66 yr old Woman Needs HELP!

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MillaBurg
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66 yr old Woman Needs HELP!

Post by MillaBurg »

Ok, here's the deal. After a couple of years going back and forth with investing with PAS, because of fear. I just transferred 500k to MMA. I have 200k additionally in MMA. And I have 76k in their IRA. I do not have much in SS income(I am retired) like 900. I was thinking of dollar cost averaging into certain funds like Total Stock and Total Bond( only because of the market volatility, and I cannot afford to lose anything!), but the advisor wants to put me in 40/60(stock, bonds), which I do realize is conservative. If I knew how, or what funds( btw, this is all taxable) I would do it myself! I'm the skittish type, but the thought of handling over total control is overwhelming for me, but I will do it, if you think that's my best option!
I am single with no beneficiaries, although I do have my nephew I would want to leave something to. Also, some charities.
I only require about 2500 a month. I do have credit card debt too, like 10k or more, if I'm counting my car payment.

They want to talk to me soon, like this week, so I want to get this settled once and for all! I really don't like having that much money in cash and not working for me. Either self invest or PAS, but I want it done this week. I want to make the jump, but not sure which way to go: PAS or do-it-yourself portfolio with 30-45 in stocks(for now anyway). Wish I could do the Target Date Income, but it's all taxable. Im in the lowest tax bracket right now, and don't want to get bumped up to higher. Is that even possible.

I'm sorry for being so desperate but I really am. I want to get going with investing so this will be a HUGE weight off my back. Thank you all!

If anyone should know, it's you guys!! Thanks again!
Topic Author
MillaBurg
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Re: 66 yr old Woman Needs HELP!

Post by MillaBurg »

OR, should I go to a financial planner in my area, so I could go and sit down to discuss my situation/issues?? I just don't know how to find someone qualified that I could trust. Thank you again~
Mr.BB
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Re: 66 yr old Woman Needs HELP!

Post by Mr.BB »

Rule 1 ...Do not rush! Being rush/pushed by your financial planner should be a big red flag.
Rule 2 ...Get a second opinion. (Check out Garrett planners in your area https://www.garrettplanningnetwork.com/). They are fee based planners and fiduciaries. Ask your planner if they are a fiduciary.
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."
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samsoes
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Re: 66 yr old Woman Needs HELP!

Post by samsoes »

What is PAS?
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Tamarind
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Re: 66 yr old Woman Needs HELP!

Post by Tamarind »

Take several deep breaths. You can get help here and there is no need to rush.

I would advise against visiting a non-Vanguard-PAS advisor. It doesn't sound like you would enjoy resisting a sales pitch, and it would not be good news for your retirement if you fell for one.

You listed 776k in assets. Is that the sum total? Is everything but the 76k IRA in a taxable brokerage account?

You listed 30k in annual expenses - is that before or after Social Security income? How accurate is that number? Does it include taxes? Would you be willing to write out for us a breakdown of your major expense categories? (Housing, food, transportation, etc)

What are the amounts and interest rates of all your debts, including the car?

It's important to get precise about this, because it looks like your nest egg is just barely big enough to safely cover your expenses for retirement. Not a lot of extra for things like unexpected medical costs, charity, or flip-flopping on your investment strategy.

When you go "back and forth" with PAS, what causes you to stop working with them and move everything to cash? How do you feel when you do that? What causes you to start working with them again?
Topic Author
MillaBurg
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Re: 66 yr old Woman Needs HELP!

Post by MillaBurg »

PAS Personal Advisory Service, which Vanguard offers.
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brother7
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Re: 66 yr old Woman Needs HELP!

Post by brother7 »

As I understand it, you're currently not employed, collecting ~900/month is Social Security.
You have 700k in a taxable account at Vanguard and ZERO in any type of tax-advantaged accounts (401k, IRA). The 700k is invested in Vanguard's money market fund and you are looking to invest this money.
So now your decision is whether to invest using Vanguard Personal Advisor Services (PAS) or DIY.
Does the above analysis sound about right?

Off the top of my head, do not invest in 30-45 individual stocks like you said in your post. Do not invest in individual stocks at all. Just stick with low-cost mutual funds which Vanguard has a LOT of.

Question...
  • Besides Social Security, do you have any other income?
  • Besides the 700k in Vanguard, do you have any other cash or investments, such as a checking account, any CDs or savings bonds, any other stock accounts at other brokerages?
EDIT: Just re-read about the 76k IRA. Where is the IRA? At Vanguard too?
Last edited by brother7 on Mon Feb 26, 2018 6:53 am, edited 1 time in total.
Topic Author
MillaBurg
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Re: 66 yr old Woman Needs HELP!

Post by MillaBurg »

Mr.BB wrote: Mon Feb 26, 2018 6:45 am Rule 1 ...Do not rush! Being rush/pushed by your financial planner should be a big red flag.
Rule 2 ...Get a second opinion. (Check out Garrett planners in your area https://www.garrettplanningnetwork.com/). They are fee based planners and fiduciaries. Ask your planner if they are a fiduciary.
Thank you Mr BB...I feel rushed by Vanguard, believe it or not. I can understand their frustration with me, but still. I'll check out Garrett Planning. Thanks
Topic Author
MillaBurg
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Re: 66 yr old Woman Needs HELP!

