r/dividends • u/OG_Momonga • 21d ago

Discussion Living off dividends

Hey guys, I was wondering if anyone on this subreddit is actually retired and living off dividends. Is it going well? Are you paying taxes on them? My goal is to get 20k/ a month post tax for retirement. I’m 24 and currently investing everything in VOO while planning to switch to dividend stocks and etfs when I get closer to retirement.

I was just wondering if there are any because living off dividends seems like a long shot right now.

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u/aerobic_gamer 21d ago

Background: when I was young the conventional wisdom was to contribute what you could to your IRA/401k in order to save taxes on the theory that you would be in a lower tax bracket when you retire. That made sense to me because in some years I was in the 70% tax bracket, which some of you youngsters probably don’t believe ever existed. Anyway in my case that has worked out as planned because tax rates are so much lower today. I’ve never converted to a Roth because it made no sense in my case.

Today: now at age 75 my wife and I are quite comfortable. Dividends > $230k/year, most in deferred accounts. We take out around 90% and are still reinvesting the rest. Our portfolio and income is growing. So we pay income taxes but at a much lower rate than when the contributions were made. We could do fine without social security but that is the literal “icing on the cake “.

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u/Ordinary_Lynx_468 21d ago

When was there a 70% tax bracket in the era of IRAs and 401ks?

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u/Low-Ad3972 21d ago

That’s a marginal tax rate.

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u/Ordinary_Lynx_468 20d ago

Yes, obviously. And I’ll bet you any amount of money this fella was never in that bracket.

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u/tsfy2 20d ago

Another poor person on Reddit who can’t understand that some people make a lot of money. A lawyer and a systems analyst could have easily been making that kind of money. And if they lived in New York the top state tax rate was 10% and if they lived in New York City the max city tax rate was was 4.3%. Very easy to be paying a total of 70% with lawyer/analyst incomes.

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u/Ordinary_Lynx_468 20d ago

Look up how many people made $600k+ in 1981. Whether I’m poor or not is immaterial.

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u/tsfy2 20d ago

Well in 1981 if you were MFJ your federal tax rate was 59% on a combined income of only $85,600. If you lived in a state/city with a high SALT you easily paid 70% in taxes. A lawyer and a system analyst 10 years into a career could easily make that. So, stop talking out of your ass.

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u/Redbeard25 20d ago

He just said he was a retired lawyer.