 [music] names total.

[00:12:45]Automatic data processing 3M, Coca-Cola, Cisco, Abbott. The expense ratio is 35 basis points, which is the highest in this pure income chapter.

[00:12:57]Yield sits at 2.2%.

[00:13:00]On $100,000, that is $2,200 a year.

[00:13:05]After tax, $1,870.

[00:13:08]Over 10 years, gross dividend stream comes in near 28,700.

[00:13:14]after tax near 24,000.

[00:13:17]Ending portfolio value near 222,000 on historical [music] averages.

[00:13:22]Nobel's honest pitch is consistency.

[00:13:25]Every company inside it has raised its payout through every [music] recession, every crash, every Fed cycle since the 80s. That is not nothing. But you are paying nearly six times the expense ratio of SCHD for a yield that is meaningfully lower. [music] and the total return over 10 years has historically trailed SCD by roughly two and a half percentage points annually.

[00:13:47]If you want the comfort of knowing every name in your dividend fund has a 25 plus year track record of consecutive raises, [music] N OL gives you that. If you want the math to work harder, the Pure Income 5 has better options sitting in the first three slots. Take a breath. If you are still here past the pure income five, you are already further down this road than 90% of investors who say they want dividends. Most of them never get past the headline yield. The next four are where the math starts breaking expectations. We are walking into the hybrids, the funds that sell options on top of stocks to push your monthly check higher. One of them pays you over $8,000 a year in cash on a $100,000 position.

[00:14:30]The honest version of that story includes what the IRS quietly takes back at the end of the year. Stay with me.

[00:14:36]The numbers from here on are not what the brochures show. Chapter 2. The income plus growth hybrids. VIG, DVO, [music] GP, and GPQ. These are the funds that try to do two jobs at once. Either they hold dividend growers and let the underlying companies do the lifting, or they hold the broad market and rent it out through covered calls to manufacture a bigger cash payout. Two completely different mechanisms, same goal, more income. Item number six, VIG. The Vanguard Dividend Appreciation ETF. VIG is the slow, steady tortoise, $ 109 billion under management, making it the largest dividend ETF [music] on this entire list. five basis points expense ratio about 338 holdings dominated by Microsoft, Apple, Broadcom, JP Morgan, and United [music] Health.

[00:15:28]The yield is the lowest in this chapter, 1.6%.

[00:15:32]On $100,000, that is $1,600 per year.

[00:15:36]After tax, 1,360.

[00:15:40]If you were judging on income alone, you would skip VIG and never look back, which is exactly what most retail investors do and exactly why this fund is on the list. Here is what changes the picture. VIG's screening rule requires 10 or more years of consecutive dividend increases. The result is a portfolio of companies whose payouts have historically grown at over 9% annually for the last 5 years. That is the fastest dividend growth rate of any of the 14 funds we are covering today.

[00:16:12]Faster than DGRRO, faster [music] than SCHD, almost double VM. So, while VIG pays you the least today, [music] the payout per share has historically climbed faster than any peer in this video. Imagine you are a 60-year-old planner who does not need the income for 5 years anyway.

[00:16:32]Picture an investor who started with $100,000 in VIG today. [music] The cash payout is small, but by year 10, if the historical dividend growth pattern holds, the same $100,000 could potentially be paying out near $2,500 per year, while the position itself could potentially have grown to near $281,000 in price. Gross 10-year dividend stream around 24,500.

[00:17:01]After tax around 20,800, ending portfolio value near 281,000.

[00:17:09]The blended score is solid, top five overall.

[00:17:12]And it is the lowest income fund on this list, which is the part nobody wants to admit out loud. VI [music] is what it is. It is a dividend growth fund, not a dividend yield fund. The mistake retirees make is buying it expecting today's check when its real job is the check 10 years from now.

[00:17:31]Item number seven, D.VO. The Amplify CWP Enhanced Dividend Income ETF. D.VO is where the strategy changes. Instead of letting companies pay dividends and waiting, D.VO holds about 25 highquality dividend stocks and sells covered calls on a portion of them every month. The premium income from those calls layers on top of the dividends, which pushes the total payout up. Yield right now sits around 4.4%.

[00:18:02]On $100,000, that is $4,400 a year paid monthly after tax. Because part of that income is qualified dividends at 15% and part is options premium taxed as ordinary income at 22%.

[00:18:18]The blended after tax number lands near 3,617.

[00:18:23]Over 10 years, the gross dividend stream from D.VO O historically lands near $58,500 after tax [music] around $48,000.

