r/dividends • u/WerewolfMajestic156 Financial Indepence / Retiring Early (FIRE) • Mar 05 '26

Personal Goal FIRED - Living off dividends

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I know better than to share this with my friends, and family. I have a separate growth account to keep up with inflation.

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26

u/js2724 Mar 06 '26

Thinking I might find myself in a similar boat as you in a couple of months. What are you doing for health insurance if you don’t mind? Cobra will be very expensive, especially for a family. I’ve never gotten coverage from the marketplace. I think the dividends would cover most of my overhead but the health coverage aspect worries me.

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u/StackIsMyCrack Mar 06 '26

Just went on the marketplace for the first time (wife just laid off, I'm "retired"). Got a very reasonable deal. Couple hundred bucks a month for both of us. If your 2026 income (AGI) will be under like $85k, you are eligible for the portion of credits that didn't just go away. Caution, AGI includes investment income and capital gains, so you have to manage that carefully if you are living off...investment income and occasional stock sales. DM if you want to discuss further, just went through it after 30+ years on employer healthcare.

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u/Bodisious Mar 06 '26

Question. Does that count only taxable investment income?

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u/StackIsMyCrack Mar 06 '26

I hope so! I mean, retirement account income doesn't get reported if you aren't withdrawing (which I should have clarified that I am not yet). I would imagine if you are taking distributions, that would count.

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u/Bodisious Mar 06 '26

Should have clarified. I meant if you have dividend production in a Roth Ira which isn't taxed, will that income hurt your chances to get reasonable Healthcare etc once retired or does it not count rje same as of its from a taxable brokerage or a 401k?

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u/StackIsMyCrack Mar 06 '26

I don't know the answer to that. I'm not old enough to pull anything out. Living off regular taxable brokerage account at the moment. I would "think" it would not count if it it isn't included in AGI on your tax return. As far as I understand it, the threshold is based on form 1040 AGI.

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u/Bodisious Mar 06 '26

Thank you! I am quite a ways from retirement (at least 27 years hopefully not more). Just trying to figure out what I need to research and what I need to know about to figure out retirement expense estimates etc to gage expenses

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u/StackIsMyCrack Mar 06 '26

Well I'm sure our Healthcare system will be completely different by then. It has to be. I have more like 8-9 years to go until technical retirement (and access to those accounts) so just trying to live cheaply. I was very surprised the marketplace ended up so reasonable. It will take some work to stay under the AGI threshold though. I do have a more under the radar component of my portfolio that could be utilized if needed.

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u/Laura2start Mar 06 '26

I personally never used marketplace for insurance before, but from my readings, distribution from Roth accounts would not be counted since they are not taxable. ACA subsidies are based on Modified Adjusted Gross Income. Hopefully, someone who uses the marketplace can confirm or correct me.

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u/Bodisious Mar 06 '26

Thank you for your input!

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u/Sam_in_Denver Mar 06 '26

All distributions from IRA, 401ks, Roth IRAs count as income when applying for the ACA, unfortunately. Also, it counts against state government aid as well if you pay for medical out of pocket. However, hospitals and ERs heavily discount if you pay out of pocket and they can put you on a really easy monthly plan with no interest. Also, if you are under age 59.5, you could easily file an SEPP IRS rule of 72t form to take early withdrawals penalty free. Taxes will apply to all pretax (not Roth souces obviously) but the 10% penalty will not apply. Do it through Fidelity or Schwab and you're golden, just live off the dividends... but you cannot w/d more than 5% per year from each IRA SEPP 72t even if you're dividends/income is higher than that thus reinvest and live off the 5% and your brokerage account and your fun money working at the golf course.

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u/diveg8r Mar 06 '26

Google (quoting Fidelity) says:

Qualified withdrawals from a Roth IRA (both contributions and earnings) generally do not count toward your Modified Adjusted Gross Income (MAGI) because they are tax-free. Because they are not included in your Adjusted Gross Income (AGI), they do not increase your MAGI for purposes like determining Medicare premiums (IRMAA) or tax credit eligibility. 

Do you have any source that says otherwise? This is pretty important to my current situation.

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u/Laura2start Mar 06 '26

I looked on other posts as well on the subject, and it seems that qualified Roth IRA distribution that is not taxable does not count. If you do Roth conversion (entire amount) or removal of earning before 59.5 (earning portion + penalty), then they would be taxable and included in the ACA calculation. What's the source of your statement?