building up nest egg in retirement

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selftalk
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building up nest egg in retirement

Post by selftalk »

A close friend of mine retired recently and has no IRA or 401k but has a good lifetime pension from where she worked plus of course social security. She asked me what should she do financially in building up her finances. She does have a couple of thousand dollars left over from all expenses each month. I really didn`t know what to tell her since I built up my pension via an IRA over my working years. Any ideas?
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elgob.bogle
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Re: building up nest egg in retirement

Post by elgob.bogle »

Perhaps a 3 fund portfolio at Vanguard: Total International, Total US. Intermediate-Term Municipal Bonds.

elgob
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Toons
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Re: building up nest egg in retirement

Post by Toons »

elgob.bogle wrote:Perhaps a 3 fund portfolio at Vanguard: Total International, Total US. Intermediate-Term Municipal Bonds.



elgob
+1 :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
Xpe
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Re: building up nest egg in retirement

Post by Xpe »

Doesn't seem any different than building up a nest egg while working. Build up an emergency fund then invest the extra. Retirement accounts won't be an option, so it will have to be taxable accounts.
Lafder
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Re: building up nest egg in retirement

Post by Lafder »

After building up a comfortable emergency fund for herself in a checking account, a single fund at Vanguard would be the easiest.

I would look at Tax Managed Balanced that is about 50/50 stocks bonds and tries to generate as few income taxes each year. https://personal.vanguard.com/us/funds/ ... IntExt=INT

Other single funds would be Life Strategy depending on how aggressive she wants to be. Does she consider it money for herself or inheritance? If for herself income or conservative, if for inheritance moderate or growth. https://investor.vanguard.com/mutual-fu ... estrategy/#/

Best wishes,
lafder
Topic Author
selftalk
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Re: building up nest egg in retirement

Post by selftalk »

It`s money for herself.
DSInvestor
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Re: building up nest egg in retirement

Post by DSInvestor »

If she's single, she cannot make IRA contributions without compensation. If she is married and spouse has compensation then she can make spousal IRA contribution based on her spouse's compensation.

If no IRA contributions are permitted, she can invest in taxable accounts. If she is in low tax bracket, she can use a LifeStrategy fund that matches her desired asset allocation. If in high tax bracket, it may be more tax efficient to use Total Stock Market, Total International and Intermediate Term Tax Exempt Bond.

While on the topic of building up her finances, would it be prudent to mention umbrella insurance? My mom retired and didn't have umbrella policy and when she got into an accident we worried that she may not have sufficient insurance. Fortunately, the combination of her auto liability and the other party's underinsured/uninsured motorist coverage was sufficient and the other party accepted this and released my mom. She has since increased her auto liability limits and acquired umbrella policy.
Last edited by DSInvestor on Sun Mar 08, 2015 9:56 am, edited 1 time in total.
Wiki
Topic Author
selftalk
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Re: building up nest egg in retirement

Post by selftalk »

Thank you all for your replies and suggestions. The only thing I would be concerned about is the age old question of whether she should invest at these lofty levels. No one knows that of course but a new person to this game would definitely be upset watching the money value drop and being retired.
Dandy
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Re: building up nest egg in retirement

Post by Dandy »

While the 3 fund portfolio has merit those new to investing in retirement might find it easier to keep it even more simple. A Life Strategy or Target Date Fund or Tax Managed (depending on income bracket) or Balanced Index Fund.
trueblueky
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Re: building up nest egg in retirement

Post by trueblueky »

Xpe wrote:Doesn't seem any different than building up a nest egg while working. Build up an emergency fund then invest the extra. Retirement accounts won't be an option, so it will have to be taxable accounts.
+1
I would build several months in a savings account, then transition to I Bonds and CDs for a second level of ER. After the I Bonds are a year old, they become part of the ER, at which time the portion of the ER in the savings account can be reduced (say, from six months to three). If using a CD ladder as part of the ER, the same sort of thinking applies -- you don't want to cash a new CD early. Then invest the rest at whatever AA she can sleep well with.

The umbrella is a great idea too. They're not that expensive.
ShiftF5
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Re: building up nest egg in retirement

Post by ShiftF5 »

selftalk wrote:It`s money for herself.
Yes. If she covers her expenses with a pension (hopefully COLA'd) then she will also have SS (delayed?) on top of that so the monthly excess should first go to an emergency fund then I'd probably spend some fun $$ and just invest the rest.

Excess. That is a nice situation to be in.

Best wishes.
john94549
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Re: building up nest egg in retirement

Post by john94549 »

My goodness, a couple of thousand dollars a month excess? I'd plop it into an Alliant savings account until I became eligible for the jumbo CD rate (48 months, 2.15%).
Last edited by john94549 on Sun Mar 08, 2015 9:47 pm, edited 1 time in total.
ShiftF5
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Re: building up nest egg in retirement

Post by ShiftF5 »

john94549 wrote:My goodness, a couple of thousand dollars a month excess? I'd plop it into an Alliant savings account until I became eligible for the jumbo rate (48 months, 2.15%).
That's a good one.
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