Recently Retired - Portfolio Advice, Please!

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SoDakJeff
Posts: 52
Joined: Mon Mar 13, 2017 11:48 am

Recently Retired - Portfolio Advice, Please!

Post by SoDakJeff » Tue Mar 14, 2017 8:27 pm

Hello Bogleheads,

I’m 63 years old, and I retired last year. Retirement has given me some time to read and study about retirement and investments (including time well-spent on this site), and that has opened my eyes to the serious problems that my lack of attention to my financial advisor has caused to my portfolio. I’m now in the process of trying to stop the bleeding, and would appreciate it if some of the minds on here would assist me out of the swamp.

As I mentioned, I’m 63. My wife is 56.
Income: Me – pension of $1226/month, IRA Dist. of $750/month. Wife – employed with a gross income of approx. $55000/year.
Debt: None, except for credit cards which are paid in full every month. I’m on COBRA for health insurance, and that’s my largest monthly bill at $729/month through 2/18 (after that, who knows?)
No children.

Current Portfolio: (with comments)

My IRA:
$107,543 in PRSGX – T.Rowe Price Spectrum Growth
$51,841 in TRVLX – TRP Value Fund
$70,501 in PRHYX – TRP High Yield Fund
$59,020 in RPSIX – TRP Spectrum Income
$19,727 in PRITX – TRP International Stock
** These funds have done pretty well, with the exception of International Stock. I’ve got enough invested with them that their fees are waived. I’m on the fence about whether to keep these funds or move them to Vanguard. If I keep them, I’d want to, at least, move the PRITX to something else. Maybe the PRDGX – Dividend Growth Fund?

My wife’s 401(k): at Principal
$33,384 in PTTRX – PIMCO Total Return Fund
$19,569 in a Pricipal Management 2030 Target Retirement Fund
$35,740 in PEIIX – Principal Equity Income Fund
$19,610 in TRLGF – TRP Large Cap Growth Fund
$19,113 in PMFSX – Principal Global Investors MidCap S&P 400 Index
$23,997 in PSSSX – Principal Global Investors SmallCap S&P 600 Index
$6,385 in RERGX – American Funds EuroPacific Growth Fund
** These funds all suck, except for the PMFSX and PSSSX, which are doing quite well and have fees of .05. This plan does have a couple of other Vanguard index funds, and I was thinking of either leaving the two Principal index funds (which together make up about 27% of the total), and putting 33% of the rest in VINIX – Vanguard Institutional Index. Then, put the remaining 40% into VWEAX – Vanguard High-Yield Corporate Fund Adm. Shares. Or just putting the whole thing into the two Vanguard funds at a 60/40 split. What do you think? BTW, my wife contributes 8% bi-monthly to this account with an employer match of 2 or 3%. Her average contribution is around $170-$175.

My wife also has an old 403(b) at Principal. This came over with her 401(k) from the previous plan administrator, but Principal said they wouldn’t do anything with it but let it sit there. Apparently, we can’t take it out until she reaches a certain age (we’re checking on that).
$316 in (I can’t find the symbols for these) MetLife Total Short-Term Fixed Income
$37,370 in Principal LifeTime 2020 Institutional Fund
** If I find that we can take this out, I’d like to move it all over to Vanguard, but what kind of funds would you suggest for an account like this? If we can’t take it out, I was thinking of just moving it all into that VINIX at Principal.

I have way too much tied up in cash. Whenever I’ve felt a little flush, I’d fund these instead of doing something smarter…
$14,152 in checking
$24,127 in Emergency Fund – Sallie Mae High Yield Savings
$19,611 in Home Improvement & Repair Fund – Sallie Mae
$13,387 in New Car Fund – Sallie Mae
$14,793 in Vacation Fund – Sallie Mae
$17,329 in Health Insurance Fund (to pay for COBRA) – Sallie Mae
$4,162 in a Money Market Account (more on this shortly)
$41,483 in a taxable brokerage account at Vanguard. 3-fund portfolio, VTSMX, VTIAX, VBTLF, 60/40 stocks. This is where I first dipped my toes into index investing.

Which brings us to (gulp) Waddell & Reed. While I’m grateful to the advisor we have there for consolidating many of our accounts under one roof and getting us on a regular investing plan towards retirement, I’ve just been shocked by what I’ve found out in my reading/research lately, and more than a little embarrassed by the lack of attention that I’ve paid to the details/fees for so many years. I’d like to hold off on listing all of the individual funds in these accounts, unless you really need them, because I plan to transfer them all from W&R.

