I did open a Roth account. I guess I am going to use this as part of my tax harvest strategy, for now. While you can't tax harvest inside a retirement account, you can harvest into one. So I sold some low yielding losses and bought some higher yielding stock from different companies inside my Roth. I guess the end goal (someday, a long time from now) would be to move everything into a Roth. That way all my dividends will be tax free, no matter how much I make. I suppose I can outline the VERY long path to doing this:
- Tax harvest into Roth up to $6k per year ($7k when I hit 50, not that far away). Repeat ad infinitum or until I run out of money.
- When I retire, roll my 401k into a traditional IRA.
- When the stock market crashes, roll from my traditional IRA to my Roth IRA up to the top of my current tax bracket. This rollover will be taxable since you are turning pre-tax retirement money into post-tax retirement money. I believe there is no limit to doing this, but I don't want to put myself into a higher tax bracket. Repeat ad infinitum or until I run out of securities in my traditional IRA.
- Earn all of my income tax free, regardless of tax bracket.
The only problem with this, will be selling my high capital gain stocks in my taxable brokerage account to move them to a Roth, like TGT, WPC, or MA. I will pay so much in taxes just to move them over, it probably won't be worth it. If I did decide to take the hit, it would be for my kids, which is another topic I need to research. What happens to these accounts when my wife and I pass into the next life? This is something for another day, as it is not at the top of my list, but I should explore it soon.
I was able to get a big gain in dividends this month. My wife magically made a big sum of money appear and she invested in some high yields so she could get more money for herself each month. I also maneuvered my 401k to increase my taxable dividends I receive from my company's stock that I can have in my 401k. In short, we are now making $910 a month in dividends!
I did say I would share my proposed retirement budget this month. It is by no means finished, but with current bills sans children here is what I can expect initially. I used some numbers from real charges I have today, and some I derived from estimates for retired couples in my location:
Total: $33k a year, or $2750 a month. That seems conservative, as I also tithe (I should do a blog on tithing vs. offering vs. usury vs. what qualifies for these at some point) so I will still be aiming for $40-50k a year combining my taxable with my 72(t) income. I can effectively head up to 80k+ (the + being the automatic tax deduction, so closer to 100k) before going from the 12% tax bracket to the 22% tax bracket. 22% is really where I don't want to be when I retire. The ultimate goal is to live essentially for free and pay no taxes, but I'm not Elon Musk, so realistically I will just aim for everything in my Roth IRA for no taxes, and eliminating as many bills as possible. Looking forward to Friday's jobs report.
Dividend Increases & Special Payouts
- Old Republic (NYSE:ORI) declares $1.50/share special dividend. ORI you SPOIL me. With the special $1 dividend payout last January and now this! One of the best dividend paying stocks I own! Word on the street is a hedge fund pressured them into this because of all the home sales increasing the home insurance part of closing costs. Either way, I'll take it!
- Main Street Capital (NYSE:MAIN) declares $0.21/share monthly dividend, 2.4% increase from prior dividend of $0.205. They barely made their dividend streak with this increase. Not a lot, but they are bringing it back slowly. My wife was delighted, she owns a big chunk of our MAIN securities and has been waiting for an increase for a long time.
- August Purchases:
- Hormel (HRL) 15
- Verizon (VZ) 65
- McDonald's (MCD) 2
- Xcel Energy (XEL) 3
- W.P. Carey (WPC) 10
- Omega Health Care (OHI) 19
- Chevron (CVX) 15
- QYLD (I'll explain this one next month) 7
- Main Street Capital (MAIN) 11
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