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Old 02-09-2024, 03:39 AM   #41
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Ok thanks. I reviewed. They didn't show the math or a yearly chart over those 30 years, which would have been interesting to see.

But, I made my own chart assuming a 15% tax on dividends and capital gains to simulate what they were showing, but over a shorter time frame. The problem isn't that the dividend is being double taxed, but when the taxes are subtracted from the dividends before reinvestment, it cuts down growth more over time than the higher taxes you would pay on a gain alone in the long run, assuming same 15% tax rate. Fortunately, this doesn't change anything for me or what I would have done. I should be in the 0% capital gains tax bracket beginning this year.
yes the dividend isn’t double taxed , but the cumulative effect is what takes its toll tax wise.

i hold berkshire in my taxable account
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Old 02-09-2024, 02:29 PM   #42
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Agreed. We will spend well above a sustainable rate for the first several years, and deplete some of the principal in the process. That has always been the plan.
Based on age and health and health histories, we won't run out of money before we run out of time.

That's the way we did it. It wasn't quite planned that way, however. We ended up doing two moves and two rehabs in two years. That's expensive. We burned through ALL of our cash which we had planned on lasting us 10 years. IOW, we changed our minds on what was important to us. THE place to live exactly WHERE we wanted it was more important to us than following the financial plan. We called that being "flexible." It still w*rked out well for us and no regrets. BUT it confirms that the 4% rule or FIRECalc , etc., are for insuring you have enough money in FIRE before you FIRE. They are not designed to "dictate" how you take the money in FIRE. Flexibility is key IMHO.
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Old 02-09-2024, 08:36 PM   #43
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Agreed. We will spend well above a sustainable rate for the first several years, and deplete some of the principal in the process. That has always been the plan.
Based on age and health and health histories, we won't run out of money before we run out of time.

That's our approach. Since we stopped working entirely (I was working online halftime from 2015-early 2020), our withdrawals peaked at almost 6%; for 2024 it was down to 5.1%. Next Jan I will hit FRA, take SS and the WR will be down to 3.4% and then down to 1.8% when DW takes her SS, sometime from 2029 or after. This assumes the portfolio will remain roughly constant; it's up about 25% since we came to Reno in 2015 and semi-retired.
So I wasn't too worried about the "high" withdrawal rate, assuming it would moderate once SS kicked in and drop below 4%.

With SS in sight, I've stopped worrying as much about the portfolio, as of a year or two ago. It was more of a worry from 2015-2020.
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Old 02-12-2024, 07:51 AM   #44
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Maybe this was posted but I didn't see it. I particularly like Retiree Portfolio Model. Just google that and you'll see that you can go to Bogleheads and download the spreadsheet. There's an awful lot in there, and it will likely take at least a couple of hours to poke around and see all that it's taking into account. But once you do that, you can "play with" doing TIRA to Roth conversions; bleeding out your TIRA in the early years (to reduce RMDs and thus taxes); look at drawing down relatively equally from taxable, TIRA, and Roth over time; etc, etc.
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Old 02-12-2024, 08:37 AM   #45
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Maybe this was posted but I didn't see it. I particularly like Retiree Portfolio Model. Just google that and you'll see that you can go to Bogleheads and download the spreadsheet. There's an awful lot in there, and it will likely take at least a couple of hours to poke around and see all that it's taking into account. But once you do that, you can "play with" doing TIRA to Roth conversions; bleeding out your TIRA in the early years (to reduce RMDs and thus taxes); look at drawing down relatively equally from taxable, TIRA, and Roth over time; etc, etc.
+1, I have spent days at a time messing with RPM. Big learning curve, but worth it if you're an Excel junkie, and very educational because all the guts of it are right there for you to see how its coming up with the results. Not a Monte Carlo simulation or even a historic simulation, but still a great tool. You can still stress test your results manually, by haircutting your starting assets or inflation or market return assumptions.
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Old 02-13-2024, 04:44 PM   #46
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My investments don't throw off 4-6% in dividends. I spend taxed dividends first (not reinvesting), then sell other ETF shares to make up my WR. Yes, I'm selling equities, but those remaining are still growing. In my early ER years (55-59.5), I'm trying to balance using the full 0% MFJ tax bracket for LTCGs with the need to reduce my inherited IRA and "Rule of 55" 401(k) by taking taxable withdrawals with no penalties.

