Not knowing much about direct indexing, I'm curious how the IRS considers ownership at death. Would each indexed stock need to be tracked separately on the estate tax form? As an executor, I recall many supplemental pages accompanying IRS form 706 for the ninety-nine individual assets that my father held. Probably less of a consideration nowadays with higher estate tax exclusions, but still a painful memory!
RDQ, I sleep soundly at night knowing that I could create an income stream with my 403b at TIAA. Had I annuitized that account at retirement four years ago, the annual income would have exceeded my then salary. For tax reasons, I opted not to annuitize and instead I support my spending mostly with withdrawals from a taxable account. That is still simple enough to manage for now. Time will simplify that further, what with income streams in two years from SS and in five years with RMDs from TIAA.
Thank you, Ed, for outlining your investment strategies. A very thoughtful piece.I retired four years ago, spent a full week then spreadsheet-testing various withdrawal strategies, and constructed a withdrawal plan that I follow and with which I am comfortable. Unlike you, Roth conversions hold no incentive for me. About two thirds of my savings are in taxable accounts, mostly stocks. The remaining third is largely tax deferred, in fixed income. The fixed income ought to help minimize future RMDs and, in my case, is more tax efficient. In two years, at age 70, I plan to collect Social Security and, at age 70.5, to begin qualified charitable distributions. I am taking pre-RMD distributions from my 403(b) to the extent they are not taxed in my state. I am extraordinarily grateful for my financial situation but also know that it reflects a lot of careful planning.
Great work, achnk53, at bringing closure to so many loose ends! Although my tax returns are no longer trivial (18 pages, this year, for the IRS), my tax planning is simple. To estimate investment income, I rely on year-end account statements. Mine include both the total income by type for the just completed year and projections by month for the coming year. To be on the safe side, I estimate future investment income to be a few percent larger than projected or previously received. An RMD, withdrawals of tax-deferred funds, and capital gains considerations are also factored in as income. The AARP/dinkytown tax calculator is a great tool and what I use to estimate future taxes: https://www.aarp.org/money/taxes/1040-tax-calculator/ . (If you use it, be sure to expand the entry prompts by clicking the down arrows to the right of the page.)
Thanks, Mike, for this welcome first post. You didn't ask, but I will answer as a childless reader. I don't have regrets either. I knew from an early age that parenting did not interest me. Over several decades, others patiently tried to dissuade me. "Oh, you'll change..." I don't think I would have been a good parent, but I seem to have been a good mentor. My choice of an academic career continuously provided the opportunity to interact meaningfully with young people.
Thanks, Bogdan, for those tips. As you allude to, it's also important to begin, in mid- to late-career, thinking differently about tax efficiency with respect to tax-deferred accounts. For those fortunate to have significant assets, keeping the bulk of one's fixed income in tax deferred accounts becomes increasingly favorable with age. That has to do with both the size of future RMDs and that fixed income interest is considered regular income. IRMAA considerations may also enter in.
Dana, thanks for the update. This new move seems to position you well for increased social connection -- the neighbors, the vibrant community, the Airbnb, even the new puppy. In that sense, it seems like a smart move. It would seem responsible too, by being affordable, walkable, and potentially helpful to your daughter. Maybe even by being a dwelling in which you can successfully age in place? Your writing conveys much enthusiasm for the purchase even considering the cons. My hope is for you to enjoy your new home and associated projects, and to think of them as fruits of your saving and career.
I save the annual income source report to my tax folder, just in case of an audit and the report disappears online. Virtually all the cash in my taxable Fidelity account is in FDLXX. In 2025, ninety-seven percent of its income came from Treasurys, and the fund yielded only 0.05% less than their default money market (SPAXX).
Comments
Not knowing much about direct indexing, I'm curious how the IRS considers ownership at death. Would each indexed stock need to be tracked separately on the estate tax form? As an executor, I recall many supplemental pages accompanying IRS form 706 for the ninety-nine individual assets that my father held. Probably less of a consideration nowadays with higher estate tax exclusions, but still a painful memory!
Post: Direct Indexing Anyone?
