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Old 07-08-2016, 01:15 PM   #21
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Join Date: Mar 2010
Posts: 582

Here are some good rules of thumb for someone that has enough income that they can max out retirement accounts and still have plenty for taxable investments.

Your 401k is the best spot for fixed income (i.e. bonds).

Your Roth IRA is the best place for REITs.

Your taxable account is the best place for stocks, especially when you can get the foreign tax credit.

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Old 07-10-2016, 04:03 PM   #22
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Join Date: Oct 2015
Posts: 76
OP, can relate. I'm still a few yrs from deciding if I want to RE, but have started thinking many of the same things. Being in the top tax bracket while currently working, my focus has always been about minimizing my taxes. For those that are self-employed as I am, there is nothing better than a Defined Benefit Plan. Without getting into the details, this can effectively allow you to put multiple hundreds of thousands of $$s away in any given year (straight deduction off your income into tax differed accounts). Not for every one, but ideal for high income producers who live below their means. They max out at around $2M (in terms of getting max benefit) which is where I am which thus creates the liquidation strategy challenges in RE. Great vehicle to minimize taxes while working, but then formulating the best tax efficient withdrawal strategy in RE is my next dilemma.@

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Old 07-10-2016, 06:05 PM   #23
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Join Date: Jul 2006
Location: Denver
Posts: 2,433
Like someone already said.. "I know nothing" is way too strong.

The Safe Withdrawal Studies all base their results on treating your portfolio as a whole & using total return (dividends + appreciation) to fund retirement. Yes, sometimes you will sell stock rather than just live on dividends.

We've been retired for 8 years now and I don't think of "principal" any more. I track my total portfolio value and see how it is stacking up versus an inflation (CPI) adjusted value of the original portfolio value. The nominal portfolio value fell way below the inflation adjusted value of the initial portfolio in 2008 and 09, but has slowly recovered.

Take tax implications into account as you move to a more tax efficient portfolio. There shouldn't be any big gotchas, but keep it in mind.

Good luck.

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