[00:18:34]The principle grows more slowly because covered calls cap the upside in any month where the underlying stocks rally [music] hard. Ending value at 75 near 218,000 on historical averages. Expense ratio is 55 basis points which is the highest of this chapter. That is the cost of an active manager picking the stocks and writing the calls. The fund has historically held up better than SCHD in down years like 2022 because the call premiums cushion the draw down. It is also smaller than SCHD by nearly 20 times which means liquidity in stressed markets can be thinner. The real do pitch is that you get a sustainable mid4% yield with a real human portfolio manager managing the call writing. If you want monthly cash on top of qualified dividend income and you are okay with slightly slower growth in exchange, DVO is a legitimate piece of the puzzle. If you put it in a Roth IRA, you also shelter the ordinary income portion from the higher tax rate, which makes a real difference over a decade.

[00:19:39]Item number eight, Jeppy, the JP Morgan equity premium [music] income ETF. Now we are in covered call territory at industrial scale. Jeppy holds roughly [music] 135 large cap US stocks and writes covered calls through structured notes called ELNs. The yield is the headline 8.44% [music] right now on $100,000.

[00:20:05]That is $8,440 per year paid monthly. Here is where the actual numbers diverge from the brochure. Almost all of that income is taxed as ordinary income, not qualified dividends because of the ELN structure.

[00:20:20]In the 22% bracket after tax, you keep $6,583.

[00:20:27]That is a tax drag of nearly $1,900 per year compared to what an equivalent qualified dividend would lose. Same gross check. Smaller take-home over 10 years. Gross dividend stream lands near 84,400.

[00:20:43]After tax in a regular brokerage account, 65,832.

[00:20:48]Ending portfolio value at 75 [music] near 97,600.

[00:20:54]Read that one again. Ending portfolio value lower than the starting position.

[00:20:59]Jeppy pays you a lot of cash. The covered call structure historically caps how much the underlying stocks can grow.

[00:21:06][music] So on a no reinvest withdrawal model, the principal slowly bleeds. The lesson is account location. Jeffy lives in a Roth IRA. In a Roth, that 22% ordinary tax never touches the income.

[00:21:21]Same fund, different account, an entirely different 10-year outcome. The mistake is putting JEPI in a regular taxable brokerage account because the yield looks attractive. Item number nine, GPQ, the JP Morgan NASDAQ equity premium income ETF. GPQ is Jeffy's techtilted sibling. Same covered call structure, but [music] the underlying basket is concentrated in the NASDAQ 100 companies rather than the S&P 500.

[00:21:51]That tilts the fund toward the largest growth stocks in the country. The yield is even higher, $10.35% right now on $100,000. [music] That is $10,350 per year. After tax, $8,73.

[00:22:07]This is where the math gets interesting.

[00:22:10]Because the underlying basket is more growth oriented, GPQ has historically captured more of the up market than Jeeppy. Over 10 years, the gross dividend stream lands near 124,000.

[00:22:22]after tax around 97,000 ending portfolio value at 75 near 118,000 on historical averages which is meaningfully better than Jet's 100ish,000.

[00:22:37]There is a catch every JPQ buyer needs to understand.

[00:22:41]The monthly distribution is not fixed.

[00:22:44]Over the last 3 years, JPQ has decreased its monthly payout 13 times and increased it 22 times. That is normal for the covered call structure. Income is mechanically tied to market volatility. When markets are calm, the premium income drops. When markets are jumpy, premium spike. You cannot budget on the number printed in the brochure because the brochure shows a backward-looking trailing yield that may not repeat next month. JPQ in a Roth again is where the math works. Roughly $1,500 per year of tax drag disappears.

[00:23:20]10 years of that is $15,000 that stays in your pocket and gets reinvested if you [music] want or spent if you need.

[00:23:28]Account location is not optional with these funds. [music] It is the entire decision. Now, we hit the part most retirees get wrong without realizing it.

[00:23:37]The next four ETFs all look like obvious income winners on a yield screener. One advertises 11.8%.

[00:23:45]Another pays you monthly in foreign currency. A third quietly returns part of your own money back to you and lets the brochure call it a dividend.

[00:23:55]Each one has a real use case. Each one also has a catch buried in the prospectus footnotes that the influencer crowd never reads on camera. By the time we are done with this stretch, you will know exactly which of these specialty funds belong in a Roth, which belong in a taxable account, [music] and which one is going to leave you with $60,000 less wealth at age 75 than you started with.

