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save for where you live?
Old 09-29-2016, 11:19 AM   #1
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save for where you live?

A comment on my COL post has me analyzing our cash to invest. (Thank you all, but especially Fritz!).








Do or did you invest based on your state's retirement tax? For instance, I like the idea of aristocrat dividend stocks. However, dividend stocks are taxed in Illinois. Do you change your strategy to save tax in retirement? If you do, how do you go about? We have a mix of investments that we at now attempting to set up in long term strategy.
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Old 09-29-2016, 11:37 AM   #2
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I switch tactics when I move from one country to another. I also do the money mgt. for my mother, she lives in Belgium, so I have a slightly different tax setup for her.

Netherlands is where I live right now, no dividend tax. Belgium, my previous and possibly next country, has 27%. None of them has capital gains tax.

So when I'm in Belgium (and for my mother, who lives there) I shift my vanguard index trackers to a different form (same index, different ticker from IShares): no payout, accumulating. Avoids the dividend tax.

What I'm trying to figure out now for my individual shares is whether I can lend out my shares for example on the ex-dividend dates for a fee, side-stepping the tax issue. I'm quite sure it can be done, probably not via discount brokers though.

Alternative might be a rapid buy/sell.
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Old 09-29-2016, 12:08 PM   #3
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CA has a high personal income tax, so I have a nice chunk of muni bonds and muni bond funds.
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Old 09-29-2016, 12:25 PM   #4
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Perhaps I should... but I don't. I just do index funds, rebalance occasionally, set it and forget it.
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Old 09-29-2016, 02:25 PM   #5
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We planned to pay no income tax on our pensions in Michigan, but our ex-friends in the legislature fixed that. Currently trying to move to Washington.
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Old 09-29-2016, 02:42 PM   #6
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Originally Posted by ecowtent View Post
Do or did you invest based on your state's retirement tax? For instance, I like the idea of aristocrat dividend stocks. However, dividend stocks are taxed in Illinois. Do you change your strategy to save tax in retirement? If you do, how do you go about? We have a mix of investments that we at now attempting to set up in long term strategy.
No, I don't do any of that. Louisiana is fairly retirement friendly although not extremely so.

I invest in very broad mutual funds plus 30% Wellesley. I don't tinker with my investments or AA except to rebalance, usually once a year after taking my withdrawal.
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Old 09-30-2016, 08:51 AM   #7
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Maryland has an exemption for employee retirement plan distributions (e.g. 401ks) so I take that into consideration by not moving too much from 401k to IRA.
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Old 09-30-2016, 02:01 PM   #8
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A comment on my COL post has me analyzing our cash to invest. (Thank you all, but especially Fritz!).

Do or did you invest based on your state's retirement tax? For instance, I like the idea of aristocrat dividend stocks. However, dividend stocks are taxed in Illinois. Do you change your strategy to save tax in retirement? If you do, how do you go about? We have a mix of investments that we at now attempting to set up in long term strategy.
B/4 retirement we pretty much invested taxable accounts in Index mutual funds - Vanguard's Total Stock Market, S&P 500, and some specialty funds (Healthcare, etc). Pretty much left these alone.

Since retiring early 58/57 (7 years now), we've changed the bulk of taxable accounts to Wellington and Wellesley balanced funds for a quarterly dividend income stream, and for occasional year end CGs if our cash reserve at local/online bacnk accounts needs replenishing. We live off investments and Social Security - unfortunately no pensions (don't care for annuities). About a third of our investments are taxable. SS and quarterly taxable account dividends cover our living expenses. Will do this for 1.5 more years for ACA subsidies than Roth conversions from our IRAs beginning with Medicare enrollment for wife (me this year).

Illinois doesn't care if your income is dividends, LTCGs, or sale of shares - it taxes them all equally... Minimizing taxable account (state) income tax utilizing stock index funds worked well for us B/4 we needed it for an income stream in retirement.
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Old 09-30-2016, 11:13 PM   #9
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We planned to pay no income tax on our pensions in Michigan, but our ex-friends in the legislature fixed that. Currently trying to move to Washington.
You could move to IL, where the State does not tax pensions,
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Old 10-01-2016, 01:49 AM   #10
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You could move to IL, where the State does not tax pensions,

......yet



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Old 10-01-2016, 06:33 AM   #11
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You could move to IL, where the State does not tax pensions,
In Alabama, defined pensions, gov't pensions and social security income are not taxed. Property taxes are probably 1/4th that of surrounding states. And a 2 1/2% sales tax on cars and boats is hard to beat. On the other side, general sales taxes are high.

But the ace in the hole is that real estate prices are ridiculously low.
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Old 10-02-2016, 10:33 AM   #12
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You could move to IL, where the State does not tax pensions,
I have seen those Chicago property taxes. LOL
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