The Value of Taxable Assets in Early Retirement

Taxable assets play a crucial role in early retirement, often misunderstood as detrimental when they can actually provide significant benefits. They offer flexibility in managing taxable income, allowing retirees to strategically draw from these assets to control their tax brackets. For example, when maintaining a taxable income below the 12% federal bracket, most qualified dividends can be taxed at 0%, and capital gains may also qualify for a 0% long-term rate. Hence, retirees are encouraged to utilize these assets first, ensuring they maintain income while also planning for future tax efficiency.