[00:24:17]Chapter 3, the specialty four and the contrarian one. SPYI, DGRW, SHY, VYMI, [music] and the pick that is going to upset the comment section. Let us walk through them honestly. Item number 10, SPYI, the NEOSS and P500 highincome ETF. SPYI advertises an 11.8% yield on $100,000, that is $11,800 per year paid monthly. after tax around 10,5002 if you assume roughly half of the distribution is classified as return of capital which is how Neos has historically structured it. Here is the part nobody tells you out loud. Return of capital is not income. It is your own money being handed back to you. The IRS [music] treats it as a reduction in your cost basis rather than taxable income.

[00:25:11]Which is why it looks so attractive in the after tax column. You are deferring tax, not avoiding it. When you eventually sell the fund or it returns enough capital to bring your basis to zero, the IRS catches up. There is a second catch. Because part of every monthly check is your own principal being returned. The underlying portfolio shrinks over time on a withdrawal model.

[00:25:34]SPYI has only been live since August of 2022, which means it does not yet have a full market cycle [music] of data. the model run from the historical S&P 500 index plus the call writing strategy and the return of capital structure projects 10-year gross income near 129,000 after tax around 115,000 ending portfolio value at 75 near 83,000 read that ending number one more time 83,000 that is $17,000 less than you started with SPYI delivers the biggest cash payout of any fund on this list and the smallest ending balance. If you live exactly 10 years past 65 and have other assets, that math might be fine. If you live to 90, you have spent down your principal at the worst possible time.

[00:26:28]The real SPYI verdict is that it is a powerful tool for a specific moment in retirement. Not a one fund anchor, not a sleep at night holding, and the 11.8% 8% yield while real as a cash number is not what it looks like once you understand what is inside it. Item number 11, DGRW, the Wisdom Tree US Quality Dividend Growth ETF. This is the fund I told you to remember from item 1. The one paying under 2.1% today that quietly finishes first by the blended score. DGRW holds about 300 US companies screened for quality and dividend growth. 28 basis points expense ratio pays monthly which is unusual for a dividend growth fund.

[00:27:16]Yield right now sits at 2.1% on $100,000 that is $2,100 per year after [music] tax in the 22% bracket $1,785.

[00:27:30]That is the lowest current payout in the second half of this video. Lower than HDV, lower than NOBL, way lower than the covered call funds.

[00:27:40]So why does DGRW finish on top total return? DGRW has historically returned near 13.8% annually over the last decade, which is the highest of any of the 14 funds we are covering today. The dividend growth rate has historically tracked near 7%. [music] So you start with a small check, the check grows steadily and the principal grows aggressively underneath it. Over 10 years, the gross dividend stream comes in near 29,000. after tax [music] around 25,000 ending portfolio value at 75 near 302,000 302,000 that is $50,000 more than where CHD ended 60,000 more than DGRO more than $200,000 more than where SPYI ended and the blended score after tax cash plus half the ending value comes out to 176,000 number one of the entire 14 picture this imagine an investor who was 47, slightly skeptical about dividends and [music] convinced everyone in his family is being too conservative. He put $100,000 in DGRW [music] about a decade ago instead of in SCHD.

[00:28:53]He took the small monthly payouts as cash. Sometimes complained that his check was barely covering his streaming subscriptions while everyone else was bragging about their SCHD income. Today, on historical averages, his account balance could potentially be near $300,000.

[00:29:10]SCD investors who took the higher payout could potentially be near $254.

[00:29:16]The fund that paid the least today historically built the most wealth while still cutting a check every month. The actual DGRW verdict [music] is that if you can stomach a smaller current paycheck in exchange for a meaningfully larger principle at 75, DGRW historically has been the best blended outcome of any dividend ETF in this list. Almost nobody talks about it because the yield does not show up in the screen when you sort by income, which is exactly why it works. Item number 12, SCHY, the Schwab International Dividend Equity ETF. SCHY is the international cousin of SCHD, 14 basis points expense ratio, around 200 holdings from developed international markets. Yield right now sits near 3.8%.

[00:30:07]On $100,000, that is $3,800 a year.

[00:30:12]After tax, after accounting for the foreign tax withholding most international funds incur, you take home around 3,230.

[00:30:20]The math on SCHY breaks slightly for two reasons. One, it has been live only since October of 2021, so the long-term track record is short.

[00:30:31]Two, [music] international dividend stocks have historically lagged US dividend stocks meaningfully over the last decade. The projection for the next 10 years [music] has total return near 8% annually rather than the 13 we see in SCHD.

[00:30:46]Gross dividend stream over a decade around [music] 45,600 after tax around 38,800.

[00:30:56]Ending portfolio value at 75 near 150,000.

