January 2023 Dividend Income Update
Welcome to a new year of dividend income updates – and some changes to report that I hope you will appreciate!
More on that in a bit…
First, a recap and some background information in how we got here…
I went through my Archives recently and found in mid-2010, in the very early days of this blog, I started reporting our projected annual dividend income (each month) in more detail with more transparency.
We’ve certainly come a long way…this chart proves it and the income derived from (part of) our portfolio is very real:
But things change…
13 years of saving and investing have passed.
TFSAs have been contributed to for tax-free investing since Day 1.
RRSPs have been contributed to for tax-deferred investing.
We’ve opened some taxable accounts to invest in (when TFSAs and RRSPs are out of contribution room, of course).
We’ve put in more pensionable time at work – mine is a small defined benefit pension plan. My wife’s pension is a defined contribution pension plan.
I’ve incorporated my business.
We were close to paying off a house, moved, paid down more debt, moved again (!) and now we’re about 12-months away from being mortgage free.
Life for us is not a straight-line and if I were to guess, your journey has not been linear either! 🙂
The point I’m trying to make is life has a way of opening your eyes to new things, new ideas and quite frankly – thinking and acting differently. You wouldn’t grow if that wasn’t the case.
As such, now that we’re approaching a long-term major dividend income milestone in a few key accounts, very, very soon, I believe it’s important to make some changes to these updates starting this month and going-forward as to be more clear about where we are going and why – to help my own plan but maybe to help you out too!
January 2023 Dividend Income Update Changes
What is changing?
Going-forward, I’m not going to report our projected non-registered and TFSA dividend income earned. That’s always been the chart above, or some form of it.
Before a reveal of changes, backing up, my main rationale for reporting monthly updates from these accounts in particular is I’ve always believed that earning $30,000 per year in dividend income inside our tax-free (thanks TFSA!) and tax-efficient (taxable) accounts would eventually cover many basic needs – without the complexity of calculating or reporting RRSP tax-deferred implications or sharing other income streams.
Fast-forward 13 years, that $30k target was pretty darn good years ago, even when I factored in unknown inflation…
Once all mortgage debt is gone in a few months, I figured even way-back-when if we got the big-3 in life right (food, housing and transportation) then we’d be close to financial independence.
Our semi-retirement spend is likely close to $4,000-$4,500 per month without any travel or major capital expenses.
In summary, we’ve always believed that earning close to $30,000 per year, from part of our portfolio, excluding RRSPs/RRIFs, ignoring workplace pensions, not including future government benefits like CPP and OAS should be “enough” to start part-time work.
Well, it is my hope to prove myself right!
To better reflect any potential semi-retirement plans I’m changing my monthly dividend income updates now and going-forward.
Yes, I’ll still post them.
Going-forward I’ll report our projected annual dividend income (each month via updates) but with these two major changes to occur with these rationales in mind:
1. I’m going to remove our TFSA income from any updates. That reporting from those accounts is over. This is because our semi-retirement drawdown plan has us (for now!) avoiding any early TFSA withdrawals.
You can read more details here:
N – Regarding non-registered accounts
- Work part-time in our 50s or beyond? In our 50s and 60s, “live off dividends” from non-registered, make slow capital withdrawals as required.
R – Regarding RRSPs/RRIFs
- In our 50s and 60s, slowly drawdown RRSPs as required. This will help smooth out taxes given other assets we hold and any part-time work plans. Therefore, there is the real potential for us to delay our CPP and/or OAS benefits until age 70.
T – Regarding TFSAs
- We don’t intend to touch our TFSA assets in any early retirement but rather, allow tax-free assets to compound away. Keeping our TFSAs until the end is also smart for estate planning.
So, by removing TFSA assets from my updates, it is my hope that I can continue to share the income that my/our porfolio generates WHILE demonstrating to you the reader the tax system I/we also need to navigate.
That brings me to reason #2:
2. I’m going to include our RRSP investment income vs. TFSAs with these updates moving forward. That reporting is new. If my/our plan is to “live off dividends” from taxable accounts and slowly drawdown the RRSP assets, well, it’s helpful for you the reader to know what I’m dealing with and why in pretty much real-time.
I won’t disclose all dividend or distribution or corporation income on this site for privacy and other reasons you can read here, but I do want to share my thinking, my journey and my expertise (or failtures!) so you can continue to learn too – even if you wish to debate my thinking as well.
I figure some level of disclosure is important to you, the reader for that, so I’m happy to oblige!
January 2023 Dividend Income Update Changes
What’s the punchline?
The summary of changes are:
- Projected annual dividend income (PADI) updates going-forward on this site will include all non-registered and RRSP dividend and distribution income – not any TFSA assets.
- Updates going-forward will include a mix of asset changes, purchases/sales, ideas related to reinvested dividends and distributions (or not) in these accounts, and why, including drawdown plans associated with these accounts (amongst other income streams).
So, with that new thinking and approach in mind…and more charts and other materials to update on my site over time, I can share this latest chart below.
This is the first chart iteration of many probably to highlight how part-time work / work on our own terms should be a perfect supplement to our existing *taxable income and *RRSP dividend income to draw from:
*Your mileage and approach to investing may vary.
To put this new 2023 dividend income stream and reporting into perspective, with more insights:
- Even with some low-cost ETFs inside our RRSPs, we’re averaging over $3,000 per month in income. (Mind you, some of that income will be taxable to navigate). Over time, I’ll provide a more accurate monthly income tally.
- Assuming we can max out contributions to our RRSPs later this year (the final year to do so???) then our dividend income will be higher with those purchases. I’ll adjust my 2023 and 2024 targets over time so stay tuned!
- We don’t intend to invest inside our taxable accounts until all TFSA and RRSP accounts are maxed out of contribution room – first – in that order. TFSAs are maxed for 2023 but I don’t share those updates any longer either! 🙂 I will keep you posted on the general timing of purchases across the portfolio however.
In closing this January 2023 Dividend Income Update, I hope you can appreciate these changes going forward as part of routine monthly updates, to share more of my investing journey but also most importantly how key income streams from certain investment accounts fit into a broader, ongoing, plan I need to monitor and successfully manage. That includes the tax implications. That also includes actually spending and enjoying some dividends we’ve worked so hard to earn and drawing down the portfolio capital as necesary.
I look forward to your comments, suggestions or changes of course!
Thanks for your readership. More to come!