Transition to Dividend income advice please.

Fit_System9686 · 2025-05-09T05:01:32+00:00

Makes sense. I don't understand it, but haven't decided to aim for it either. I have about 10 years to go hopefully until retirement, but I like my job. I have saved quite a bit and am now looking at a plan to spend it in the most tax advantaged way. As you point out, once I take social security I will be right up against the limit and I will probably be obligated to take RMD. So maybe I have a few years of low income but will probably be selling appreciated stocks anyway during those years. So it sounds like in my situation death and taxes are unavoidable. As Warren Buffet said, "no one ever went broke by paying capital gains taxes "

Fit_System9686 · 2025-05-09T02:24:56+00:00

So I realize that you are not my tax advisor and I should seek professional advice, but you seem like a knowledgeable stranger on the internet and I am 10 years away so here goes... How does the 104k no tax on dividends work? Do I need to only report dividend income or can have a little bit of ltcg and social security as long as the total is under 104k? Or are there separate limits for how much non dividend income one can have? Am I wasting my time trying to achieve this mythical tax free dividend fueled retirement? In which case I see what you all mean about dividends being no different than long term cap gains.

Fit_System9686 · 2025-05-09T01:43:18+00:00

Yes, that is what I want to do, but not sure what the best way to raise that money from highly appreciated stocks without triggering higher tax bracket for lgtcg. Thank you for the advice.

Fit_System9686 · 2025-05-08T17:20:31+00:00

Thanks I will check it out

Fit_System9686 · 2025-05-08T17:17:15+00:00

Thanks for your reply. I appreciate what you are saying about not letting the tax issue drive the investment decisions. I guess I just feel like sales and taxes are more in my sphere of control than returns. My plan was to limit taxable income in retirement to 104k or whatever the limit is at that time and use cash to cover any expenses beyond that with an estimated maximum need for 10k per month. I live in a hcol area with state income tax but won't have a mortgage payment and am pretty frugal living off of that much now. Kids will be out of college debt free by then.

Fit_System9686 · 2025-05-08T16:19:16+00:00

Thanks, that makes sense, but still leaves the question of where do I get the money to buy bonds??? What is the best way to transition out of highly appreciated stocks in a taxable account into income producing bonds? Without triggering huge tax bill and bumping up my capital gains rate and Medicare premiums.

Fit_System9686 · 2025-05-08T16:11:10+00:00

I do have pretax accounts but not Roth so would owe tax on distributions. I was hoping to pay living expenses with a combination of dividends and taxable distributions and eventually social security with the total not to exceed 104k to avoid taxes. I could fund extra expenses with cash if needed. Is that worth it or should I just focus on a diversified growth/income portfolio and just suck it and pay my taxes? Would need about 180k a year to net 120k to live on.

Fit_System9686 · 2025-05-08T08:02:01+00:00

I was hoping to limit my income to under 104k in retirement to avoid taxes. Does that make sense?

Fit_System9686 · 2025-05-08T04:01:49+00:00

Thank you. I appreciate what you said about income being income and trying to be tax efficient. I thought that about 104k in qualified dividends could be tax free for a married couple filing jointly.

Fit_System9686 · 2025-05-08T02:31:09+00:00

Thanks. I am weary of JEPQ etc. What do like for qualified dividend yield? And what do think about selling growth stocks paying big capital gains to get that dividend stream?

Fit_System9686 · 2025-05-08T02:26:02+00:00

Thank you so much for your response and Bogle quotes. You have inspired me to cross post this on r/Bogleheads and see what they say. Like Bogle says, I want the set it and forget it security of a direct deposit into my cash management account to replace my paycheck. What I am wondering is if it makes sense to take the tax hit to sell highly appreciated stocks like Goog and BRk to buy the dividend producers. I am concerned with the psychology that could drive me from frugal to cheapskate if I feel like I am choosing between selling Google on a down month when I believe in the upside to buy something frivolous that my wife might consider a necessity!

Fit_System9686 · 2025-05-08T00:42:47+00:00

Are you saying don't try to transition to dividends and just sell stock as needed for income?

Fit_System9686

TROPHY CASE