[00:31:01]SCHY has one specific use case [music] where it earns its place. If you hold it in a taxable brokerage account, you can claim the foreign tax credit on your US tax return, which can recover most of the foreign withholding. Hold it inside an IRA and that credit disappears. So, account location flips here. SCY in taxable, Jeepy and Jeep Q in Roth. The real playbook treats each fund as a tax structure, not just a ticker. Item number 13, VMI, the Vanguard International High Dividend Yield ETF.

[00:31:36]VMI is the higher yield international play, 17 basis points expense ratio, around 1,200 holdings, which makes it one of the broadest funds on this list.

[00:31:47]Yield sits at 5.5%.

[00:31:50]On $100,000, that is $5,500 per year.

[00:31:55]After tax [music] around 4,675 with the foreign tax adjustment.

[00:32:01]Over 10 years, gross dividend stream lands near 67,600. [music] After tax, near 57,400.

[00:32:11]That is solid income, comfortably higher than SCHD's [music] after tax cash. The trade-off is the ending portfolio. International dividend [music] stocks have historically appreciated more slowly than US dividend stocks. So the principal at age 75 sits near 118,000.

[00:32:30]You got paid well and your principal grew, but the growth was muted. Vime's real pitch is the same as wise with two adjustments. The yield is higher. The diversification is broader. The historical total return has been more in line with global equity averages, which means [music] you are explicitly diversifying away from a US-only portfolio. If you already own a lot of SCHD and you are nervous about US large cap concentration [music] risk, VMI gives you a non US dividend stream while the foreign tax credit in a taxable account clause back some of the withholding. For a retiree at 65, the case is real but conditional. If your total dividend portfolio is already overweighted in US large caps, [music] VMI is a sensible diversifier.

[00:33:18]If you are building from zero, the math says you start with the US options first and add international as a satellite, not the main course. One left. After 13 dividend funds, after 130 different data points, after every yield from 1.2% 2% all the way up past 11. The honest answer comes down to the one pick on this list that does not pay a dividend at all in any meaningful sense. Number 14 ranks second by total dollars in your hand over 10 years. It ranks fourth in ending portfolio value. It pays more after tax than 10 of the income funds we just covered. And it is the same boring fund your nephew talks about over Thanksgiving. The 14th retirement ETF [music] is not actually a retirement ETF.

[00:34:04]Item number 14, V plus the 4% rule. V is the Vanguard SNP500 ETF.

[00:34:13]Three basis points expense ratio, the lowest of every fund in this video.

[00:34:18]About 53 holdings.

[00:34:20]Apple, Microsoft, Nvidia, Amazon, and Alphabet sitting on top. Trailing dividend yield 1.2%. 2%. On $100,000, that is $1,200 in dividends per year [music] after tax at the 15% qualified rate, 1,020. Basically nothing. Which is why no one ever lists VO as a retirement income fund. And which is exactly why this entire video ends here. The contrarian setup is this. [music] Instead of relying on the dividend, you sell shares of VO each year on a schedule. The schedule is the 4% rule.

[00:34:57]William Ben published it in the Journal of Financial Planning in 1994.

[00:35:02]He tested every rolling 30-year window from 1926 forward using the S&P 500 plus intermediate [music] bonds. And he found that a retiree who started with 4% of their portfolio in year 1 and then increase that dollar amount each year by the rate of inflation could potentially survive every 30-year retirement period in modern US history. The follow-up Trinity study in 1998 confirmed [music] the same result for an all stock portfolio with roughly a 96% success rate over 30 years. So, here's the math.

[00:35:35]$100,000 in V.

[00:35:38]Year 1 withdrawal at 4% equals $4,000.

[00:35:42]Each subsequent year adjusted up by 2.7% annual inflation. Over 10 years, total withdrawals historically come to around 45,200 taunt $27 after tax. Because most of that withdrawal is long-term capital gains taxed at 15% rather than ordinary income, you keep around 39,800.

[00:36:05]$40,000 in your pocket over 10 years from a fund yielding 1.2%.

[00:36:10]That after tax number is higher than DGRW, higher than DGRO, higher than no BL, higher than VM, almost the same as SCHD, which was paying you a 3.34% dividend the whole time. And here is the part that stops the room. The ending portfolio value after taking out 45,000 inflationadjusted dollars in withdrawals [music] sits near 260,000 on historical averages. That is more money left in your account than SCHD, DVO, Jeepy, Jeepy Q, SPYI, Nobel [music] L, VM, HDV, VYMI or SHY.

