I'm about to take the plunge, and I've been getting conflicting advice on how to start withdrawing funds.My investments are split among a regular IRA, Roth IRA, and a small regular brokerage account.Together they would produce enough enough in dividends each year to keep me going along with a small pension.Trying to figure out if I should just take the dividends from all accounts (some taxable, some not) leaving the capital, or spend down the regular and Roth accounts as some have advised. I know that eventually I will have to take the required minimum from the regular IRA.Pros & cons?
You will pay tax on the dividends in your brokerage account. You may as well take that money and spend it. You've paid taxes on it. If you need money beyond that, depending on your tax situation, I'd start to wind down the regular iRA. let the Roth grow since you'll get that money tax free when it is time. What about SS? t.
There will be some SS. I will be wanting just about the amount extra that the total current annual dividends from all of my accounts would provide.Good idea on taking the dividends 1st from the brokerage account since as you said, I've already paid tax on them.Interestingly enough, an accountant told me to spend down the brokerage account (cap gains only) and then live tax-free on the Roth and leave the regular IRA as long as possible to put off the taxes as long as possible.Maybe the accountant thinks I will be dead before I have to tap the rIRA....S
Interestingly enough, an accountant told me to spend down the brokerage account (cap gains only) and then live tax-free on the Roth and leave the regular IRA as long as possible to put off the taxes as long as possible.Maybe the accountant thinks I will be dead before I have to tap the rIRA….I am not a tax expert, but it strikes me your accountant's advice is about minimizing taxes in the near term (say 5 years or less). That is just fine, but your post suggests to me you may have an issue with running out of money. I suggest you do some serious looking at taxes and returns for your accounts. Unless you are going to run out of money or die in the next 10 years, I suspect you will be better off in 10 years by spending your Roth money last.GordonAtlanta
If you can, it's best to defer SS as long as possible. You get a 8% increase in what you receive for each year you delay it. t.
Thanks for the thoughts. I have no intention of dying in the next 30 years, if I can help it! Accountants do have their own way of looking at things.Just looking for strategies to maximize income over the long run. Will delay SS until I need it or 70.Still wondering about taking the dividends from all accounts which should do me fine, or leave some accounts (like the Roth) alone and use capital from the others to make up the difference.S
Thanks for the thoughts. I have no intention of dying in the next 30 years, if I can help it! Accountants do have their own way of looking at things.No, your accountant is only looking at what increases his retirement fund, not yours. Even if he/she sent you to an "independent" insurance agent, he/she still would get a piece of the action. Believe me, financial advisors do not have your best interests in mind when they provide you with advice, plain and simple. Most folks don't have any defined benefit pension, so what you have is really quite nice. When you reach SS, then you'll get even more. As for your investments, you could put 70% in a Vanguard bond fund and 30% in Vanguard's Total Market fund. If you can handle more risk, then up the Total Market allocation. If you can't handle it, then you can lower it. Alternatively, stay with what you have, but don't buy insurance, annuities, or anything at all that is purchased via a bank, financial advisor, CPA, accountant, or dog catcher.
I can only tell you what I have done and it works for me. Unfortunately, I do not have a ROTH...just a regular IRA. Only once did I take funds from the IRA because I read some idiot's advice that you should draw down the IRA first. NOT. I paid taxes on what I withdrew and never took out another penny until I was forced to do my RMD.I withdraw only from my taxable account which is invested in very conservative dividend bearing stocks. Many many moons ago, I had $xxx,xxx in the taxable account. I have been able to pay cash for cars, pay for house repairs, GK's college stuff, etc. Today, the market is up, and although I have drawn down a lot of money from the taxable account, it is worth more than ever. The only funds removed from my IRA are RMD funds, after taxes for FIT and SIT. Those funds go into my taxable account and I can use them now as I see fit.My IRA has some bonds left, but no way can they be replaced for the interest rates they had. So, again, I buy very conservative dividend bearing equities in the IRA also. Over the years, the IRA has increased in value, in spite of the RMD withdrawals. I do have an annuity of sorts...I am lucky enough to have a pension. That is the only annuity I would ever have. I took out SS at age 60, allowable to widows and plus I thought I was going to die after being diagnosed with Breast Cancer. Doc made a mistake...not stage 4, but stage 1!! Good reason to have second opinions;). But if you think you will live long, and you seem to think you will, delay SS as long as you can. Invest what you have conservatively with dividend bearing stocks is my advice.Birgit
Thanks, Birgit, and congratulations on beating the cancer!
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