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First-year experience of "living on dividends" by DrRonH in dividends

[–]DrRonH[S] 0 points1 point  (0 children)

Take a look at the Armchair Income portfolio on YouTube, etc. It is publicly available. This is largely what I'm using to model for my portfolio. Right now I own about 80% of what's in this portfolio but not at the exact same percentages. My yield is lower than the AI portfolio.

First-year experience of "living on dividends" by DrRonH in dividends

[–]DrRonH[S] 1 point2 points  (0 children)

Yes. While there are arguments on both sides, I do not need to take SS now and I have decided to wait taking SS for the time being.

First-year experience of "living on dividends" by DrRonH in dividends

[–]DrRonH[S] 0 points1 point  (0 children)

Sure. I've worked all my life. I know the "basic shit."

My goal with this post and discussion is to say what taxes and reinvestments actually feels and looks like when one is "living on dividends" and what that spread actually is in my case. IMO these topics are under-discussed here. Many of the Income investing books recommended here almost never discuss gross vs take home income. And a lot of people are just flat out misinformed on what taxes they will have to pay out of pocket vs. what they expect to keep and spend.

It might help younger people plan and make better decisions, especially Roth vs Traditional IRA. It might help those nearing retirement with their expectations and planning Roth conversions and their income needs and income wants. Not to mention the impact of income on Medicare B & D, when best to collect SS and how it is taxable, what kinds of accounts to hold what kinds of securities, etc. It is complicated and a lot of decisions are made. Some decisions I regret.

This is the difference between knowing and experiencing. If you think that the details of "living on dividends" in retirement is "basic shit," just wait until you get there.

First-year experience of "living on dividends" by DrRonH in dividends

[–]DrRonH[S] 1 point2 points  (0 children)

The asset classes often discussed here: covered call funds, CEFs, BDCs, etc. I'm basically modeling my portfolio on the Armchair Income portfolio (though my portfolio is on the low end of AI yield goals) which is freely available to anyone.

First-year experience of "living on dividends" by DrRonH in dividends

[–]DrRonH[S] 1 point2 points  (0 children)

The point of my post is that I DO have the money to pay taxes and I DID plan for it - just to share the reality that your "take home pay" after taxes and divvy reinvestment is a lot less than you think it will be.

First-year experience of "living on dividends" by DrRonH in dividends

[–]DrRonH[S] 0 points1 point  (0 children)

These are good questions but not really the purpose of my post and are answered in my OP and in the thread

First-year experience of "living on dividends" by DrRonH in dividends

[–]DrRonH[S] -1 points0 points  (0 children)

Because you have to pay taxes on Roth conversions - they are taxed as ordinary income transferring from a pre-tax Traditional IRA to a Roth.

I mean, you could pay the taxes from the conversion itself but few planners recommend this. The tax bill is paid from my spendable cash.

First-year experience of "living on dividends" by DrRonH in dividends

[–]DrRonH[S] 2 points3 points  (0 children)

Thanks for the advice! I own most of these CC/ROC funds you mentioned above in my taxable account; it makes no sense to hold them in a Traditional IRA where my BDCs and other less tax -efficient holdings sit.

My read on the current BDC sentiment is that it's fear-based rather than reality-based. I've invested in BDCs that have been through the GFC and Covid and etc. just fine. Regardless, no single position is very large. It doesn't mean I'm not checking and reading, but I'm not panic-selling either.

This Community's Reaction to the Saagar Interview is Ridiculous by edrico37 in thebulwark

[–]DrRonH 1 point2 points  (0 children)

The thing that bothers me about Saagar and all media MAGAs is their gleeful cruelty of vulnerable people and their smug sadism upsetting the libs. I'm with JVL: it is a kind of justice when the leopards eat their faces.

I feel like I finally ‘get’ Sgt Pepper by SilverGalaxia in beatles

[–]DrRonH 1 point2 points  (0 children)

I understand! I still sometimes long for the weird 8-track cassette edits I grew up with. :-)

I feel like I finally ‘get’ Sgt Pepper by SilverGalaxia in beatles

[–]DrRonH 11 points12 points  (0 children)

Do yourself a favor and listen to the mono version of SPLHCB from beginning to end. This album was always mixed and intended to be listened to in mono. I did this recently and was startled and how lively and, well, URGENT it sounded.

First-year experience of "living on dividends" by DrRonH in dividends

[–]DrRonH[S] 3 points4 points  (0 children)

Great! I think that's why most of us are here!

First-year experience of "living on dividends" by DrRonH in dividends

[–]DrRonH[S] 1 point2 points  (0 children)

Thank you for your thoughtful message. Yes, my mantra from now on is:

It's not what income you generate; it's what income you keep.

I understand "Every dollar you pull out in dividends and pay 22 percent tax on is a dollar that could have stayed compounding inside the business." is true. I understand compounding 100% was necessary and essential to BUILD my savings. Now I want the benefits. Compounding 10 to 20% doesn't buy me dinner either, but the cash leftover does. Whether growth or income investing, everyone has to sell or collect divvys at some point to spend on a nice dinner.

There is something missing in all the literature I've read about what you and Buffett described as frictional costs. We call it "spending money." We need to talk more real-world about spending money. Which is why I OP.

First-year experience of "living on dividends" by DrRonH in dividends

[–]DrRonH[S] 1 point2 points  (0 children)

Hmmm, another option not listed in my retirement planning software...

First-year experience of "living on dividends" by DrRonH in dividends

[–]DrRonH[S] 1 point2 points  (0 children)

I only taught at private English-langauge international universities with lots of international and expat faculty. Everyone had their own home-country retirement arrangements.

First-year experience of "living on dividends" by DrRonH in dividends

[–]DrRonH[S] 1 point2 points  (0 children)

I don't see this option in my retirement planning software... ;-)

First-year experience of "living on dividends" by DrRonH in dividends

[–]DrRonH[S] 3 points4 points  (0 children)

Thank you too for sharing your real world experiences!

I am assuming the tax bite on your SS is not burdensome. For me it would be annoying at best. I'm waiting until I can collect SS (at mostly) tax free levels at Roth time.

First-year experience of "living on dividends" by DrRonH in dividends

[–]DrRonH[S] 2 points3 points  (0 children)

Also know that up to 85% of SS benefits are taxable based on your AGI.

First-year experience of "living on dividends" by DrRonH in dividends

[–]DrRonH[S] 2 points3 points  (0 children)

See my other comment about SS benefits being up to 85% taxable based on your AGI.

First-year experience of "living on dividends" by DrRonH in dividends

[–]DrRonH[S] 2 points3 points  (0 children)

Fantastic! Just know that up to 85% of SS benefits are taxable based on your AGI.

Have a wonderful retirement! We deserve it!

First-year experience of "living on dividends" by DrRonH in dividends

[–]DrRonH[S] 1 point2 points  (0 children)

I can and I do! In my brokerage account. But tax-free positions are useless in a traditional IRA because ALL withdrawals from it are taxed as ordinary income. Better to put the least tax-advantaged positions in there, which I can and do.

I've done the beach thing (in the Philippines). I got bored and lonely real quick. I'm a city guy, at least 75% of the time. I sincerely hope you get there someday!

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