That Money Market Account listed above is a W&R acct.
$91,263 in my Roth IRA. No longer contributing to this
$7,174 in my wife’s Roth IRA. $500 contribution/month.
$49,751 in another previous 403(b) of my wife’s.
$89,329 in a 403(b) rollover MAP of my wife’s.
$88,897 in an IRA rollover MAP of my wife’s.
$39,761 in a non-retirement account, jointly owned
$5,933 in another non-retirement account, jointly owned

Questions:
I’m still pretty happy with around a 60/40 stock to bond asset allocation.
1. Overall impressions? See any obvious changes that should be made?
2. What to do with my IRA at T.Rowe Price?
3. Is my thinking sound with my wife’s 401(k) at Principal? The 403(b)? Assuming I can transfer that, what kind of mix would work for that small fund?
4. What should I do with all that cash?
5. Waddell & Reed – except for the non-retirement accounts, I suppose each of the other accounts will need to have their own separate accounts at Vanguard. Is the same 3 fund portfolio appropriate for every fund, or should they be mixed up a little?
6. Any and all advice/suggestions will be appreciated.

Thanks! Let me know if you need more information.

delamer
Posts: 5483
Joined: Tue Feb 08, 2011 6:13 pm

Re: Recently Retired - Portfolio Advice, Please!

Post by delamer » Tue Mar 14, 2017 9:04 pm

It would be helpful to commenters for you to show totals for the accounts with multiple investments and a distribution (%) of stock/bonds/cash for taxable and tax-advantaged. There's too much going on to get a good overall picture. See this: viewtopic.php?f=1&t=6212

How much will you need to draw from your assets once your wife retires? When do you expect her to retire? What will her SS be per month?

You said the T. Rowe Price funds have done pretty well. Is that just a general feeling or have you actually compared their returns to an appropriate benchmark? Ultimately, the only thing that matters in terms of performance is whether you are getting the best return for the level of risk you are comfortable with for that type of assets.

What's MAP?

Assuming that you are planning on spending your cash on the various expenses you've noted within the next couple years, there is nothing wrong with holding those amounts in a savings account.

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dwickenh
Posts: 1253
Joined: Sun Jan 04, 2015 9:45 pm
Location: Illinois

Re: Recently Retired - Portfolio Advice, Please!

Post by dwickenh » Tue Mar 14, 2017 9:27 pm

Hello SoDakJeff,

I am in a similar situation to you, except my wife also retired when she was supposed to work several more years :annoyed ,

Your 60/40 Asset Allocation is reasonable, mine is 50/50 at this time.

I would definitely simplify your holdings and use either Fidelity or Vanguard for low cost index funds. Do not give up on the foreign
index funds as recency bias is not a good reason to stop investing in a fund.

I keep 10 months in cash at 1.95% rewards checking account, 26 months in short term corporate bond fund, and the rest in index funds to complete my AA of 50/50. I also have cobra coverage that will end 2018. Who knows what we will have then.

Good luck to you,

Dan
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

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jmndu99
Posts: 341
Joined: Sun Jul 14, 2013 4:18 pm

Re: Recently Retired - Portfolio Advice, Please!

Post by jmndu99 » Tue Mar 14, 2017 10:42 pm

Hello SoDakjeff,

I'm not an expert, however, the wife is still working. She still can contribute to your and her Roths.

Is it possible to get on her health insurance plan?

desiderium
Posts: 675
Joined: Sat Jan 04, 2014 11:08 am

Re: Recently Retired - Portfolio Advice, Please!

Post by desiderium » Wed Mar 15, 2017 12:01 am

Jeff,

Your situation looks ok, but it is kind of a mess. I don't think you can tell exactly what you are doing with all these accounts and funds. You have a good start with a three fund portfolio your Taxable account, so I would start by trying to implement this portfolio across your accounts. Here are a couple of steps to consider

1. Transfer your IRA to Vanguard
2. Transfer all of your wife's old 403b and rollover IRA from the advisor into a Vanguard Rollover IRA
3. Transfer both Roths into vanguard.
4. Consolidate all your non-retirement accounts at Vanguard. You can transfer the assets in kind so avoid selling until you have a clear view of tax implications.
5 Identify funds in your wife's current employer accounts (401k and old 403b) that mimic vanguard 3 fund portfolio--it looks like there are broad index funds with low expense ratios, good.
6. Think of everything as one big portfolio and calculate the allocation to each. Fit these into your accounts in the simplest way--one fund in the smaller accounts, 2 or at most 3 funds in the larger ones.
7. Read up on asset location in the WIKI. You may want to keep stocks in your taxable account and roths, bonds in the IRA and wife's retirement accounts.
8. Not sure where high yield bonds fit. I would avoid these until you have a clear picture of the risks they entail.
9. Call Vanguard. They will help you move all this stuff.
10. You will feel much better with a simpler portfolio and fewer accounts

Good Luck!

