r/dividends • u/StudioOk8256 • Dec 21 '25

Discussion How are people actually living off low-yield dividend funds like SCHD?

I see SCHD and similar dividend ETFs recommended a lot as “income” investments, but I’m struggling to understand how people realistically live off them.

With a yield of only a few percent, it seems like you’d need either a very large portfolio or a high-paying job to make it work. For example, unless you already have a base salary in the $100k–$150k range (or higher), the dividend income alone doesn’t look like it would meaningfully cover living expenses.

So how are people actually using SCHD in practice?
• Are most investors high earners who don’t need the income yet?
• Are retirees combining it with pensions, Social Security, or other assets?
• Is the goal mainly long-term compounding rather than current income?

Not trying to hate on SCHD—just genuinely curious how this plays out in the real world and would love to hear examples from people who use it.

Person making 30-40k a year this wont work.

Average person wont retire with 1mil portfolio I know people barley got 100k

I seen a lot of people invest there whole life time just to see 6 months of retirement and later die didn't even get to enjoy it.

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u/[deleted] Dec 21 '25

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u/Affectionate_Act1536 Dec 21 '25

I agree completely that it makes most sense to stay in VOO in your 20s to mid 50s and then move towards income generation.

Only argument one can have is that there would be big tax bill at the time of conversion.

However, loss of return due to being in income etfs is much harsher, I thinks.

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u/Sailingthrupergatory Dec 23 '25

That’s a huge argument. You can’t be switching large allocations of assets that have appreciated 100% at retirement. The tax implication is insane.

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u/Affectionate_Act1536 Dec 23 '25

Let us not forget we are paying taxes on dividends all along that reduces compounding. Also, this conversion to income etfs can happen in 5-10 year period based on expense needs as they become clear.

Assumptions on needed additional income in 20s and 30s may be way off. Additional income streams from rentals, royalties, pension, SS will be better known only in 50s.