Timing of withdrawals in retirement and dividend/interest distributions

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LearningAlot
Posts: 45
Joined: Thu Aug 02, 2018 8:43 am

Timing of withdrawals in retirement and dividend/interest distributions

Post by LearningAlot »

I am early in my retirement and will soon be making withdrawals from my nest egg to supplement social security as planned based
on the asset allocation and withdrawal rates I have chosen. I am working through my cash flow routine and want to standardize on what makes most sense.

My question is more of a tactical one. Should I time these withdrawals to be immediately after the monthly interest or quarterly dividend
earnings are credited to my accounts or doesn't that matter?

Thanks in advance!
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Phineas J. Whoopee
Posts: 9675
Joined: Sun Dec 18, 2011 6:18 pm

Re: Timing of withdrawals in retirement and dividend/interest distributions

Post by Phineas J. Whoopee »

LearningAlot wrote: Wed May 08, 2019 8:40 am I am early in my retirement and will soon be making withdrawals from my nest egg to supplement social security as planned based
on the asset allocation and withdrawal rates I have chosen. I am working through my cash flow routine and want to standardize on what makes most sense.

My question is more of a tactical one. Should I time these withdrawals to be immediately after the monthly interest or quarterly dividend
earnings are credited to my accounts or doesn't that matter?

Thanks in advance!
That's a good question. The answer is it does not matter in a tax-advantaged account. In a taxable account it may matter a little.

With stock funds, dividends come directly out of share price. They do not increase your wealth. Sell the day before the dividend and the price reflects what it will end up being. Wait until the next day, the share price will be lower (subject to other market fluctuations, of course), and you will have cash in your account to make up the difference.

With most bond funds, not all, dividends are declared daily and paid monthly or quarterly. If you sell before the ex-dividend date you will receive pro-rated dividends.

PJW
btenny
Posts: 5438
Joined: Sun Oct 07, 2007 6:47 pm

Re: Timing of withdrawals in retirement and dividend/interest distributions

Post by btenny »

I rebalance once a year in October or so and put aside enough cash in my taxable accounts to cover me for the next year. I take dividends and interest on the investments in this account as cash. I move part of the cash to my checking account every three months or so. In my IRA I do a few charity donations during the year and then take the rest of my RMD in October when I rebalance.

I also keep enough money for 3+ years in tax free municipal bonds in my taxable account so I do not have to sell stocks to raise cash.

Good Luck.
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