Poll: What is your annual cash income from securities?

[pb4uski]

....This was actually an interesting exercise for me ....

Me too. I knew was it was for our taxable accounts since that shows up on our tax return, but I had never looked at "income" across taxable, tax-deferred and tax-free accounts. It is a high percentage of our annual living expenses so it makes me feel even better about retiring.

 

[scrabbler1]

Why separate out "income" from total return? I'm really curious to see the answer.

For tax-deferred accounts such as IRAs and 401(k)s, I don't make a big distinction between growth (unrealized cap gains), cap gains distributions, and dividends because none of it taxable and any distributions are reinvested automatically.

But for taxable accounts I do make a distinction, especially as an early retirree who is living off (most of) the dividends while the cap gains distributions and some of the diivends are reinvested. Furthermore, the income from the taxable accounts are subject to different levels of taxation - some federal as ordinary income, some federal at LTCG rates (which is zero for me), and some subject to state income taxes - and various combinations of those three,

 

[Rustward]

I have had trouble making these polls precise enough, but what I am looking for here is dividends, interest, MLP distributions, etc., but not capital gain income or capital gain distributions from funds. Cds, savings accounts etc are considered securities for this poll. On your tax return, this is stuff that will show up on your schedules B or E for the most part, if it is held in a taxable acount. No need to differentiate between taxable and deferred or tax free accounts. All income credited goes here. I am ignoring the special tax treatment of certain dividends. I also am not looking for money you withdraw, only account earnings whether you leave it in place or withdraw it to spend. If you take $40,000 from your accounts, but the accounts only show cash earnings of $20,000, then $20,000 is the figure we are looking for here.

I should stress that this can be done completely blind- a person can fill out the poll, but not post any commentary. If it still seems intrusive, just ignore it. I hope we can get some aggregate info, I am not looking for anyone's personal details

Ha

I'll ask this as a binary question, but answer any way you would like to:

Do dividends inside an IRA count in this poll?

 

[haha]

I had the number for taxable but had to guesstimate the number for our 401ks/IRAs. Probably in the ball park. Why did you make the last two entries greater than or was those brackets typos? (I'm not up there - just asking.)

Good spot. Maybe a mod can fix it. I meant <$250,000 and the highest one should then be >$250,000.

Ha

 

[haha]

I'll ask this as a binary question, but answer any way you would like to:

Do dividends inside an IRA count in this poll?

Yes.

 

[haha]

Why separate out "income" from total return? I'm really curious to see the answer.

Because they are completely different questions, and in this poll I happened to be more interested in cash income. I am not saying that cash income is more important than total return, just different.

Ha

 

[FIREd]

Good spot. Maybe a mod can fix it. I meant <$250,000 and the highest one should then be >$250,000.

Ha

Done.

 

[haha]

I also included short-term cap gain distributions from my mutual funds which are, for tax purposes, included on Schedule B as taxable dividends. Haha, is this okay? (I would still have chosen the same range.)

Sure; I am not the police. If that is easier for you, whatever you do is OK.

The rationale for my conception is my belief that dividends and interest often are more robust than capital gains, realized or unrealized. I know many others feel differently, and that is fine.

Ha

 

[haha]

Including tax free interest from municipals, I presume. My goal is to have enough interest and dividends to make ends meet without drawing down the principal.

Yes, I do intend non taxable interest to be included. And my goal is the same as yours. To me, capital gains are for increasing my wealth, dividends and interest are for living.

Ha

 

[FIREd]

The rationale for my conception is my belief that dividends and interest often are more robust than capital gains, realized or unrealized. I know many others feel differently, and that is fine.

Ha

I agree with your belief. One caveat is how much you have to stretch to generate that income. I could generate more income by replacing my investment-grade bonds with junk bonds for example. I could also generate more income by investing in Frontier Communications instead of AT&T. In both cases my income would be higher, but would it be equally "robust" as you put it?

 

[W2R]

I like the idea of not including capital gains, because I choose to reinvest them.

Thanks for the poll - - I thought it was fun.

 

[Alan]

I like the idea of not including capital gains, because I choose to reinvest them.

+1

 

[foxfirev5]

I don't know and I don't really care. Total return of the portfolio is what is relevant to me.
Bruce

Likewise I prefer the total return approach. I am sold on having a diversfied portfolio through retirement and to me the total return approach makes the most sense. I try to avoid emphasizing interest and dividends as I have an urge to chase yield that I need to contain.

 

[KingB]

Looks like some responders must really have the dough. $105K - $175K investment income (not withdrawals) = whew!

Amethyst

Technically, income <15000 is also <250000.

 

[rothlev]

No dividends show up for any of the TSP thrift savings plan funds. Any idea on how to estimate?

 

[Rustward]

Technically, income <15000 is also <250000.

Read from the top down and use the first one that is true.

