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Old 06-23-2015, 08:28 AM   #21
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I got turned down last week for an American Airlines reward card because I have no income. I asked about taking into consideration my savings, which I am currently living off of. No dice! No outside income or withdrawals from a retirement account, no card. Even with an 830+ credit rating.

While I am not a high net worth individual, it appears that income, rather than savings or net worth, is the benchmark banks are concerned about.
Do you pay any income taxes? Then you have income. I have no problems getting a new credit card, because I give the income I received from investments as declared on my 1040 each year. I use the prior year's income. I know that I can provide a copy of my 1040 as proof.

If you are truly living off of savings, and with no interest or dividends paid out, then you don't have income. But if you have to declare income for tax purposes, then you do have income. Whether it is high enough to qualify for a card is another matter.
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Old 06-23-2015, 08:54 AM   #22
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Originally Posted by DEC-1982 View Post
I was reading the last few posts on this thread from yesterday and I think I learnt something new. Just watching the forum posts is such a great learning experience for me.

So if DW was not working and we withdrew $60K from our savings account, we would still have 0 taxable income (simplistically speaking) and therefore we would be eligible for ACA subsidies?

(assuming Supreme Court does not invalidate GA subsidies of course)
Interest income, dividends, and cap gains all count, including tax-exempt interest.

Modified Adjusted Gross Income (MAGI) - Obamacare Facts

But yes, some ER folks who are no longer pulling a salary are eligible for ACA subsidies. One way to control income is to sell off investments with little or no capital gain to use for paying expenses.
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Old 06-23-2015, 03:11 PM   #23
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3/4 of my stash is in tax-deferred accounts like 401k's and IRAs. And of the 1/4 that is already taxed, quite a bit is in I-bonds, whose interest is not counted as income and taxed until I redeem them. What counts as income is only dividends and cap gains from what's left of that 1/4 of the portfolio. So, my income is quite low compared to my expenses, as I am still 1 year away from being able to tap my retirement funds.

I have been using this opportunity to do Roth conversions. Roth conversions count as income. This reduces the tax liabilities in the future, and also levels out the tax burden over the years. This, one should do whether ACA gets subsidized or not, though ACA does add some complexities to it.
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Old 06-23-2015, 07:23 PM   #24
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Do you pay any income taxes? Then you have income. I have no problems getting a new credit card, because I give the income I received from investments as declared on my 1040 each year. I use the prior year's income. I know that I can provide a copy of my 1040 .
I have never NEVER been asked for a copy of a 1040 for a credit card. Only for a house mortgage. I guess they sometimes ask to see a paycheck stub, but I personally have never been asked to show one.

I think they mostly go by your credit report, and if that's okay they just go by what you say your income is.

When I first retired, when asked for my income I just said, "My income is whatever I want it to be, I just take money from my stocks." They mostly couldn't deal with that, they needed a hard number.

After some thought, I finally decided to say that my income is the 4% SWR figure. I take 4%, and whatever I don't spend goes back into the investments, just the way you do savings from your paycheck.
But, of course it doesn't make sense to pull money out to just put it back in, so I short-circuit the process and withdraw only the net amout.

Which conveniently happens to have the same effect as just like taking out whatever I want.

But they can get their heads around that.
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Old 06-24-2015, 06:47 AM   #25
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DW was real excited when we hit the $1M mark years ago. I reminded her that we had to get to $2M so we could each have $1M. She did not like it but she had to agree with my logic.

We made it.
Tell DW that the first M is the hardest.

After you hit 1M, in addition to being encouraging, there is actually truth to the phrase.
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Old 06-24-2015, 05:24 PM   #26
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After you hit 1M, in addition to being encouraging, there is actually truth
to the phrase.
Agreed.
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