Investment strategy for 60 year old who just lost job

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Investment strategy for 60 year old who just lost job

Postby Watertree » Sun Aug 22, 2010 9:32 am

Bad day last week, I lost my job of 24 years.

Unemployment benefit and wife's salary of $68,000 will be our annual income. Only $10,000 in debt. Could pay this off from savings. No home or car mortgages.

Current asset allocation:

Domestic Large Company mutual funds 14%
Domestic Small/Mid Cap mutual funds 7%
International mutual funds 21%
Global real estate REIT 11%
Commodites 27%
Fixed Income-bonds 18%
Money Market 1%

I would welcome and appreicate comments or recommendations on rebalancing.

Thanks!
Watertree
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Postby Chuck T » Sun Aug 22, 2010 9:53 am

Watertree

Welcome to the forum. I am sorry to hear of your job loss. In order to provide you the best possible advice we will need to be better informed about your situation. For example it would help to know your ages, whether the asset classes you listed are held in taxable or tax deferred accounts, your estimated monthly expenses and other information. Please see this link and post the info by modifying (edit button) your first post. Thanks

viewtopic.php?t=6212

Good luck.
Last edited by Chuck T on Sun Aug 22, 2010 10:19 am, edited 1 time in total.
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Postby BL » Sun Aug 22, 2010 10:14 am

Sorry to hear you lost your long-time job. Take good care of yourself during this stressful time!

It sounds quite aggressive to me with only 19% in bond-type funds rather than somewhat closer to "age in bonds". It would be helpful to also know if you will have pensions, and whether they are COLA-adjusted. That is, figure out how much additional income you both need in retirement on top of SS and pension compared to what you have saved now. I realize you have a lot to do and think about at this time.

It would also be helpful to state where the funds are located and what is the expense. Here we often see low-cost index funds suggested to reduce controllable expenses. Vanguard or Spartan Fidelity funds are examples of such funds and do not require paying additional money to brokers for not always good advice.
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Postby livesoft » Sun Aug 22, 2010 11:29 am

There are many investment strategies to choose from. It appears that you already have some kind of asset allocation that you like. It might appear to be some kind of modified "permanent portfolio" with very roughly 1/4th US stocks, 1/4th in foreign stocks, 1/4th in fixed income, and 1/4th in commodities/real estate. Maybe that 27% is in gold bullion. You didn't say.

On one end of the spectrum one might have 100% Treasury inflation-protected securities for their retirement portfolio. You might wish to read works of Dr Zvi Bodie or watch his videos posted on the web.

In the middle might be something like 50% equities and 50% bonds.

Somewhere else might be your portfolio with 38% in commodities and REITs.

You didn't give us much to go on. I personally would not own commodities nor a global REIT. But I'm not you.

You didn't say, but your expenses may be only $40K a year, so it really won't matter what your portfolio is since your family income exceeds that. You didn't say, but maybe your portfolio is worth $8.7 million in value, so it wouldn't matter either.

So how much do you expect to withdraw from your retirement portfolio annually? 1%? 2%? 3%? Do you have enough assets & income to pay for retirement? What does www.firecalc.com report for you? What about other such calculators like www.retirementoptimizer.com ? What all have you read on the subject?
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Postby retiredjg » Sun Aug 22, 2010 11:34 am

watertree, welcome to the forum. Sorry about your job loss.

We do need more information, but I'd have to agree with what has already been said - you need more bonds.
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Postby dbr » Sun Aug 22, 2010 11:47 am

livesoft wrote:You didn't say, but your expenses may be only $40K a year, so it really won't matter what your portfolio is since your family income exceeds that. You didn't say, but maybe your portfolio is worth $8.7 million in value, so it wouldn't matter either.

So how much do you expect to withdraw from your retirement portfolio annually? 1%? 2%? 3%? Do you have enough assets & income to pay for retirement? What does www.firecalc.com report for you? What about other such calculators like www.retirementoptimizer.com ? What all have you read on the subject?


Livesoft is correct that one cannot make sense of asset allocation issues without first assessing the income/expenditure situation. A general rule is that an excessive need to withdraw cannot be fixed by devising a certain asset allocation. A corollary is that those who have little need to withdraw are really free to do almost anything they want with the AA.

Another source, though long but also thorough, is the book by Jim Otar at he link above. The pertinent discussion is the assessment of whether one is in the red, gray, or green zones with respect to being able to support cash needs in retirement and what to do in each case.
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Re: Investment strategy for 60 year old who just lost job

Postby YDNAL » Sun Aug 22, 2010 11:53 am

Watertree wrote:Bad day last week, I lost my job of 24 years.

Watertree, welcome to the Forum.

That day last week may turn-out to be one of the best days of your life.... who knows, right? 8)

Current asset allocation:

Domestic Large Company mutual funds 14%
Domestic Small/Mid Cap mutual funds 7%
International mutual funds 21%
Global real estate REIT 11%
Commodites 27%
Fixed Income-bonds 18%
Money Market 1%
  1. IF this portfolio can provide what you need to pay bills (after wife's salary, etc.) at an annual withdrawal clip of 3-4% you are likely OK. But, it depends on your needs and your assets.
  2. The Equity/Commodity risk you take is out-of line for someone that could easily be 60yo... how old are you (after 24yrs in the same job)?
  3. However, without specifics such as above, it's hard to comment further on the portfolio.
    Watertree wrote:I would welcome and appreicate comments or recommendations on rebalancing.
Landy | Be yourself, everyone else is already taken -- Oscar Wilde
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Postby tibbitts » Sun Aug 22, 2010 12:01 pm

Your wife's salary alone is much more than the typical household income, so you should probably continue to do what most people do, following the usual guidelines. You have not provided the amounts of you investments and expenditures, but from the information you supplied, I'd say that losing your job was a financial non-issue.

So, let's review. You have a perfect excuse for not working; no debt; you're going to be paid to do (almost) nothing; and you have a wife that makes $68k! Where do I sign up for this deal?

Paul
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Re: Investment strategy for 60 year old who just lost job

Postby rcshouldis » Sun Aug 22, 2010 12:41 pm

Watertree wrote:Bad day last week, I lost my job of 24 years.

Unemployment benefit and wife's salary of $68,000 will be our annual income. Only $10,000 in debt. Could pay this off from savings. No home or car mortgages.

Current asset allocation:

Domestic Large Company mutual funds 14%
Domestic Small/Mid Cap mutual funds 7%
International mutual funds 21%
Global real estate REIT 11%
Commodites 27%
Fixed Income-bonds 18%
Money Market 1%

I would welcome and appreicate comments or recommendations on rebalancing.

Thanks!
Watertree


Are you in your companies 401k ? If so, I would open an IRA and move your funds there. You'll have many more choices in the development of your asset allocation. Whatever you do, be careful of advisers and brokers trying to sell you something. If you're not already educated about investing then get educated. Don't make a move without understanding exactly what you're doing and why you're doing it.


As far as re-balancing goes I recommend a Paul Merriman article:

http://www.fundadvice.com/articles/inve ... ance-.html
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Postby retiredjg » Sun Aug 22, 2010 1:11 pm

Moving your old 401, if you have one, is a good idea. But it might be best to wait till next year if you have an IRA you want to convert to Roth IRA during this time of relatively low tax rates.
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