Bogleheads

[padeen]

After long hours with you Bogleheads, Swedroe’s books, recognition of what the market has done in the past and could do in the future and my own risk tolerance, I’ve come to the conclusion that an AA in the neighborhood of 20/80 bonds/stocks is best for me.

I expect to retire within the next two years (at about age 60), at which time I project my 401K to be about $750,000. At retirement I also expect to have about $200,000 available to invest in taxable space and will receive non-COLA pension of about $65,000 per year. I’ve read many who plan to defer SS, and I may ultimately be convinced to do likewise. But at this point, I lean toward taking SS at 62. At that time annual SS (mine plus spouse) will be around $35,000.

No mortgage.

I am partial to Vanguard and will most likely roll the 401K to Vanguard at retirement, so I am interested in investment ideas restricted to Vanguard products. Except, unlike most(?) Bogleheads, I’m not smitten with TIPS, so portfolio ideas sans TIPS are of interest.

I hope the above is enough for the Boglehead community to offer Vanguard portfolio suggestions for the projected $950K and what kind of withdrawal rate would be feasible with the suggested portfolios…living to 90 and no need to leave anything.

Thanks.

[Christine_NM]

Welcome padeen -

Do you really mean 20% bonds/ 80% stocks? Or vice versa? That's pretty aggressive and if it's correct, I'd wonder why you need to take that much risk.

I retired as a single person with no debt a few years ago, with pension & SS half of your projected values. I've done OK without touching the IRA so far.

The most helpful exercise was to keep close track of spending for a couple of years before retiring, so I knew exactly what I'd need and could take an educated guess at annual increases.
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[Prokofiev]

[retiredjg]

Padeen, welcome to the forum!

I too suspect you don't really mean 80% stocks in retirement. Till we know more, here is a general idea of a way to set up a portfolio.

Taxable
Money Market
Total Stock Market
FTSE All World or Total International

VG IRA
Total Bond Market
GNMA (since you don't want TIPS, or just use all Total Bond Market)
Total Stock Market
International

The money market is for spending and emergency buffer.

TSM and one of the Internationals - all are tax-efficient (won't raise your taxes). Both good for tax loss harvesting. The international gets the foreign tax credit.

Don't know what kind of bonds you like - TBM has a representation of all the US investment grade bonds.

GNMA - ? Not sure you need this - they are already included in TBM.
TSM and International just there to fill the spaces. You could also tilt with REIT or small cap/small cap value.

What to take? No more than 4% - $38k a year (starting, then add inflation). In your calculations, remember that withdrawal includes your taxes. You don't get to spend it all.
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Links to Investment Planning and Asking Portfolio Questions

[padeen]

Sorry. After all that, I didn't even get the allocation right.

80% bonds, 20% stocks...that's what I meant.

Desired income in retirement: $75,000 per annum.

I am not averse at all to SPIA (one or more) at some point in the future, but feel that that option is probably best left for later. I have no health issues now that would result in better-than-average SPIA payout.

Thanks.

[YDNAL]

[dbr]

One consideration in SS timing in a case like this is that delaying SS may be a helpful offset to the lack of COLA in the pension.

This might be best investigated by running a model of the trade-offs.

[tgduffy]

I'm about 5 years from retirement and in the middle of the early versus late social security question. I did a very simplistic calculation. At age 80 how much would social security have paid out to me if I had started at 62 or 66. Within about $2,000 it was a break even. So I don't see a huge benefit in waiting and only potential risk with the uncertainty of the SS program. I'm jumping in as soon as I can.

[celia]