I am a VNG Flagship member & have gotten excellent advice over the past 12 months from my Flagship advisor as well as the Boglehead forum.
Primary question is where best place to invest funds from an IRA at PenFed CD (6.25%) that matures in January 2014;
also open to additional suggestions on my overall investment positions & "Grand Plan".
Married couple both 70 years old, retired & both in good health (I work part-time as a trainer at a local health club -
but consider income from this part time job as temporary).
Pensions (total): K$142/year - primarly taxable by Fed & NJ.
Cash: M$1.5....various FDIC insured MM with avg return of ~ 1.5%/year taxable.
Munibonds: M$1.8 (individual issues at Par) with avg annual return of ~ 4.5% Fed tax free; 28% Fed Tax bracket;
investment spread over many US states but ~ 40% NJ. Expect additional calls on these bonds in 2013.
401K/Employer: K$989......composed of K$785 VNG Stable Value (1.95%/year) & K$204 VNG funds (S&P 500 - K$64; Mid Cap Index - K$30; Small Cap Index - K$30; Life Strategy Growth - K$80).
note: Consider VNG Stable Value fund as a mid-term bond fund with essentially no down-side principal risk, although % return will fluctuate. Locked into Employer 401K unless I bail out completely...then lose ability to invest in VNG Stable Value which, I admit, is my security blanket.
VNG IRA: K$317....composed of 60% Wellsley Adm / 40 % Wellington Adm.
PenFed IRA: K$575....6.25% CD that matures in January, 2014.
I calculate our annual living expenses at ~ K$115 - including Federal & NJ State Income Tax, property tax, car & home insurance, Medicare, Dental Insurance, LTHC Insurance - also annual gifting to our son. Supplemental health insurance
& drug expense covered by Tricare for Life (Navy veteran).
We are currently in the 28% Federal Tax bracket.
No mortgage or debts......own home that I estimate we could sell & clear ~ K$200 after fees.
Additional income (& taxes) will begin in earnest this year (2013) when both my wife & I will begin taking RMDs from 401K
Grand Plan is to escape NJ......currently negotiating with bank to purchase a short sale home in Northeast FL (moderately priced} that we will rent until wife is ready to pull the plug on NJ. Interest in moving is driven by warmer climate & desire to eliminate NJ State Estate Tax that my son would ultimately pay if we do not establish FL residency before we both pass.
Once I feel comfortable that FL deal is settled, will plan to reduce cash holdings & further invest in VNG funds.
On the horizon........ concern about where to invest the ~K575 that will be available when the PenFed CD IRA matures in January 2014. Obvious from my investments that I am not a bold investor in stocks & have never really had a formal asset allocation plan.....but have gradually been shifting into equities via VNG funds.
In the absence of any other information, would likely transfer funds to a VNG IRA & split investment between Wellington
& Wellsley funds 50/50 or 60/40. Still feel more comfortable with managed funds as long as fees are "reasonable"......
but understand the wisdom of very low cost VNG index funds.
Sorry for the large data dump above, I have tried to simplify for brevity.....
but would like to hear advice from seasoned investors in the Boglehead Forum.
I know that I am likely to get beat-up for my current large cash holdings.....but it was comforting during the 2008-2009 stock melt down.