I’m Pat Rosenheim, a.k.a. the PandA Trader.
I have initiated full account transfers from Merrill Edge to Fidelity and have taken an additional $1,000 withdrawal from our joint account. In addition, I have turned off DRIP for most securities that I was able to effect before they went into their payment cycles. Also, the previous update (aka part I) showed $1,000 incorrectly withdrawn from my Roth in the screenshot of the cash page.
We are in the income phase of portfolio management, partially (or totally) withdrawing each month from the available settled cash.
I am changing the way withdrawals are made. First, DRIP will be enabled on all positions. Since some positions are expected to DRIP or reinvest distributions at a discount, it only makes sense to accumulate those positions. If a withdrawal is warranted, some holdings may be sold at potentially higher rates than they were acquired, resulting in more holdings being retained and thus, more retained earning power. This is a break from my prior practice of letting dividends accumulate as cash in each account and then withdrawing from that cash. I believe this will allow more value to be extracted from every investment.
Part of the cash in our Roth IRA accounts may be withdrawn each month on an ‘as needed’ basis. The available withdrawal amounts are shown on the cash tab on our Google spreadsheet.
Projected checkbook balance(s) for the end of the current month should now be at least $5,000.00 – $10,000.00 but if it’s not within that range then the dividend reinvestment and withdrawals will need to be adjusted. Also, the next few month’s projected EOM balance will also be used to determine if adjustments are necessary. This will provide a greater ‘margin of safety’ and hopefully avoid any unpleasantness. I think planning up to 3 or 4 months in advance should provide a reasonable level of financial security, all things considered.
- Monthly withdrawals from available (i.e.; settled) cash may be taken.
- Monthly withdrawals will only be scheduled after the end of each month or on an ‘as-needed’ basis.
- I am now employing margin in our taxable account to boost our dividend income and possibly some capital gains.
So, based on the amount of the checkbook balance at the end of the previous month would determine whether or not I should make a withdrawal this month. If no withdrawal is warranted, then I will base it on the checkbook balance at the end of the current month. If no withdrawal is warranted, then I will base it on the checkbook balance at the end of the following month, etc. This procedure will also determine if I should make a deposit to the taxable account instead. <Whew!> This could (and did, and probably will again) change…
In our PandA account, I plan to withdraw $0.00 from the account.
In my RothP account, I plan to withdraw $1,000.00 from the account.
In my wife’s RothA account, I plan to withdraw $1,000.00 from the account.
In my IRAP account, I plan to withdraw $0.00 from the account.
This is the cash balance sheet and YTD withdrawal history (as of this posting);
Withdrawals are calculated after adding the end of the month dividends & interest, and before adding any of the following month’s dividends. Also, calculations based on current balances are shown for next month, but will change due to investing, dividend income, cash transfers, etc.
We have a plan for my wife’s RMD withdrawals from her TSA on November 15th of each year, and it is automatically withdrawn with 50% withheld for Federal Income Taxes.
We might need to plan for my first RMD withdrawal from my IRA in April of 2025, which should be totally covered by dividends for *at least* the first few years. But, if I convert 1/6 of my remaining IRA each year starting in January of 2018, then the balance at the end of the year before my RMDs are scheduled to start will be $0.00, eliminating the need for any RMDs! There will not be any RMDs for my wife’s IRA (except automatically each November 15th for her TSA!) because I totally converted her IRA holdings to her Roth IRA in 2016. This maximizes our untaxed income.
Of course, we’ll still have our regular recurring monthly charges that will need to be paid, but the withdrawals from the Roth IRAs and individual brokerage should cover that, and we are already taxed on anything that we make in our individual brokerage account.
- CLM, CRF, DNP, ECC, FFC, FLC, GOF, GUT, MAV, MHI, OXLC, PFD, PFO, PHK, PHT, PMF, PML, PMX, & SAR are DTC discount eligible for DRIP in Fidelity accounts because they may reinvest at a discount! (Status @ Merrill Edge is the same)
This plan will provide the necessary augmentation of social security to allow us to live quite comfortably on a minimum income.
We met with our tax advisor in mid-2014 and went over this plan. It got a glowing review. The tax advisor is happy, I’m happy, and (most importantly!) my wife is happy. I aim to keep it that way.
But, as I always say; “Hindsight is 20/20, foresight not so much.”
PLEASE TAKE NOTE AND REMEMBER THIS!
I’m not telling anyone to buy anything or giving anyone any advice, because that’s illegal. You see, I have no letters after my name, like RIA, CFA, etc. I SIMPLY DO NOT GIVE ADVICE. I only tell (and show!) what I do. You, like me, are all alone in this.
And remember, always do your own due diligence!