There is a thesis prevalent among financial planners that during the accumulation stage of our lives, we should try to amass the most wealth possible. It is said that if you have the most money on the day accumulation ends and retirement begins, you win. What about retirement income? You win there too, because you can turn your money into as much income as someone who has been managing for income all along. Simply buy their portfolio. You will have the same yield as if you had been working on it for years.
It seems like I have chosen a stupid strategy. If I would simply invest for maximum total return during all the accumulation years when I don't need the income, it looks like I would win every time. When I retire and need the income, I would just buy it. I would win. So why do I prefer income optimization? Am I stupid? I don't think so, but you can decide. There are several reasons that I prefer to optimize income along the way: Reason #1. The progress is smooth and less emotional, Reason #2. Receiving dividend increases is like investing more, except you don't have to and Reason #3. My portfolio is less volatile than the overall market.
Source: Seeking Alpha
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