--- title: When Good Investments Are Bad for Your Retirement Savings description: If your portfolio generates a lot income from dividends and bonds, that's a good thing. Reinvesting it while you’re in saving mode rather than taking it as income to spend will boost your total return. But dividends can get cut and interest rates fluctuate, so counting those as part of your savings rate is risky. authors: - name: Donna Rosato url: https://money.com/author/donna-rosato-3/ at_money_since: 2013 articles: 125 covers: - Retirement - Career Advice - Housing - Insurance - Investing - Lifestyle - Mortgages - Personal Finance - Taxes social: - https://x.com/RosatoDonna former_staff: true published: '2015-07-02T10:00:48.000Z' modified: '2024-04-16T06:06:52.000Z' section: Retirement tags: - 401(k) - capital appreciation - dividends - goals - income - interest income - IRA - Retirement - Savings - stocks - total return word_count: 456 canonical: https://money.com/retirement-savings-dividends-interest-incom/ type: Article source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![When Good Investments Are Bad for Your Retirement Savings](https://img.money.com/2014/11/140605_askexpert_retirement_illo.jpg?quality=85&w=1012&h=569&crop=1) **Q: I have an investment portfolio outside of my retirement plans. That portfolio kicks out dividend and interest income. If I roll all that passive income back into my portfolio, can I count that toward my retirement savings rate? — Scott King, Kansas City, Mo.** A: No. The interest income and dividends that your portfolio generates are part of your portfolio’s total return, says Drew Taylor, a managing director at investment advisory firm Halbert Hargrove in Long Beach, Calif. “Counting income from your portfolio as savings would be double counting.” There are two parts to total return: capital appreciation and income. Capital appreciation is simply when your investments increase in value. For example, if a stock you invest in rises in price, then the capital you invested appreciates. The other half of the equation is income, which can come from interest paid by fixed-income investments such as bonds, or through stock dividends. If your portfolio generates a lot income from dividends and bonds, that's a good thing. Reinvesting it while you’re in saving mode rather than taking it as income to spend will boost your total return. But dividends can get cut and interest rates can fluctuate, so counting those as part of your savings rate is risky. “The only reliable way to meet your savings goal is to save the money you earn,” says John C. Abusaid, president of Halbert Hargrove. It's understandable why you'd want to count income in your savings rate. The amount you need to save for retirement can be daunting. Financial advisers recommend saving 10% to 15% of your income annually starting in your 20s. The goal is to end up with about [10 times your final annual earnings](https://money.com/collection-post/how-much-income-to-save-for-retirement/) by the time you quit working. [How much you need](https://money.com/collection-post/how-much-income-to-save-for-retirement/) to put away now depends on how much you have already saved and the lifestyle you want when you are older. To get a more precise read on whether you are on track to your goals, use a retirement calculator like [this one](https://www3.troweprice.com/ric/ricweb/public/ric.do) from T. Rowe Price. It’s great that you are saving outside of your retirement plans. While 401(k)s and IRAs are the best way to save for retirement and provide a generous tax break, you are still limited in how much you can put away: $18,000 this year in a 401(k) and $5,500 for an IRA. If you're over 50, you can put away another $6,000 in your 401(k) and $1,000 in an IRA. That's a lot of money. “But if you’re playing catch-up or want to live a more lavish lifestyle when you retire, you may have to do more than max out your 401(k) and IRAs,” Taylor says. *Read next:* How to Prepare for the Next Market Meltdown ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/retirement-savings-dividends-interest-incom/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Retirement", "item": "https://money.com/retirement/" }, { "@type": "ListItem", "position": 3, "name": "Retirement Planning", "item": "https://money.com/retirement-planning/" }, { "@type": "ListItem", "position": 4, "name": "When Good Investments Are Bad for Your Retirement Savings" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/retirement-savings-dividends-interest-incom/#webpage", "url": "https://money.com/retirement-savings-dividends-interest-incom/", "name": "When Good Investments Are Bad for Your Retirement Savings", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2015-07-02T10:00:48.000Z", "mainEntity": { "@id": "https://money.com/retirement-savings-dividends-interest-incom/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/retirement-savings-dividends-interest-incom/#breadcrumb" }, "dateModified": "2024-04-16T06:06:52.000Z" }, { "@type": "Article", "headline": "When Good Investments Are Bad for Your Retirement Savings", "articleSection": "Retirement", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2014/11/140605_askexpert_retirement_illo.jpg?quality=85", "width": 2100, "height": 2100 } ], "author": [ { "@type": "Person", "name": "Donna Rosato", "url": "https://money.com/author/donna-rosato-3/", "@id": "https://money.com/author/donna-rosato-3/#author", "image": "https://img.money.com/2014/05/140530_bio_author_rosato.jpg?quality=85&w=190&h=190&crop=1", "email": "donna_rosato@moneymail.com", "sameAs": [ "https://x.com/RosatoDonna" ] } ], "publisher": "https://money.com/#organization", "datePublished": "2015-07-02T10:00:48.000Z", "description": "If your portfolio generates a lot income from dividends and bonds, that's a good thing. 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