Artisan
Posts: 324
Joined: Sat Oct 01, 2016 8:30 am

Re: Recently Retired - Portfolio Advice, Please!

Post by Artisan » Wed Mar 15, 2017 7:16 am

Welcome to the forum!

You might get more responses if you edit your original post in the recommended format described here:

viewtopic.php?f=1&t=6212

Make sure to include the expense ratio of each fund and list of the other choices as well.

SoDakJeff
Posts: 52
Joined: Mon Mar 13, 2017 11:48 am

Re: Recently Retired - Portfolio Advice, Please!

Post by SoDakJeff » Wed Mar 15, 2017 9:17 am

delamer wrote:It would be helpful to commenters for you to show totals for the accounts with multiple investments and a distribution (%) of stock/bonds/cash for taxable and tax-advantaged. There's too much going on to get a good overall picture. See this: viewtopic.php?f=1&t=6212

How much will you need to draw from your assets once your wife retires? When do you expect her to retire? What will her SS be per month?

My wife was hoping to retire at 62, but she likes her job a lot more than I did mine. Coupled with the uncertainty about healthcare costs, I wouldn't be surprised if she delays that for a while, or even until 65. Her SS will be $1892 at FRA. Mine will be $1805 (I've not applied for SS yet, and probably won't until FRA). With pension and both SS payments, I supposed we'd go with the 4% withdrawal rate from investments to start.

You said the T. Rowe Price funds have done pretty well. Is that just a general feeling or have you actually compared their returns to an appropriate benchmark? Ultimately, the only thing that matters in terms of performance is whether you are getting the best return for the level of risk you are comfortable with for that type of assets.

Mostly a general feeling. I started contributing to TRP in my 20's, and most years was good about putting in the max $2000 up until the early '90's. That's when my wife and I started at W&R. From then on, I didn't add a cent to TRP, and it's grown to just about the same as our W&R accounts, that we've been pouring $$'s into.

What's MAP?

Managed Allocation Portfolio. W&R was big on these. Put your IRA Rollover (for example) into one of these, and they buy a large number of funds that are supposed to be well-diversified. You pick your risk tolerance. Then, quarterly, they rebalance the portfolio to maintain that risk. I've now realized that the funds are all front load, with fees in the .2 range and there's a hefty re-balancing fee on top of that.

Assuming that you are planning on spending your cash on the various expenses you've noted within the next couple years, there is nothing wrong with holding those amounts in a savings account.

SoDakJeff
Posts: 52
Joined: Mon Mar 13, 2017 11:48 am

Re: Recently Retired - Portfolio Advice, Please!

Post by SoDakJeff » Wed Mar 15, 2017 12:51 pm

jmndu99 wrote:Hello SoDakjeff,

I'm not an expert, however, the wife is still working. She still can contribute to your and her Roths.

We're planning to contribute something, if not the max, to my Roth towards the end of the year when we see how our financial situation is shaking out.

Is it possible to get on her health insurance plan?


Where she works, they don't have an employee/spouse option - only spouse/family. That option is only slightly less than what I'm paying for COBRA. Because of some pre-existing health issues, we decided to spend a little extra because on her plan I would have had to give up all of my doctors.

SoDakJeff
Posts: 52
Joined: Mon Mar 13, 2017 11:48 am

Re: Recently Retired - Portfolio Advice, Please!

Post by SoDakJeff » Wed Mar 15, 2017 1:19 pm

desiderium wrote:Jeff,

Your situation looks ok, but it is kind of a mess. I don't think you can tell exactly what you are doing with all these accounts and funds. You have a good start with a three fund portfolio your Taxable account, so I would start by trying to implement this portfolio across your accounts. Here are a couple of steps to consider

1. Transfer your IRA to Vanguard
2. Transfer all of your wife's old 403b and rollover IRA from the advisor into a Vanguard Rollover IRA
3. Transfer both Roths into vanguard.
4. Consolidate all your non-retirement accounts at Vanguard. You can transfer the assets in kind so avoid selling until you have a clear view of tax implications.
5 Identify funds in your wife's current employer accounts (401k and old 403b) that mimic vanguard 3 fund portfolio--it looks like there are broad index funds with low expense ratios, good.
6. Think of everything as one big portfolio and calculate the allocation to each. Fit these into your accounts in the simplest way--one fund in the smaller accounts, 2 or at most 3 funds in the larger ones.
7. Read up on asset location in the WIKI. You may want to keep stocks in your taxable account and roths, bonds in the IRA and wife's retirement accounts.
8. Not sure where high yield bonds fit. I would avoid these until you have a clear picture of the risks they entail.
9. Call Vanguard. They will help you move all this stuff.
10. You will feel much better with a simpler portfolio and fewer accounts

