Does anyone have any evidence to suggest that living off dividends like that of Growth and Income IT's will cause you issues in 20+ years. My understanding is that if you can survive of 3 or 4% on these Trusts (whatever divi they provide), then you should be fine, as you never need to touch capital and never need to reinvest any of your dividends as the dividend growth and capital growth will see you through.I don't know if anyone has any evidence for what might happen in the future, let alone proof. But various studies in the past have shown that a withdrawal rate of around 4% from an equity portfolio is sustainable, meaning that the cashflows into the portfolio, from both dividends and gains, will be sufficient to support that level of withdrawals.And in truth, at least historically, that's proven to be a very conservative figure, since the long-term average annual total return from equities has been about twice that rate. The much more conservative figure is typically used to provide a cushion should we have a decade or more of poor markets.Where that 4% comes from is another matter. Some hold that one should target a yield of 4% with the hope that, as you say, you "never need touch the capital". Some go even further than you and suggest that one also should never touch the capital gains. But clearly if you hold such ambitions, you will need a larger pot to start off with, meaning in turn that you'll have to work longer, save harder or both. That's not for everyone.But if the market yield (currently 3.5% or so) gives you the annual income that you currently need, then you're in good shape. That's better than going for a much higher yield simply because you don't have enough capital - that is a more risky approach. If you can live off the income from an index fund or growth-and-income type IT, then more power to you.Having said that, personally I'm not averse to touching capital gains and capital on an opportunistic basis. Unless it's crucial to you to die rich, such an approach will give you more flexibility. And a shorter working life. And more fun.
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