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Strategies & Market Trends : Dividend investing for retirement
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To: Steve Felix who wrote (21994)2/28/2015 12:06:34 PM
From: JimisJim1 Recommendation

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Mannie

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My father got crushed by RMD and his refusal to accumulate the coming year's RMD cash during the previous year and was thus forced to sell a significant amount of stock at rock bottom prices. I had told him for several years prior to that to begin accumulating "next year's" RMD cash during the current year to at least be able to sell at times of his choosing vs. forced sales -- he also did not see the value in divvy/income investing until last year when he complained to me that his remaining PF didn't generate enough cash anymore. That's when I gave his PF an analysis and left him with 24 specific suggestions divided roughly in half between what was underperforming total-returnwise and watch/buy list of good divvy/income stocks that would generate the amount of cash he desired and leave some room for total return growth and income growth... he turns 90 in June.

My takeaway plan as I've built my hybrid DGI/IG portfolios has been to practice what I preach -- the year I turn 69, I will stop reinvesting dividends automatically until I accumulate the amount of cash I estimate I'll have to withdraw to satisfy RMD requirements, reinvesting only the cash that exceeds (if any) my estimated RMD for the next year. Only seems to make sense.

However, I am reading more and more pieces that suggest the more successful my DGI/IG portfolios are, the more likely my RMDs could grow to the point where I may have to begin selling pieces of positions anyway. If so, the excess will go into taxable accts. I'm still trying to figure out the tax ramifications of my portfolios' growth over time.

Obviously the best solution would have been to go with a heavy dose of Roth accts. My problem was procrastination and I always seemed to let the tax pmts. for conversions scare me off as I rarely had a lot of extra cash just laying around to pay taxes on conversions and didn't want to cannibalize the IRAs to pay the taxes. In retrospect, I should have done it anyway and may still.
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