Prior to ERing, I reinvested everything because my wage income was always enough to pay my expenses. This included my taxable account and retirement accounts (401k).
After I ERed, 13 years ago at age 45, my taxable account's investment income has been my only source of income, so I need to take much of it as cash. In my main bond fund, I always take the dividends as cash, as it acts as a monthly "paycheck." The rest of my taxable account's investment income, from the remaining dividends to all cap gain distributions, it has varied between cash and reinvest. It depends on how much cash I need as a supplement to pay my bills. And sometimes, for any large cap gain distributions, I have to make sure I have enough cash laying around to pay the added taxes on them. If I do, then I take the CGD as cash, set aside some to pay the taxes (and anything else I might need it for), then reinvest the rest.