Good Luck!
Yes, it is a mess. Way too much to track. I'd appreciate a little clarification on a couple of your points:

1. TRP -> Vanguard: Is this because in the long run you think it will perform better, or for the convenience? Or both?
2. Do those old IRA rollovers and 403(b) rollovers (wife's) need to be kept separate at Vanguard, or can they be combined because they're retirement accounts? I never could figure out why W&R had all those in different accounts, unless there was some kind of regulatory requirement to keep those different kinds of retirement accounts separate.
6&7. Is the 3 fund portfolio appropriate for all that I'm moving to Vanguard? And are you saying that once the funds are moved, I shouldn't have the 3-fund portfolio in each fund, but rather treat the entire collection of accounts as a 3-fund portfolio and allocate my 60/40 split between accounts?

I know I still have a lot of reading to do on all of this, including in the WIKI. I'm still pretty uninformed about all of this at this stage, but I wanted to get some ideas quickly so I could start getting these accounts moved ASAP.

This has been really helpful! Thanks so much!

Capsu78
Posts: 223
Joined: Wed May 18, 2016 10:30 am

Re: Recently Retired - Portfolio Advice, Please!

Post by Capsu78 » Wed Mar 15, 2017 6:51 pm

I just reviewed my AA with my fee only CFP, and I think his comment to me might apply to you:

"There is no extra credit issued for complexity!"

desiderium
Posts: 675
Joined: Sat Jan 04, 2014 11:08 am

Re: Recently Retired - Portfolio Advice, Please!

Post by desiderium » Wed Mar 15, 2017 9:16 pm

SoDakJeff wrote:
desiderium wrote:Jeff,

Your situation looks ok, but it is kind of a mess. I don't think you can tell exactly what you are doing with all these accounts and funds. You have a good start with a three fund portfolio your Taxable account, so I would start by trying to implement this portfolio across your accounts. Here are a couple of steps to consider

1. Transfer your IRA to Vanguard
2. Transfer all of your wife's old 403b and rollover IRA from the advisor into a Vanguard Rollover IRA
3. Transfer both Roths into vanguard.
4. Consolidate all your non-retirement accounts at Vanguard. You can transfer the assets in kind so avoid selling until you have a clear view of tax implications.
5 Identify funds in your wife's current employer accounts (401k and old 403b) that mimic vanguard 3 fund portfolio--it looks like there are broad index funds with low expense ratios, good.
6. Think of everything as one big portfolio and calculate the allocation to each. Fit these into your accounts in the simplest way--one fund in the smaller accounts, 2 or at most 3 funds in the larger ones.
7. Read up on asset location in the WIKI. You may want to keep stocks in your taxable account and roths, bonds in the IRA and wife's retirement accounts.
8. Not sure where high yield bonds fit. I would avoid these until you have a clear picture of the risks they entail.
9. Call Vanguard. They will help you move all this stuff.
10. You will feel much better with a simpler portfolio and fewer accounts

Good Luck!
Yes, it is a mess. Way too much to track. I'd appreciate a little clarification on a couple of your points:

1. TRP -> Vanguard: Is this because in the long run you think it will perform better, or for the convenience? Or both?
2. Do those old IRA rollovers and 403(b) rollovers (wife's) need to be kept separate at Vanguard, or can they be combined because they're retirement accounts? I never could figure out why W&R had all those in different accounts, unless there was some kind of regulatory requirement to keep those different kinds of retirement accounts separate.
6&7. Is the 3 fund portfolio appropriate for all that I'm moving to Vanguard? And are you saying that once the funds are moved, I shouldn't have the 3-fund portfolio in each fund, but rather treat the entire collection of accounts as a 3-fund portfolio and allocate my 60/40 split between accounts?

I know I still have a lot of reading to do on all of this, including in the WIKI. I'm still pretty uninformed about all of this at this stage, but I wanted to get some ideas quickly so I could start getting these accounts moved ASAP.

This has been really helpful! Thanks so much!
TRP to Vanguard is optional. I suggested it because it is simpler. Your portfolio will provide returns of the market, minus costs.

The IRA and 403b accounts should be able to be combined; Roths are a separate species.

Yes, you needn't to replicate the 3-fund portfolio in each account. Make it simpler. Also certain assets do better in different kinds of accounts. For example, assets expected to grow the most (stocks) should fill your Roth accounts. Bonds are taxed at your highest rate, so many would suggest putting these in the traditional IRA accounts. Once you get things moved and a tentative plan laid out, post it here and you will get some more detailed critique from a number of really smart people.

Given the number of accounts and complexity of moving all this, you should be able to get some good personalized attention from vanguard that will help with getting all the forms together and answer your questions about consolidating.

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