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I Need Help Deciding
Old 03-13-2016, 09:05 AM   #1
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I Need Help Deciding

It's been a while since I've been here but I am back now, fully retired and about to start living off of my investments.

Up until now, I have been living off of minimal income form part time jobs and money in a savings account. It is now time to start selling investments for my living expenses. Here is a breakdown of where I am...

- I have non-IRA accounts yielding about $22,000 per year in dividends
- My remaining investments are in Roth and traditional IRA's
- I have about $27,000 in capital loss carryover on the books for tax year 2016 and beyond
- I am married with no dependents
- My annual expenses are around $60,000
- I am 64 years old and have not started collecting Social Security

So, what I need help with is: When I sell my non-IRA investments (which I must start doing in the next month or so) how do I decide whether to minimize or maximize my capital gains (they will all be long-term gains).

I see that if I maximize my gains, I will use up my capital loss carryover more quickly and if I minimize them, it will last longer, but how do I determine which is the better approach for the long term? Or does it even matter?

Any help or guidance would be greatly appreciated.

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Old 03-13-2016, 09:24 AM   #2
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I think that more info is needed for some here to give advice...

How much gains are you holding now?

What are the balances of your regular IRAs?

Roth IRAs?

If you are getting $22k in dividends, then you have a pretty good stash... but is that all dividends or is some cap gain distribution?

What about bonds?

Other sources of income besides dividends?

Sounds like you have enough to live off comfortably, so no worries there...

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Old 03-13-2016, 09:45 AM   #3
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Yes, the non-IRA accounts should keep me comfortable for the next 8 to 10 years before I start tapping my IRA accounts (beyond the RMD's). The IRA accounts (12% Roth, 88% Traditional) are all pre-tax dollars and I expect they will last the rest of my life.

I'm not sure how to answer the question of "how much gains are you currently holding". If I were to sell everything in my non-IRA accounts today, I would have about $210,000 in capital gains - it that what you mean?

The $22k is all dividends.

All of my bond holdings are in the IRA accounts.

No income other than the $22k in dividends.
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Old 03-13-2016, 10:06 AM   #4
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So you need to generate about $40k per year from asset sales. It sounds like your income from sources other than dividends is small. In that situation the income tax on capital gains arising from $40k of asset sales will likely be small or even none, thus IMO the tax should not be the main factor in your decision as to what to sell. I would first sell assets that are overpriced relative to long term average.
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