Link to comment from May 11, 2026
RDQ, I sleep soundly at night knowing that I could create an income stream with my 403b at TIAA. Had I annuitized that account at retirement four years ago, the annual income would have exceeded my then salary. For tax reasons, I opted not to annuitize and instead I support my spending mostly with withdrawals from a taxable account. That is still simple enough to manage for now. Time will simplify that further, what with income streams in two years from SS and in five years with RMDs from TIAA.
Post: The never ending payday
Link to comment from May 9, 2026
Thank you, Ed, for outlining your investment strategies. A very thoughtful piece. I retired four years ago, spent a full week then spreadsheet-testing various withdrawal strategies, and constructed a withdrawal plan that I follow and with which I am comfortable. Unlike you, Roth conversions hold no incentive for me. About two thirds of my savings are in taxable accounts, mostly stocks. The remaining third is largely tax deferred, in fixed income. The fixed income ought to help minimize future RMDs and, in my case, is more tax efficient. In two years, at age 70, I plan to collect Social Security and, at age 70.5, to begin qualified charitable distributions. I am taking pre-RMD distributions from my 403(b) to the extent they are not taxed in my state. I am extraordinarily grateful for my financial situation but also know that it reflects a lot of careful planning.
Post: Slow on the Draw
Link to comment from May 9, 2026
Your first full post, I think, D.J.? Keep them coming!!!
Post: California, Here They Came
Link to comment from April 30, 2026
Thank you, Andrew, for a most meaningful, grounding, and hopeful article.
Post: One World, One Kind of Work
Link to comment from April 30, 2026
Great work, achnk53, at bringing closure to so many loose ends! Although my tax returns are no longer trivial (18 pages, this year, for the IRS), my tax planning is simple. To estimate investment income, I rely on year-end account statements. Mine include both the total income by type for the just completed year and projections by month for the coming year. To be on the safe side, I estimate future investment income to be a few percent larger than projected or previously received. An RMD, withdrawals of tax-deferred funds, and capital gains considerations are also factored in as income. The AARP/dinkytown tax calculator is a great tool and what I use to estimate future taxes: https://www.aarp.org/money/taxes/1040-tax-calculator/ . (If you use it, be sure to expand the entry prompts by clicking the down arrows to the right of the page.)
Post: Tools/calculators for monthly retirement cash flow and tax estimation
Link to comment from April 10, 2026
Thanks, Mike, for this welcome first post. You didn't ask, but I will answer as a childless reader. I don't have regrets either. I knew from an early age that parenting did not interest me. Over several decades, others patiently tried to dissuade me. "Oh, you'll change..." I don't think I would have been a good parent, but I seem to have been a good mentor. My choice of an academic career continuously provided the opportunity to interact meaningfully with young people.
Post: Financial regrets about parenthood?
Link to comment from April 6, 2026
Thanks, Bogdan, for those tips. As you allude to, it's also important to begin, in mid- to late-career, thinking differently about tax efficiency with respect to tax-deferred accounts. For those fortunate to have significant assets, keeping the bulk of one's fixed income in tax deferred accounts becomes increasingly favorable with age. That has to do with both the size of future RMDs and that fixed income interest is considered regular income. IRMAA considerations may also enter in.
Post: Tax Efficiency
Link to comment from April 4, 2026
Dana, thanks for the update. This new move seems to position you well for increased social connection -- the neighbors, the vibrant community, the Airbnb, even the new puppy. In that sense, it seems like a smart move. It would seem responsible too, by being affordable, walkable, and potentially helpful to your daughter. Maybe even by being a dwelling in which you can successfully age in place? Your writing conveys much enthusiasm for the purchase even considering the cons. My hope is for you to enjoy your new home and associated projects, and to think of them as fruits of your saving and career.
Post: A Big Little Move (by Dana/DrLefty)
Link to comment from March 30, 2026
I save the annual income source report to my tax folder, just in case of an audit and the report disappears online. Virtually all the cash in my taxable Fidelity account is in FDLXX. In 2025, ninety-seven percent of its income came from Treasurys, and the fund yielded only 0.05% less than their default money market (SPAXX).
Post: Treasury Tax Reporting
Link to comment from March 29, 2026