12-07-2021, 05:12 PM
This thread is near and dear to my heart. I am retiring at the end of this year and as we get the week between Christmas and New Years off guess what - two weeks from tomorrow is IT! I have given a lot of thought to funding my retirement. Here's how I plan to do it.
I have a little bit of income outside of stocks from three partnerships I am in. It isn't much and not the same year-to-year so I'm not using it in my retirement budgeting. Calling it bonus money. Could fund a trip, could bank it.
For stocks I have three accounts These are, with the % of my total:
Taxable Account - over 60%
403b, to roll over to an IRA in spring, 2022 (I'm 59,5 on February 19 but have two months' vacation, may as well wait until the last employer contribution) - about 35%
Roth, just started when I got into stocks in March, 2017 - 2.3%
The following bullet list is copied from an SA post: https://seekingalpha.com/instablog/48196...o-not-work
Here's my plan for funding my retirement:
The idea was that I would have income-generating assets and I'd never need to sell a single bit of an asset. Makes sense, right?
In May I took the IRS 1040 ES form and worksheets and started figuring. From a tax standpoint it makes far more sense to tale LT cap gains on some stocks in the taxable account. They're only taxed at 15%. In the IRA, the IRS doesn't care that what I withdraw is from dividends; it's taxed as income. So the change.
Why GOOGL and AAPL?
GOOGL doesn't pay a dividend.
AAPL doesn't pay much of a dividend AND the last 3 raises have been very disappointing. I can take low yield if the company is giving my good raises. MSFT is the perfect contrast. It also yields very low but it has consistently raised it over 10%.
AAPL could easily raise it that much if it wanted - look at the cash flows and all the buybacks. After three years this seems to me to be a new established policy. So it's saleable.
At 62 I could take SS which would make up for my "dividend gap." I don't know if I will but it's an option.
I get two more "raises" in retirement:
65 - Medicare
67 - Mortgage paid off
Until June I had been using dividends received to buy more stocks in my taxable account. I have stopped doing that as well as adding new money to my accounts. If the market - at least GOOGL and AAPL - are trading soft, I could use more cash.
I look at cash flows quarterly as all my companies pay 4 times a year. First time I should need to take cash out will be late March. Right now I'm thinking of taking the amount I need to live on for a quarter but I could change my mind and go monthly.
I shouldn't need to use either IRA at all, ever, thought the IRS will make me starting in 2034. Roth conversions are a possibility, if allowed, to try to keep the RMDs down a little.
I have a lot more - 9 retirement planning posts on SA but this should be for a conversation, not an info-dump. I'll be posting my Taxable Account portfolio shortly.
I am happy to answer any questions. I'm pretty much an open book with one exception - I don't tell strangers on the internet dollar figures even though I'm sure you're all fine people. But there are bots and such that look for people to go after.
I have a little bit of income outside of stocks from three partnerships I am in. It isn't much and not the same year-to-year so I'm not using it in my retirement budgeting. Calling it bonus money. Could fund a trip, could bank it.
For stocks I have three accounts These are, with the % of my total:
Taxable Account - over 60%
403b, to roll over to an IRA in spring, 2022 (I'm 59,5 on February 19 but have two months' vacation, may as well wait until the last employer contribution) - about 35%
Roth, just started when I got into stocks in March, 2017 - 2.3%
The following bullet list is copied from an SA post: https://seekingalpha.com/instablog/48196...o-not-work
Here's my plan for funding my retirement:
- My retirement will be 100% funded from my taxable account
- Dividends will give me about 80% of what I have budgeted; this % should gradually rise through ongoing dividend growth
- The 20% gap or shortfall will be made up by periodic sales of AAPL and GOOGL, supplemented by saved cash
- Other than those two companies I will do little trading in this account; I'll pretty much hold unless the dividend investment scenario changes for a company, negatively
- This account likely will not beat the market. Its main purpose is dividend income. And I'll gradually be selling two of the best companies, from a potential growth standpoint, in it.
- I haven't set a firm number but I will be looking for a 6-8% increase annually from dividend income. AAPL is such a low payer that it won't have much effect and right now the account has a 9.30% "organic" projected DGR (no dividends reinvested, based on 5-year DGRs for companies held).
The idea was that I would have income-generating assets and I'd never need to sell a single bit of an asset. Makes sense, right?
In May I took the IRS 1040 ES form and worksheets and started figuring. From a tax standpoint it makes far more sense to tale LT cap gains on some stocks in the taxable account. They're only taxed at 15%. In the IRA, the IRS doesn't care that what I withdraw is from dividends; it's taxed as income. So the change.
Why GOOGL and AAPL?
GOOGL doesn't pay a dividend.
AAPL doesn't pay much of a dividend AND the last 3 raises have been very disappointing. I can take low yield if the company is giving my good raises. MSFT is the perfect contrast. It also yields very low but it has consistently raised it over 10%.
AAPL could easily raise it that much if it wanted - look at the cash flows and all the buybacks. After three years this seems to me to be a new established policy. So it's saleable.
At 62 I could take SS which would make up for my "dividend gap." I don't know if I will but it's an option.
I get two more "raises" in retirement:
65 - Medicare
67 - Mortgage paid off
Until June I had been using dividends received to buy more stocks in my taxable account. I have stopped doing that as well as adding new money to my accounts. If the market - at least GOOGL and AAPL - are trading soft, I could use more cash.
I look at cash flows quarterly as all my companies pay 4 times a year. First time I should need to take cash out will be late March. Right now I'm thinking of taking the amount I need to live on for a quarter but I could change my mind and go monthly.
I shouldn't need to use either IRA at all, ever, thought the IRS will make me starting in 2034. Roth conversions are a possibility, if allowed, to try to keep the RMDs down a little.
I have a lot more - 9 retirement planning posts on SA but this should be for a conversation, not an info-dump. I'll be posting my Taxable Account portfolio shortly.
I am happy to answer any questions. I'm pretty much an open book with one exception - I don't tell strangers on the internet dollar figures even though I'm sure you're all fine people. But there are bots and such that look for people to go after.