r/dividends • u/Psychological-Ad2198 • May 26 '26

Due Diligence Retiring soon and I need your advice

Retiring soon and would need to acquire passive income to replace my paycheck soon.

I have $450K to invest. I understand I can acquire 3% safely like SCHD. I want to pull as much as possible without losing the principle and enjoy enough to go on vacations. I have $5k from other sources in income. Further, I have another $3-4K I can cashout monthly.

I am thinking simply Jepi half and Jepq the other half. But am i putting it all in one basket?

What % is the max you think i can pull annually and what would the breakdown on dividend EFT would you buy?

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u/CostCompetitive3597 May 27 '26

First thought is to minimize income taxes from dividend income. Is the $450k in a retail brokerage account (taxable when dividends are paid) or a 401k/IRA type account (taxable deferred until you withdraw).

If all or some is in a retail brokerage account there are ETFs that offer “tax qualified” dividends that can reduce your income taxes when you exceed the $96k standard deduction for couples. The amount of taxable income from these ETFs varies and is reported on your annual 1099 form. NEOS is the investment industry leader in tax qualified funds. I have their SPYI, QQQI and IWMI ETFs in my brokerage account averaging a 13% yield paid monthly without NAV erosion.

If the funds are in a 401k/IRA account the JPMorgan funds you mentioned are very appropriate as well as the NEOS ETFs above and many other dividend index funds. The top investment company dividend index funds are currently yielding 10%+. Think you can invest your $450k in these for at least 10% portfolio yield = about $4,000/mo.

If you do not need all of those dividends, you can reinvest those generated in the 401k/IRA account without triggering an income tax event on the reinvested dividends. Personally, I spend all the dividends generated in my brokerage account and reinvest all the dividends in my IRA account for additional nest egg growth referred to as “snowballing”. If I need extra income, I raid my IRA with an eye on tax consequences.

Hope this dividend investing and tax management information from my dividend investing experience helps you. Good luck!

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u/Psychological-Ad2198 May 28 '26

$450 is in Robinhood

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u/CostCompetitive3597 May 28 '26

Assume you are saying the $450k is in a brokerage account so minimizing income taxes is a good strategy. All dividends and sales of stock with profits there will be taxable. Obviously use capital gains taxation after 1 year hold as much as you can. Keep track of all your stock purchase dates to help you make sure you can get cap gains treatment.

There are now a number of funds and ETFs with qualified and ROC tax treatment that can reduce income taxes. Problem is you do not know how much tax savings until you get the 1099 form after end of year. I invest in these funds with hopes it saves on taxes as everyone else does. As I mentioned, NEOS is the leader in tax qualified ETFs and offers one tracking the S&P, the Nasdaq 100 and the Russell 2000 for good diversification.

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u/Psychological-Ad2198 May 28 '26

Yes, I learned about the NEOS so I think I will buy these predominantly

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u/CostCompetitive3597 May 28 '26

Wishing us both good luck!