Personal Finance (Not Investing) • Re: Reinvest Dividends During semi-FIRE?

My job has ended due to a restructuring, and I realistically am looking at a 6-9 month "semi-FIRE" period at least. We are at 30-33x expenses with flexibility to reduce expenses if needed, so my "semi-FIRE" period could turn into full blown FIRE if I don't find a job worth doing. DW does not work. We are both 50 with two elementary age children.

Question for the board: Historically we have reinvested dividends in both taxable and tax-advantaged accounts. What is the typical approach to dividends during FIRE? If I continue re-investing from my taxable accounts, I will likely need to keep more cash on hand to cover expenses. If I instead sweep dividends from my taxable accounts to banking it will cover approx 25% of monthly expenses. Note I am not planning to change my investment mix to generate more dividends - this is just a question about what to do with dividends I am already receiving based on my established investment mix (65/35).

I am leaning towards using those dividends for monthly expenses to reduce potential variance but the accumulation phase side of my brain is having a hard time accepting that approach.

The tax advantaged dividend reinvestment or non reinvestment is a moot point at this point if you withdraw dividends or profit/capital it’s all the same penalty.

If you lost your job and the other adult doesn’t earn anything and life is uncertain then yea let the dividends in the non tax advantaged structured broker account accumulate cash and let it sit as cash or take the cash in the account…how do you know what monthly expenses will be in September or November unless everyone stays inside orders everything to the home then yea the probability is you can predict costs each month but if that’s not the case you need to start building cash saving…or you can just get a part or full time job at 15+ an hour and start earning not everything has to be six figure career to earn money there are many ways you aren’t in charge of hiring yourself to a good job but I’m sure you can make $60k+ a year somewhere and then you can keep dividends reinvesting

The non working/earning adult can keep staying home and there is no day care expense

Your expenses won’t change and you can work to slightly lower them while you are exchanging your time/energy for dollars while you let dividends reinvest

Thanks, but I am not concerned about earning additional income.

Then the loss of job is also a meet point if you don’t have to earn after your job ends…so what are we talking about here?

To reinvest dividends or take cash in a brokerage account?

Yes.

Statistics: Posted by Dpmbball — Sat Jun 08, 2024 11:36 pm