Modeling dividend payments

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drbrandt1
Posts: 14
Joined: Fri Nov 21, 2014 5:52 pm

Modeling dividend payments

Post by drbrandt1 »

I plan on having significant dividend payments during retirement. I'd like to be able to model these in some fashion. Of course, I could just add them as misc income, but how do I reflect the fact that these monies will be coming from my taxable portfolio? How do I reflect their withdrawal from the taxable investments? It would be nice to be able to reflect negative taxable savings in the additional inputs to do this but this is not currently allowed (unless I'm missing something). Any other ways to do this? Thanks much!

jimr
Posts: 634
Joined: Thu Feb 28, 2008 6:48 pm

Re: Modeling dividend payments

Post by jimr »

The planner can't really help with this because portfolio growth is always handled on a 'total return' basis.

Any attempt to break out dividend and interest payments from portfolio capital growth would be very problematic. You'd have to somehow lower the expected portfolio return to 'take out' the dividend and interest part of the return, then adjust for taxes somehow.

Personally, I prefer to model overall retirement spending on a 'total return' basis and do cash flow planning as an entirely separate exercise.

drbrandt1
Posts: 14
Joined: Fri Nov 21, 2014 5:52 pm

Re: Modeling dividend payments

Post by drbrandt1 »

Thanks. Why not leave taxable return as total return and allow for negative taxable account savings in the additional inputs page to reflect the explicit withdrawal of dividends (as opposed to reinvestment)? If this were then combined with the ability to model pulling additional withdrawals needed from deferred first, then taxable, then tax free, I'd have the ability to model preserving taxable stock while using dividends for retirement.

Thanks much for your prompt and thoughtful answers.

Doug

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