Portfolio Review #2 Requested

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Hat
Posts: 53
Joined: Wed Feb 10, 2010 10:27 pm

Portfolio Review #2 Requested

Post by Hat » Sun Mar 09, 2014 11:05 am

Thanks again to all for the vast amount of knowledge on this forum, and especially to Laura for providing excellent advice on my first post.

Emergency funds: 1 year

Debt: None

Tax Filing Status: Single
Tax Rate: 28% Federal, 0% State (TX)

Age: about 40

Desired asset allocation: 60% stocks / 40% bonds
Intl allocation: 20% of stocks
Current portfolio: $530k

Taxable
$100k Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) (0.14%)

401k
$185k Bond Index Fund (0.05%)

Roth at Vanguard
$110k Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) (0.05%)

Rollover IRA at Vanguard
$105k Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) (0.05%)
$30k Vanguard Intermediate-Term Bond Index Fund Admiral Shares (VBILX) (0.10%)

Pension (non-COLA) from previous job
At age 55, a $39k lump sum or $200/mo
At age 65, a $56k lump sum or $475/mo

New Annual Contributions
$17.5k + $5k match 401k
$5.5k Roth
$20k Taxable

Other
Umbrella insurance: $2M
Disability insurance: individual policy
Housing: renting with no plans to buy

401k Fund Choices
Money Market Fund (0.09%)
Short Duration Bond Fund (0.5%)
Bond Fund (intermediate term) (0.46%)
Bond Index Fund (intermediate term treasuries) (0.05%)
Balanced Fund (0.28%)
Balanced Real Asset (0.7%)
Equity Index Fund (S&P 500 index) (0.025%)
Large Cap Growth (0.55%)
Large Cap Value Fund (0.23%)
Small Cap Value Fund (0.78%)
Small Midcap Core Index (0.1%)
Small Cap Growth (0.81%)
Emerging Market Equity (1.31%)
International Fund (0.5%)
International Index (0.1%)
International Value (0.64%)
PreMixed Portfolio Retirement Fund (0.52%)
PreMixed Portfolio Funds: 2015, 2025, 2035, 2045, 2055 (0.54%)

Questions:
1. Any portfolio recommendations? I thought about using the S&P 500 fund in 401k, but this would require a completion index fund and a higher expense bond fund in the rollover IRA.
2. My aggressive goal is to retire at 53 with $60k-$65k per year. How likely is this? Please use SS of $10k/year at 62 to estimate initiating SS benefits at various ages.

thisismyusername123
Posts: 95
Joined: Tue Nov 05, 2013 8:52 am

Re: Portfolio Review #2 Requested

Post by thisismyusername123 » Sun Mar 09, 2014 11:16 am

With a very simple portfolio like the one you have, you're likely to get reliable results from the early-retirement calculators firecalc.com or (my favorite) flexibleretirementplanner.com.

My own view is that $500k at age 40 is on the low side for early retirement in 13 years. You need a $1.5MM portfolio which doesn't even account for the tax liability on 401k distributions. You need a guaranteed 200% return including contributions during that time. I would ramp up to an 80/20 stock/bond allocation and also invest half of the emergency fund (use a muni bond fund for this if you're worried about long term unemployment.)

pkcrafter
Posts: 13748
Joined: Sun Mar 04, 2007 12:19 pm
Location: CA
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Re: Portfolio Review #2 Requested

Post by pkcrafter » Sun Mar 09, 2014 12:42 pm

username, I think you forgot to add the 43k/year contributions to retirement. I calculated the contributions in with an overall rate of return of 5% and Hat could have about 1.75M in 13 years. My only concern is a 4% withdrawal rate at age 53 could be too high. On the other hand, by applying some good ol' common sense on withdrawals, he could pull lit off. The only other obstacle to success might be a bad sequence of returns, but that goes for pretty much everyone.
1. Any portfolio recommendations? I thought about using the S&P 500 fund in 401k, but this would require a completion index fund and a higher expense bond fund in the rollover IRA.
You've got a small/mid core index that should work.


Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

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