Yes, I would not reinvest dividends in taxable if you need cash to spend. If you're not sure if you will need the cash, you could turn off auto-reinvest and then evaluate once or twice a year and reinvest manually or re-allocate if you determine you don't need the cash.Basel Hodge wrote: ↑Mon May 06, 2019 9:37 amThank you Taylor & Dialectical Investor for your thoughtful responses to my post. I’ve read the linked material and I think I understand the underlying rationale. It does prompt some follow up questions. First I think some additional information might be in order…
I do have a pension which is about 2.5 % the amount of my total current portfolio per year. I’m 61 years old.
My portfolio is allocated generally 65% Stock 35% bond
My portfolio has the following percentages:
Joint acct (Non tax advantaged) 39%
My age based priority plan for withdrawal in retirement:
Before age 70.5
1. Taxable accounts first (joint acct)
2. Traditional IRA second (Taxable)
3. Roth IRA third
1. Traditional IRA first (RMD taxable)
2. Taxable accounts second (joint acct)
3. Roth IRA third
1. Use Joint taxable account to establish a yearly spend account. This should be an account that pays the highest interest rate possible yet remains liquid. Assets used for expenditures for that year. (Money Market?)
2. Direct dividends from Joint account to Spending account (currently being re-invested).
3. Set aside cash in rebalancing portfolio by reducing stock portion of joint account to meet spending.
1. Given the responses regarding dividends in my last post, I want to be certain regarding my plan (general principals section #2) to direct dividends from the joint act. (non taxed advantaged) to my spend account makes sense. Up to this point in my life all dividends in all accounts have been reinvested. Or have I misunderstood the answer to my previous post?
2. Is there anything in the description of my portfolio that raises any red flags or provides any reason for concern?
Again thank you for your thoughtful response.
Withdrawal strategies can be complicated, as short-term and long-term tax implications need to be evaluated. For instance, you might consider doing Roth IRA conversions. You might also be interested in this Withdrawal Methods page in the Wiki.
You will likely get more (and better) responses if you start a new thread about withdrawal sequencing in retirement in the Personal Investments forum. You'll probably be asked for more info, such as marginal tax rate and spending needs.