 

[Lsbcal]

Because they are completely different questions, and in this poll I happened to be more interested in cash income. I am not saying that cash income is more important than total return, just different.

Ha

Fair enough , not trying to be provocative.

Most of our money is in tax deferred accounts so I just tend to think about the safety of any income stream as the tax consequences are the same for us, i.e. Treasury bonds held to maturity are much different then bank stocks with high dividends or high yield (junk) corporates. So I guess the yield plus safety might be a figure of merit. Then there is real yield (inflation protection). So we might say real yield plus safety is the figure of merit. Maybe there are even more dimensions too.

 

[MooreBonds]

It's interesting to see that many people don't track their dividend and interest income. I am quite obsessed with tracking that kind of data. I have the spreadsheets to prove it.

I'm also among the ranks of the spreadsheet-obsessed.

My main sheet has all of my positions listed, with 5 main groups: General Equity, Conservative Income (REIT/Utilities), Int'l, Natural Resources, and Fixed Income. I simply download .csv files from Yahoo each week and copy and paste the price columns into my spreadsheet categories to see the current values each week, and then record the NAV for each account to track its fluctuation.

Of course, one of the more critical elements of my spreadsheet is to list the dividend in one of the columns, and compute the yields off of my basis and current price. I then have a total income for each account (based on dividends, not cap gains) to see what my 'recurring' annual income is, and also track that number (I look at each holding twice a year to update the current annualized dividend, and note with different colors if it's increasing or decreasing, along with the previous dividend, so I can track the growth/decline of each holding's dividend at a glance).

 

[Amethyst]

I take them in cash to help defray estimated tax payments!

I like the idea of not including capital gains, because I choose to reinvest them.

 

[W2R]

I take them in cash to help defray estimated tax payments!

I take them in cash too, but the cash never leaves Vanguard. I use the cash to rebalance (not spend). So, to be clearer, they are reinvested in my portfolio, not that particular fund.

I pay my estimated taxes from my dividends (which I transfer from Vanguard to my bricks'n'mortar bank once a year during the first week in January, for spending during the following year).

 

[obgyn65]

I apologize, I read the poll too fast. Is there any way I can change my answer to the poll please?

From his first post, Ha wanted to include CD's in this survey.

 

[Mulligan]

I'm also among the ranks of the spreadsheet-obsessed.

My main sheet has all of my positions listed, with 5 main groups: General Equity, Conservative Income (REIT/Utilities), Int'l, Natural Resources, and Fixed Income. I simply download .csv files from Yahoo each week and copy and paste the price columns into my spreadsheet categories to see the current values each week, and then record the NAV for each account to track its fluctuation.

Of course, one of the more critical elements of my spreadsheet is to list the dividend in one of the columns, and compute the yields off of my basis and current price. I then have a total income for each account (based on dividends, not cap gains) to see what my 'recurring' annual income is, and also track that number (I look at each holding twice a year to update the current annualized dividend, and note with different colors if it's increasing or decreasing, along with the previous dividend, so I can track the growth/decline of each holding's dividend at a glance).

I do a manual monthly spreadsheet to track my assets in CDs, mutual funds, IBonds, HSA and savings. This amount is relatively small and will never be spent as I live comfortably on my pension. If I had to plan my retirement in the manner that most now do (no pension), I believe I would be as diligent as you. However my problem would be after 20-30 years of tracking, nurturing, and watching it grow, I don't think I could stand to spend it down. Shifting to spending after decades of saving would kill me. Spending a pension is easy. Although I contributed for years, the money was gone from my check monthly and I never viewed it as my money after it was withheld.

 

[ERD50]

I agree with your belief. One caveat is how much you have to stretch to generate that income. I could generate more income by replacing my investment-grade bonds with junk bonds for example. I could also generate more income by investing in Frontier Communications instead of AT&T. In both cases my income would be higher, but would it be equally "robust" as you put it?

I am thinking this way also. I'm kinda scratching my head to understand where haha is going with this (maybe nowhere, which is fine), or what he hopes to get out of it.

I like the idea of not including capital gains, because I choose to reinvest them.

Thanks for the poll - - I thought it was fun.

From the OP, I don't think he cares where it goes, reinvested, spent, moved to cash - only the source.

-ERD50

 

[FUEGO]

It's interesting to see that many people don't track their dividend and interest income. I am quite obsessed with tracking that kind of data. I have the spreadsheets to prove it.

I just started tracking the dividends on all my holdings in 2011.

Around $17000 on a ~100% stock portfolio. 2.x% yield. Still a few years from being FI.

 

[LOL!]

If one plugs in their portfolio into something like a Morningstar Portfolio X-ray, then it will give the "yield" on the portfolio which includes all the annual stock and bond dividends. I think most portfolios of equities and bonds will have a yield of 2% to 4%, so on a million dollars that's $20K to $40K.