Either way, you're living off your investments. (If you spend all dividends and the markets are flat, you'll see your investments values decline).
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Old 02-13-2024, 07:34 PM   #47
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I retired at 56. I had a bunch of cash. So I lived off of that,plus took 20k a year from my 401k. Since I retired after 55, I could take it with no penalty. I kept my taxes low. for 2 year I used ACA, so I was happy to keep income as low as I needed it to be to cover a fairly rich lifestyle. The goal is to take out only as much as you need..keep the taxes low, and keep your health prems low (i ended up taking my companies health plan which was only $200 a month), but for 2 years my ACA was only $95 a year. it was fun to play with the numbers. But stock up on cash, now, for when you are retired.
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Old 02-13-2024, 07:57 PM   #48
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There are 2 financial aspects to the "can I live off my investments" question- income & expenses. Lots of good thoughts on investment income. I'm also a big fan of firecalc, especially its 'what if' graphs illustrating how sequence of returns can make or break things even at the same average rate of return. But the other key component is the expense side. The longer the retirement the wider the cone of financial uncertainty. IMHO any long term plan of predicted expenses should include alternative plans should major unexpected expenses rear their ugly head(s).
The 'can I live off my investments' question can be a difficult one, especially for those whose well-paid career is difficult to re-enter should they experience a future financial need to do so.
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Old 02-13-2024, 08:44 PM   #49
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A financial planner today told me that if you hold three years of cash living expenses you virtually eliminate SoRR. I know this is wrong. Iíd like to send him one or more studies that will show him heís wrong. I donít think the guy is very bright. Heís also trying to get all his retirement clients on cash value life insurance, arguing thatís the best investment approach, which is also ridiculous.
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Old 02-13-2024, 09:30 PM   #50
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A financial planner today told me that if you hold three years of cash living expenses you virtually eliminate SoRR. I know this is wrong. Iíd like to send him one or more studies that will show him heís wrong. I donít think the guy is very bright. Heís also trying to get all his retirement clients on cash value life insurance, arguing thatís the best investment approach, which is also ridiculous.
Donít waste your time trying to correct him. Heís a salesman. Heís not interested in truth. Heís only interested in suckering as many people as possible. The commissions on whole life are incredibly high. Heís not stupid. He knows heíll make a bundle from every poor sap he can convince to take out a policy.
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Old 02-13-2024, 10:07 PM   #51
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It may seem fairly straightforward to some people, but as the DW & I are planning for ER in either 2025/2026 @ the ages of 55/56, we are having a problem deciding which way to go, if there is even a choice. As most folks here, we saved, invested for growth and let the market work its magic. Now, as we start to make the transition to this next phase and start talking buckets and withdrawal strategies, how do you plan this? How do you know if you need to draw down your portfolio or if you can live off of the income it could throw off? We do not have pensions or annuities. We will have a hair above 2 million spread out among SEPs, Roths, Simple iras, HSAs, I-Bonds and taxable accounts. Annual expenses will be around 52,000. DW may take SS (around 18,000) @62 while I will wait until 70 (around 30,000).

Also, where is a good site for a portfolio tester to check different allocations and investments?
Vanguard has one, but it doesnít show prior performance.
Morningstar now charges for there portfolio X-Ray.
Morningstar offers 7 days free for their portfolio X-Ray.
Vanguard's Monte Carlo Simulator is a very simple nice one. You don't need prior performance for a Monte Carlo Sim.

Your situation is somewhat similar to mine. I retired at 50 with around 1.7M while my DW still works as a writer, so her income is not really counted. I plan on taking SS at 70, while DW at 67 since I don't want ordinary income to increase due to SS. Since the market has hit new highs, our portfolio has doubled in 7 years. We withdraw about $60-70K/year - and had originally assumed $50K/year.

Currently our withdrawals are from non-retirement funds that are generally sitting in CDs or T-bills so that I minimize ordinary income from dividends, and then each Dec I do a Roth conversion of around $30-40K/year to keep us in the 10% tax bracket as well as keeping our Marketplace medical insurance very low. We shifted our allocation from 85/15 to 70/30 and in my tIRA am gradually converting lower performing stocks/funds to CDs and T-bills while increasing my stocks/funds in my Roth account. My DW's Roth can be touched if our AGI gets too high.

