Retirement Portfolio Overhaul, Yikes, Help!

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Retirement Portfolio Overhaul, Yikes, Help!

Postby PacZen » Tue Jan 29, 2013 1:31 pm

Warm greetings to everyone. Short time lurker, first time poster.

I am seeking the collective wisdom of the forum regarding the structure of my portfolio heading into retirement. I recently retired 4 months ago. I have three children at home (15,9,7) and estimate my annual income needs to be ~$150K/year until the kids have left home.

On to the specifics:

Age 54, married, wife is 47.
Live in Washington state.

Debts- none. Home is paid off.

Assets are approximately $7 million exclusive of home value. Home is worth ~$500K.

Assets are currently deployed as such: 66% Bonds, 30% Cash, 4% REITs. I always considered my employment income as the "risky" equity-like portion of my financial puzzle when I was working- now it is gone.

Bonds are 75% in intermediate term muni funds (taxable) and 25% in TIPS fund (tax deferred).

Overall, 70% of my assets are in taxable accounts and 30% in tax-deferred accounts.

I am looking for the expert advice of the forum regarding positioning my assets for income, inflation protection, growth, etc. Basically, the whole enchilada.

Thank you so much in advance.
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Re: Retirement Portfolio Overhaul, Yikes, Help!

Postby linuxuser » Tue Jan 29, 2013 6:53 pm

$7M is $7M, but still, no equity except for the REIT?
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Re: Retirement Portfolio Overhaul, Yikes, Help!

Postby NYBoglehead » Tue Jan 29, 2013 7:12 pm

You only need to generate 2.14% annually to get 150k from $7 million. I would recommend:
-60% Bonds
-25% Equities
-5% REIT
-10% cash (since you seem INCREDIBLY risk averse)

-Take the withdrawals from cash
-The remainder of your portfolio ($6.3 million) should earn at least 2% annually in dividends and interest, which will mean $126k in income from this part of the portfolio
-Doing this you will only be drawing down 24k per year from your cash position, and we have not even touched any price appreciation on the portfolio.

Enjoy retirement, you certainly have built a nice portfolio during your working years.
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Re: Retirement Portfolio Overhaul, Yikes, Help!

Postby PacZen » Tue Jan 29, 2013 10:48 pm

Thank you NYBoglehead. How would you suggest the Bond and Equity allocations be structured to generate income and minimize taxes?
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