Author Topic: The General Strategy  (Read 526 times)

uneven_cyclist

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The General Strategy
« on: August 25, 2019, 02:23:12 AM »
Hi All,
I am beginning to put into place my general investing strategy that I hope to use in order to reach retirement in the next 10 years. I am posting to the Forum with the hope that some of you more-experienced users might be willing to take a look and then let me know if you have any suggestions or advice for my plan.  I would appreciate any and all suggestions.  Thanks all for your time!

Plan so far:
1) Max out 403(b) plan at work - 19k/year + matching contribution from employer (maybe 21K total / year with match); contribute to index fund that tracks S&P 500.
2) Max out Roth IRA, or contribute as much as possible, $6000/year, contributing to ETF that tracks total stock market.
3) Carry out a series of rollovers to move my 403(b) into Roth IRA account(s) beginning a few years from now; then once Roth IRAs reach 5 years old, begin living off of dividends.

A couple of questions so far:
1) I have seen that there are some high dividend ETFs available through online brokerages -- would it make sense, once I reach my retirement savings goal to sell off my various shares from the 403(b), Roth, etc. and convert to a high dividend position in order to maximize my dividends?  I'm sure that there would be tax penalties etc. and that the high dividend funds would not grow as fast...curious what people think about this strategy?
2) Any of you out there who have carried out rollovers from 403(b) or 401(k) to Roth accounts in order to free up your money? Suggestions/advice/warnings?

Thanks all for your advice and time, I really appreciate it.

uneven_cyclist

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Re: The General Strategy
« Reply #1 on: August 25, 2019, 02:25:30 AM »
Should also mention, that my wife will be carrying out a similar plan, but saving at a somewhat higher rate than I will...based on the assumption of 7% interest, compounding over 10 years, and factoring in what we have now, we're hoping to reach 1-1.2 million in 10-12 years. 


MDM

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Re: The General Strategy
« Reply #2 on: August 25, 2019, 11:56:03 AM »
...in order to reach retirement in the next 10 years.

3) Carry out a series of rollovers to move my 403(b) into Roth IRA account(s) beginning a few years from now
Often it is better to wait until one has retired to do traditional->Roth conversions, if the conversion after retirement can be done at a lower marginal rate than while working.

Quote
1) I have seen that there are some high dividend ETFs available through online brokerages -- would it make sense, once I reach my retirement savings goal to sell off my various shares from the 403(b), Roth, etc. and convert to a high dividend position in order to maximize my dividends?  I'm sure that there would be tax penalties etc. and that the high dividend funds would not grow as fast...curious what people think about this strategy?
One should care more about total growth than how much is from dividends and interest vs. capital appreciation when the funds are held in tax-advantaged accounts.  In taxable accounts, the tax penalties you mention make low dividend funds attractive.  See Tax-efficient fund placement - Bogleheads.

For general suggestions, see Investment Order and links therein.

koshtra

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Re: The General Strategy
« Reply #3 on: August 25, 2019, 12:22:33 PM »
I think the only real advantage of switching to a dividend-based retirement would be that the ship basically runs itself -- which may be a good thing for late in life, when incapacity or dementia might rear their heads. If you're "FIRE-ing fat" -- which it sort of sounds like you are, with way more than you need -- it's a reasonable way to go. You'll likely lose a percentage point or two of your annual return: but it's just money. Who cares?