The goal is to try and stay in the 10 or 12% tax bracket until we take SS, and slowly drain the tIRA with Roth conversions for the next 10-15 years. By the time we hit 75 and the RMDs kick in, hopefully the RMDs will start with about $25-30K/year - replacing the yearly Roth conversions.
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Old 02-13-2024, 11:26 PM   #52
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It may seem fairly straightforward to some people, but as the DW & I are planning for ER in either 2025/2026 @ the ages of 55/56, we are having a problem deciding which way to go, if there is even a choice. As most folks here, we saved, invested for growth and let the market work its magic. Now, as we start to make the transition to this next phase and start talking buckets and withdrawal strategies, how do you plan this? How do you know if you need to draw down your portfolio or if you can live off of the income it could throw off? We do not have pensions or annuities. We will have a hair above 2 million spread out among SEPs, Roths, Simple iras, HSAs, I-Bonds and taxable accounts. Annual expenses will be around 52,000. DW may take SS (around 18,000) @62 while I will wait until 70 (around 30,000).

Also, where is a good site for a portfolio tester to check different allocations and investments?
Vanguard has one, but it doesnít show prior performance.
Morningstar now charges for there portfolio X-Ray.
Two million plus SS with expenses of around $52,000 should be just fine to retire right now.

But there is one important question. Do you plan to spend ALL of your retirement savings over the 30+ years of retirement ahead you should have OR do you want to leave money to heirs?

It's a big question. I want to spend every penny of my savings over the course of my retirement, but many people want to leave money to children, charities, etc.

This must be planned for as the expense it is. If you want to leave your kids $1 million, then you don't have $2 million saved for retirement, you have only half that much!
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Old 02-15-2024, 01:38 AM   #53
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There are 2 financial aspects to the "can I live off my investments" question- income & expenses. Lots of good thoughts on investment income. I'm also a big fan of firecalc, especially its 'what if' graphs illustrating how sequence of returns can make or break things even at the same average rate of return. But the other key component is the expense side. The longer the retirement the wider the cone of financial uncertainty. IMHO any long term plan of predicted expenses should include alternative plans should major unexpected expenses rear their ugly head(s).
The 'can I live off my investments' question can be a difficult one, especially for those whose well-paid career is difficult to re-enter should they experience a future financial need to do so.

Yeah, my c@reer ended up in such a tiny box (expert on a very limited subject) that I would never have found an equivalent j*b (though my major field would have offered a "living" if need be.) Thankfully, I never even had to consider such a return to the w*rk place.

Though I found myself in the 2008 debacle soon after my retirement, I never panicked. Now, with a good portion of my retirement life behind me, I only worry about black swan events - and try not to think about them too often. YMMV
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Old 02-15-2024, 07:22 AM   #54
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Yeah, my c@reer ended up in such a tiny box (expert on a very limited subject) that I would never have found an equivalent j*b (though my major field would have offered a "living" if need be.) Thankfully, I never even had to consider such a return to the w*rk place.
+1. There's another side to that coin as well. Despite a stellar resume and industry wide name recognition, at age 52 I was unable to find a new job. I was either over qualified or over priced...not that we even discussed pay.

At one point I was told that I was just some rich guy looking to play golf with clients for the next 10 years and do nothing else, which wasn't true. "Why should I invest in you when you'll be gone in 5 or 10 years? "

Ageism is very real. I would advise anyone to not plan for an age 65 retirement and instead plan on 10 years earlier...just in case.
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Old 02-16-2024, 06:42 AM   #55
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+1. There's another side to that coin as well. Despite a stellar resume and industry wide name recognition, at age 52 I was unable to find a new job. I was either over qualified or over priced...not that we even discussed pay.

At one point I was told that I was just some rich guy looking to play golf with clients for the next 10 years and do nothing else, which wasn't true. "Why should I invest in you when you'll be gone in 5 or 10 years? "

Ageism is very real. I would advise anyone to not plan for an age 65 retirement and instead plan on 10 years earlier...just in case.

