audreyh1
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Other way round, seriously. My withdrawal is absolutely pre-tax, and I get to spend what remains after paying taxes.For taxable accounts, where one has to pay taxes on cap gains and dividends, it does reduce the return. And if one is in the 15% bracket, then there's no tax.
Still, if you have to pay taxes, most people would just account for the taxes in the portfolio return, and not in the WR. Then, when you draw 3.5% WR from it, you get to spend the entire 3.5%.
In my case, which is similar to that of many posters here, we have both before and after-tax accounts. The money drawn from before-tax accounts would be fully taxed, and with the WR of 3.5% I would have less than 3.5% to spend.
None of the portfolio survival models take into account taxes. They are all based on pre-tax returns. If you do otherwise, you are ignoring the models and any pretense of "safety".
Therefore, any taxes incurred by the portfolio have to be paid out of the withdrawal.
If you have a tax efficient portfolio, you get to spend more of what you can safely withdraw.
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