Personal Finance

Withdrawal rate

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  • Aug 5th, 2015 8:00 pm
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Newbie
Oct 15, 2010
61 posts
25 upvotes

Withdrawal rate

I'm just fooling around with some retirement calculators and had a quick question.
Are dividends that are collected considered part of the withdrawal calculation?
For example, say you collect $40,000 in dividends and plan on taking out another $20,000 from the principle.
Is the withdrawal considered to be just the $20,000, or the full $60,000?
3 replies
Member
Mar 5, 2013
497 posts
118 upvotes
Ottawa
You mean from an RRSP account? If you withdraw $40,000 that came in as dividends, it counts as $40,000 in income, considering that money was sheltered from taxes.
Newbie
Oct 15, 2010
61 posts
25 upvotes
It's a taxable account. So, say it has a principle of $1000000, and you withdraw all of your annual dividend income ($40,000)as well as an additional $20,000, does that make the withdrawal rate 2% or 6%?
Deal Expert
Mar 25, 2005
22706 posts
3697 upvotes
presidente wrote: It's a taxable account. So, say it has a principle of $1000000, and you withdraw all of your annual dividend income ($40,000)as well as an additional $20,000, does that make the withdrawal rate 2% or 6%?
It's semantics. I would consider any cash out as a withdraw, the dividends are part of the total portfolio return.

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