I saw ageism happen at Megacorp. Once folks reached 50 (unless you were an executive) your c@reer became stagnant and no one paid much attention to you. Then the layoffs and downsizing started, and guess what? The over 50's were the ones who seemed to be still looking for a chair when the music stopped. Didn't happen to me. They simply stuck me in a place I didn't want to be. Since I had options, I took them and bailed.
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Old 02-16-2024, 08:24 AM   #56
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^^^

Ahh, the topic of ageism in the megacorp workplace. I know it well.

Would still be toiling for the man, but for the fact that was made clear no further advancement would be in the cards - after all, why would they "invest" in an oldie (early 60's) like me regardless of how much revenue I was facilitating for them. And where was I gonna go at my age? Ha, they figured, we'll just keep him reeling in the profits, skim all the fat off the top, have him baby sit the youngsters, and throw him a bone here and there.

At the income I was clocking, another 3-4 years would have had a multi-seven-figure impact on NW - both in terms of avoiding drawdown on portfolio, as well as additional savings, RSU's, portfolio growth, etc. I really loved my work, but, honestly, I just could not stand feeling arbitrarily cheated.

So, here I am, class of 2024. Perhaps blessing in disguise. Right now I'm feeling like it was definitely the right decision. Whole point of reaching FI is so you have choices, don't have to put up with BS, get to play (or not play) on your own terms!
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Old 02-16-2024, 10:04 AM   #57
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just a novice trying to understand but if you are just pulling dividends then arn't losing shares. If selling I know porfolio will go up over time but what if you have several bad market years and you are selling shares ? Seems like you can't get those shares back and can deplete baance quickly ? Is my thinking incorrect ? Not debating one over the other just trying to understand.
In my case I have a special needs son that I will need to leave as much as possible for him to suvive after I'm gone
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Old 02-16-2024, 10:16 AM   #58
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just a novice trying to understand but if you are just pulling dividends then arn't losing shares. If selling I know porfolio will go up over time but what if you have several bad market years and you are selling shares ? Seems like you can't get those shares back and can deplete baance quickly ? Is my thinking incorrect ? Not debating one over the other just trying to understand.
In my case I have a special needs son that I will need to leave as much as possible for him to suvive after I'm gone
The only thing that matters is total return. The number of shares you own is not relevant; only their value.

You can avoid selling assets that are down in value by holding less volatile assets (cash, bonds) and using those for expenses.

Go over to bogleheads.org and search for "total return" for hours and hours of fun. Here's an example: https://www.bogleheads.org/forum/viewtopic.php?t=276554
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Old 02-16-2024, 12:59 PM   #59
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just a novice trying to understand but if you are just pulling dividends then arn't losing shares. If selling I know porfolio will go up over time but what if you have several bad market years and you are selling shares ? Seems like you can't get those shares back and can deplete baance quickly ? Is my thinking incorrect ? Not debating one over the other just trying to understand.
In my case I have a special needs son that I will need to leave as much as possible for him to suvive after I'm gone
this is incorrect .

You get no additional compounding then you had without the dividend .

You only lose the compounding you had pre ex div if You donít reinvest .

As an example if you have a 100 dollars invested and the stock pays 10% , when the stock goes ex div you get 10 bucks in hand and the mandatory price roll back leaves you with 90 dollars invested .

If the stock market doubled that stock you have 180 in the investment and 10 bucks in hand , so you have 190 .


If you reinvested the 10 bucks you have the same 100 back you had before it went. Ex div and if it doubles that is 200 dollars in value .

That is the same balance you would have had if the stock never went ex div and you never reinvested .

Itís a wash .


You are no different than pulling 10% out of a portfolio of non div payers and deciding you donít need the money so you put it bac
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Old 02-17-2024, 07:03 PM   #60
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This thread made me look into how much I have sold since I retired Apr 2017.

I have withdrawn $10,519.69 in the 7 years I've been retired. No SS or pension (I'm 58). I've lived off dividends and I think I had 20k in savings when I retired. Otherwise I am all in the market (most of my life 99-100% in the market including now, almost all S&P 500). I do have a less than 1k rmd every year from an inherited IRA. I retired with 625k which has more than doubled now.

So I retired Apr 3,2017 and I sold a few shares in 2020 and a few shares in 2023. Thats it.
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