[00:36:48]Only DGRW, VO without withdrawals and VIG end with more and two of those paid you almost nothing while you held them.

[00:36:56]Imagine Harry has a brother. The brother retired the same day at 65 with the same $100,000.

[00:37:03]Harry put his money in HDV. The brother put his in V and committed to the 4% rule. 10 years later, on historical averages, the HDV side could potentially be around $230,000 after taking 3,000 or so per year in dividends. The VO side could potentially be sitting near $260,000, [music] having withdrawn 4,000 per year, and inflation adjusted that withdrawal every year. They both got paid roughly the same after tax cash. The brother has $30,000 more dollars of principal and a younger fund of growing companies still working underneath him. Why does almost nobody recommend this out loud? Two reasons. The first is psychological.

[00:37:47]Selling shares feels like spending your nest egg. Receiving a dividend feels like getting paid. The brain reads those two transactions [music] completely differently. Even though dollar fordoll the after tax outcome is often identical or better with the sell strategy. The second is content. A YouTube video titled VO plus the 4% rule gets a tenth of the clicks of a video titled the 8% [music] dividend ETF you have never heard of. The boring honest answer does not sell brochures. It just [music] works. Two caveats on this strategy. The first is that the 4% rule was designed for a 30-year retirement, not a 40 or 50-year retirement. If you retire at 65 and there is a real chance you live to 95, the safer withdrawal rate historically is closer to 3 1/2%. The second is that you have to actually stick to the rule. The temptation to pull out an extra 5% in year 3 because you saw a great cruise deal is exactly the behavior that breaks the math. The 4% rule works because it is mechanical.

[00:38:53]The minute you start adjusting it based on feeling, you are no longer running Ben's strategy. [music] You are running something else and the historical success rate does not apply. Reminder, none of this is financial advice. Every projection in this video is based on historical averages. The 4% rule is a mathematical illustration, not a guarantee. Past performance has never guaranteed future results. And a 30-year back test does not promise the next 30 years look anything like the last ones.

[00:39:24]Always do your own research and talk to a qualified financial adviser before changing any retirement income plan. So where does this leave us? The blended score ranking of all 14 looks nothing like the yield ranking. DGRW finishes first, paying you under 2.1% today. V plus the 4% rule finishes second, paying you no meaningful dividend at all.

[00:39:49]V with dividends only finishes third.

[00:39:52]SCHD finishes fourth. VIG finishes fifth. The covered call income funds, the ones with the biggest headline numbers, finish sixth through eighth on [music] the blended score because the cash they pay you is offset by the principal that quietly walks out [music] the door. The real pattern across all 14 is this. Yield by itself is [music] not a strategy. It is a single number on a brochure that tells you almost nothing about what an ETF will actually do for you between 65 and 75. [music] The funds that finish on top blend three things at once. A real qualified dividend stream you can spend, a principle that historically grows underneath the withdrawals, and a tax structure that does not hand back a quarter of [music] your check to the IRS. If I had to summarize what 14 funds and 10 years of math actually teach a 65-year-old retiree, it comes down to four moves. First, the foundation belongs in the high blended score funds.

[00:40:52]SCHD, DGRW, VIG, and the V plus 4% strategy. Second, the high yield covered call funds belong in a Roth, never a regular brokerage. GP and GPQ shed an extra $1,500 a year of tax drag the minute they live in the right account.

[00:41:12]Third, the international funds belong in taxable accounts where the foreign tax credit can be claimed. SCHY and VMI in taxable, [music] never in an IRA. Fourth, the 11.8% yield headline is almost always paid for in principal loss and return of capital is not income. It is your own money being handed back to you and called something else. There is one fund in this entire list that [music] quietly does all three jobs well. Real Dividend Stream. Growing principal, tax efficient. It pays you under 2.1% today and has historically outperformed every other fund in this video on the only number that matters at 75. DGRW, the one no one in the dividend comment section ever mentions. Tell me in the comments which of these 14 you already own and which one surprised you the most. I read every comment, even the ones telling me I am wrong about VO, especially those. If this kind of honest math is what you want more of, the next video walks through what changes if you retire at 55 instead of 65 and how the 4% rule has to adjust when you tack 10 more years onto the retirement runway.

[00:42:24][music] That math is even more uncomfortable.

[00:42:27]Past performance has never guaranteed future results. Every number in this video is a historical or hypothetical scenario, not a forecast. Please do your own research and consider talking to a fiduciary financial adviser before you change a single dollar of your [music] retirement income plan. Thanks for being here. Stay honest with the math. I will see you in the next one.