Of our total funds marked for retirement, about 30% is in a single stock as deferred comp at this point (RSUs, Alphabet).
I'm trying to construct some math to help me understand the risk/tax implications of starting to divest that and diversify that part of the portfolio a bit.
If we sell it now, it's about 35% total tax rate (20% fed long term gains, ~11% state, 3.8% NIIT). In retirement, this would be at least 10% lower.
The plan would be to sell a chunk this year, and split the investment between a mortgage at a relatively high rate (8%+), and a broad market fund mix in a Vanguard brokerage. Future years that mortgage will be paid off, and so it'd just be diversification.
We are 8ish years from our desired retirement dates (50 years of age).
I'm trying to math this out, understand how much the stock would have to drop to break even if I were to take the tax hit now, and reinvest it in a broad market account, and get say 5% a year out of it for the next 8 years, etc.
I have some intuitive sense of this but I need to construct the formulas and run some scenarios. I'm probably not thinking of a bunch of things too.
I'll have some dedicated time to start to work on the financial math over the next few weeks and just want to ensure I'm understanding things right.
Thanks!
I'm trying to construct some math to help me understand the risk/tax implications of starting to divest that and diversify that part of the portfolio a bit.
If we sell it now, it's about 35% total tax rate (20% fed long term gains, ~11% state, 3.8% NIIT). In retirement, this would be at least 10% lower.
The plan would be to sell a chunk this year, and split the investment between a mortgage at a relatively high rate (8%+), and a broad market fund mix in a Vanguard brokerage. Future years that mortgage will be paid off, and so it'd just be diversification.
We are 8ish years from our desired retirement dates (50 years of age).
I'm trying to math this out, understand how much the stock would have to drop to break even if I were to take the tax hit now, and reinvest it in a broad market account, and get say 5% a year out of it for the next 8 years, etc.
I have some intuitive sense of this but I need to construct the formulas and run some scenarios. I'm probably not thinking of a bunch of things too.
I'll have some dedicated time to start to work on the financial math over the next few weeks and just want to ensure I'm understanding things right.
Thanks!
Statistics: Posted by takinthecake — Wed Dec 18, 2024 9:59 am — Replies 1 — Views 76