Retired - Continue to reinvest dividends and capital gains?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
mjb49
Posts: 9
Joined: Sat Jan 07, 2017 2:25 pm

Retired - Continue to reinvest dividends and capital gains?

Postby mjb49 » Thu Jan 26, 2017 11:03 am

Hi,
I retired and started withdrawing from my IRA. To generate cash is it best to continue reinvesting my dividends and capital gains or get income when I rebalance. Either way I will need to get some cash during the rebalance.
Thank you!

User avatar
midareff
Posts: 4666
Joined: Mon Nov 29, 2010 10:43 am
Location: Biscayne Bay, South Florida

Re: Retired - Continue to reinvest dividends and capital gains?

Postby midareff » Thu Jan 26, 2017 11:16 am

I'm retired and start my RMD in 2018. I'm undecided on which method to use. What I see as logical choices are either having all dividends in IRA buy shares into St Bond Fund and then distribute 1/12 of required RMD monthly from ST Bond Fund to bank, or, re-balance at the end of the year funding the ST Bond Fund. I think I like the second better at the moment.

livesoft
Posts: 55087
Joined: Thu Mar 01, 2007 8:00 pm

Re: Retired - Continue to reinvest dividends and capital gains?

Postby livesoft » Thu Jan 26, 2017 11:25 am

In an IRA, I don't think it really matters whether you reinvest or withdraw the distributions. The reason is that if you need to withdraw money, then you would sell shares without any tax consequences anyways. Same goes for rebalancing: if you need to sell something to buy something else, there are no tax consequences anyways.
This signature message sponsored by sscritic: Learn to fish.

aristotelian
Posts: 1870
Joined: Wed Jan 11, 2017 8:05 pm

Re: Retired - Continue to reinvest dividends and capital gains?

Postby aristotelian » Thu Jan 26, 2017 11:26 am

If you take the gains as cash, you can decide for yourself each time how to use the funds. The problem is that you might give in to emotion when rebalancing. If you trust yourself to stick to your plan, then that is probably the best way. If you set them to reinvest, that ensures you don't make any irrational decisions, just set and forget.

User avatar
ruralavalon
Posts: 10476
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Retired - Continue to reinvest dividends and capital gains?

Postby ruralavalon » Thu Jan 26, 2017 1:00 pm

I am retired. I still reinvest dividends in my rollover IRA and our Roth IRAs.

We do not reinvest dividends in our joint taxable account, so all sales will be with long-term gains and without any short-term gains. Before starting Required Minimum Distributions, all of our withdrawals for retirement spending were from the joint taxable account.

We currently are taking Required Minimum Distribution from my rollover IRA, by far our largest account. Almost all of our withdrawals for retirement spending are now in the form of Required Minimum Distributions.The distributions are set up to be monthly and automatically proportional from each fund in my rollover IRA, so that the distrbutions tend to keep oor desired asset allocation intact.

This works very well for us, with no management effort required at all. Vanguard automatically determines how much to take from each fund every month, because we picked "proportional" and "monthly" when when setting this up with their RMD service.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

mjb49
Posts: 9
Joined: Sat Jan 07, 2017 2:25 pm

Re: Retired - Continue to reinvest dividends and capital gains?

Postby mjb49 » Mon Mar 20, 2017 11:11 am

Thank you for your replies.


Return to “Investing - Help with Personal Investments”

Who is online

Users browsing this forum: Bing [Bot], Gino'61, Noalani, rijk, surfer_chick and 51 guests