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Subject:  Re: Liquidation of Bond Fund Date:  3/17/2000  9:59 PM
Author:  rkmacdonald Number:  2961 of 20791

Tax-free muni bond funds are currently generating about 5.25% tax free and taxable intermediate term bond funds are generating about 7.5%. In retirement your income usually goes down along with your tax bracket, and tax-free is often not as good as regular taxable bonds.

Assume 28% tax bracket in retirement, 5% tax-free is equivalent to 5.25/(1-.28)% = 7.29% taxable. This says that you would be slightly better off with the 7.5% taxable than you would the 5% tax-free.

You should do this calculation with your actual percentage yields to decide what to do in your case.

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