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No, not a trick question in the least. "Keeping a portion to pay taxes" diminishes the portfolio. And cares to countenance that? One wants to see one's portfolio grow, not slowly wither away.
Secondly, the more money one has, the more vulnerable one becomes to market-vicissitudes. Why? Because saving and investing additional money, hardly matters, relative to what's already been invested... even if one's comparatively young, and has decades left in the labor-force.
Thirdly, affluent people can't relocate to a state with nicer quality of life, because said state is also likely to be higher-tax. Move to California, and get walloped with their state individual income tax... which makes no distinction between earned-income and long-term-capital-gains. And with the $170K annual dividends in the "rich Beer Geek" example, our hero can't qualify for any benefits (such as Obamacare), even if he's 100% unemployed and devoting his time exclusively to beer. Even if he has plenty of money to pay cash for a tony mansion on the Pacific Coast, CA is going to milk his portfolio voraciously.
Corollary: why bother? Unless, of course, you're going to become Galactic Emperor.
we don't really have a job so to speak . but we do get 6 figures in portfolio income ... when we rebalance each december we set a side the years spending cash for the entire year plus we include our best guess on taxes too . it really is not an issue . it is no different then paying taxes when you have a pay check except we pay some as estimated . this is what a safe withdrawal rate is all about
No, not a trick question in the least. "Keeping a portion to pay taxes" diminishes the portfolio. And cares to countenance that? One wants to see one's portfolio grow, not slowly wither away.
Secondly, the more money one has, the more vulnerable one becomes to market-vicissitudes. Why? Because saving and investing additional money, hardly matters, relative to what's already been invested... even if one's comparatively young, and has decades left in the labor-force.
Thirdly, affluent people can't relocate to a state with nicer quality of life, because said state is also likely to be higher-tax. Move to California, and get walloped with their state individual income tax... which makes no distinction between earned-income and long-term-capital-gains. And with the $170K annual dividends in the "rich Beer Geek" example, our hero can't qualify for any benefits (such as Obamacare), even if he's 100% unemployed and devoting his time exclusively to beer. Even if he has plenty of money to pay cash for a tony mansion on the Pacific Coast, CA is going to milk his portfolio voraciously.
Corollary: why bother? Unless, of course, you're going to become Galactic Emperor.
i can't believe how little we just paid in new york and nyc taxes being retired ....
a lot of retirement income is not taxed by the state ... ss is not taxed , my wife's nyc pension is not taxed , the first 20k in retirement money is not taxed , we got thousands of dollars in interest on my treasury bond funds that is not taxed ...
in fact ny gives us a 1600 dollar tax credit for having a new york partnership plan for long term care . we could not take the whole thing and have to carry it over because we paid so little in one of the highest tax states in the country
LOL I'll never get to a million let alone 10 million.....
Not counting on AT&T for a whole lot -- I'll settle for being above break even! Why would I need a job to cover taxes on dividends? I do plan to work on a part time basis, it won't be a full retirement.
If you make under $75k in cap gains (long term) the rate is 0%.
On $170,000 you'd owe $10,000.
On $170,000 in income. Leaving $160,000 to spend or invest as you wish. Yearly. And that would rise with inflation more or less.
Stop being obtuse.
Those who are wealthy can easily change their home state since they do not work a regular job. Both my wife and I are not "affluent", but since she works from home and I travel we can live anywhere. Similar setup. On the taxes paid to a state, we can buy a home and pay the mortgage in a no income tax state. And with no kids there is nothing tying us to any locale.
the problem is all other income that is taxable fills the bucket first ... then whatever space if any can fit in the zero percent capital gains bracket can go in . so there is a pecking order to utilize that ...
our ss alone fills a major portion of that bucket and most of my trading gains are short term any way .
First, you're assuming tax-brackets and tax-rates for married couples. I'm assuming as single individual.
Second, your observations are predicated on the investor dipping into his/her portfolio to pay taxes. I on the other hand am assuming the contrary... the portfolio is holy and inviolable, so that if it generates any taxable income, those taxes will have to be paid by other sources of income... such as a McJob. The corollary is that the wealthier we become, the harder we have to work for wage-income, just to pay taxes on our investments.
Once again: the "problem" is the having to penetrate into one's portfolio, to draw funds to cover the taxes. If we allow this, yeah, spend away. Go buy a few McLarens, put them in a 7-car garage, and get a mansion in California to go with the garage. And a penthouse in Manhattan. But if the goal is careful, indefatigable, relentless preservation of the portfolio - well then, there's a cost involved, isn't there?
there is no problem raising cash for living or our taxes . as retirees we do it yearly.
One specific book? No. A personal finance class as a required credit in high school? YES.
We homeschool and we do our budget each month right where our teens can see it. Sometimes I will sit down with them and we will do the budget together. I also insist that they take a personal finance course their junior year. Personal finance is one thing that my parents never taught me and I spent many years struggling with the basics that any 16-year-old can be taught. Old habits die hard, particularly when they are generational. Whether or not parents are able to pass this knowledge onto their children, a good personal finance class could improve the current generation's lifestyle immensely.
That's excellent. In many homes, the parents are more willing to talk about sex than personal finances.
Location: Formerly Pleasanton Ca, now in Marietta Ga
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Quote:
Originally Posted by mathjak107
we don't really have a job so to speak . but we do get 6 figures in portfolio income ... when we rebalance each december we set a side the years spending cash for the entire year plus we include our best guess on taxes too . it really is not an issue . it is no different then paying taxes when you have a pay check except we pay some as estimated . this is what a safe withdrawal rate is all about
So you withdraw a years worth of cash from the portfolio. Where does the money sit while you spend it? High interest savings like ally bank?
we ladder some as cd's and the rest is kept as cash as needed in our fidelity core ... our expenses are not even .. we have biggies up front like our long term care plan .... but about 1/2 in laddered cd's works fine.
like i said , if i ever have to worry about a fraction of a percent on a declining balance then i better look at my investment plan because this difference should amount to nothing .
Last edited by mathjak107; 03-15-2019 at 09:15 AM..
the problem is all other income that is taxable fills the bucket first ... then whatever space if any can fit in the zero percent capital gains bracket can go in . so there is a pecking order to utilize that ...
our ss alone fills a major portion of that bucket and most of my trading gains are short term any way .
But none of that applies to the situation I responded to
But none of that applies to the situation I responded to
it is just the problem many of us hit hit when we do try to use that zero percent bucket ... there is a priority order that fills it first
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