Post by MillaBurg »

[quoting fixed - moderator prudent]
Tamarind wrote: Mon Feb 26, 2018 6:48 am Take several deep breaths. You can get help here and there is no need to rush.

I would advise against visiting a non-Vanguard-PAS advisor. It doesn't sound like you would enjoy resisting a sales pitch, and it would not be good news for your retirement if you fell for one.

You listed 776k in assets. Is that the sum total? Is everything but the 76k IRA in a taxable brokerage account?

You listed 30k in annual expenses - is that before or after Social Security income? How accurate is that number? Does it include taxes? Would you be willing to write out for us a breakdown of your major expense categories? (Housing, food, transportation, etc)

What are the amounts and interest rates of all your debts, including the car?

It's important to get precise about this, because it looks like your nest egg is just barely big enough to safely cover your expenses for retirement. Not a lot of extra for things like unexpected medical costs, charity, or flip-flopping on your investment strategy.
Yes, that's the sum TOTAL Tamarind. That's exactly why I cannot afford to lose money.
All accounts are 0 interest except Bank of America at 4.9%; Auto is 0.9%
I'd say 30-35k is accurate. I own my own home so there's no mortgage. Food, is about 120/mos, transportation-gas/ 120/mos; I hardly ever treat myself, so entertainment is sparse. When I have medical, it comes out of the MM fund. I usually sweep up to 1300/month to my checking, which holds my SS money too. I try to live frugally, but I realize I have used plastic to help me not run out. I guess I'm in a real pickle at this point.

I don't go ahead for some reason, because I'm afraid of a downturn in the market. One advisor was totally rude to me, because I'm so skittish, which I understand but there are ALL types of investors. The last woman sounded good, but like I said it's 40/60...SO, is that doable?? I still have 200 left outside of that including IRA, just sitting there in MMA. I know I need an emergency fund too. It took me so long just to get this far because my anxiety was/is so overwhelming just discussing these issues! God forbid, some medical emergency happens, then I'm really in a mess!

Thanks so much for your help!
Topic Author
MillaBurg
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Re: 66 yr old Woman Needs HELP!

Post by MillaBurg »

[quoting fixed - moderator prudent]
brother7 wrote: Mon Feb 26, 2018 6:51 am As I understand it, you're currently not employed, collecting ~900/month is Social Security.
You have 700k in a taxable account at Vanguard and ZERO in any type of tax-advantaged accounts (401k, IRA). The 700k is invested in Vanguard's money market fund and you are looking to invest this money.
So now your decision is whether to invest using Vanguard Personal Advisor Services (PAS) or DIY.
Does the above analysis sound about right?

Off the top of my head, do not invest in 30-45 individual stocks like you said in your post. Do not invest in individual stocks at all. Just stick with low-cost mutual funds which Vanguard has a LOT of.

Question...
  • Besides Social Security, do you have any other income?
  • Besides the 700k in Vanguard, do you have any other cash or investments, such as a checking account, any CDs or savings bonds, any other stock accounts at other brokerages?
EDIT: Just re-read about the 76k IRA. Where is the IRA? At Vanguard too?
Yes, I have 76k IRA at Vanguard, in addition to the total amount. No individual stocks except for ATT, Verizon, Comcast which totals about 50k. I am including that amount in the sum total that I mentioned. I do not invest in idividual stocks at all...It's all in MMA.
No, no other income...and that's about it. Thanks so much for your input!

I'm just wondering if my taxes would be the same if I invested in Target Ret Income, as it would with a PAS advisor??? At least I wouldn't be spending an extra 1800 a year on fees.
denovo
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Re: 66 yr old Woman Needs HELP!

Post by denovo »

MMA? :confused
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Grt2bOutdoors
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Re: 66 yr old Woman Needs HELP!

Post by Grt2bOutdoors »

STOP!! Don't do anything you do not fully understand. Absolutely do not place the money in 30-40 different stocks, that is the equivalent of visiting 30-40 different casinos and hoping you leave with all of your money plus some of theirs- does that sound realistic?

If PAS is pressuring you, ask for another advisor- it’s your right to choose someone you are comfortable with.

You need to focus on your needs first, forget about the charities and nephew for time being. Have you read any thing from the wiki, Vanguard or any books? No planner is going to be able to provide a “guarantee” - you need to reconcile that with “can not afford to lose anything”.

Did the planner say why they suggested you invest at a 40/60 allocation? Did they disclose how often the allocation experienced a “down” year in the market? The worse mistake you can make is to feel the need to “do something” before you are well-informed. If that requires a month for you to figure out, then the cost is $2,500 that you need to live on, but it’s not 10X or more if you buy something that you are not comfortable with. Take your time!
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Grt2bOutdoors
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Re: 66 yr old Woman Needs HELP!

Post by Grt2bOutdoors »

denovo wrote: Mon Feb 26, 2018 7:16 am MMA? :confused
Money market account.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Topic Author
MillaBurg
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Re: 66 yr old Woman Needs HELP!

Post by MillaBurg »

All the advisors I spoke with at PAS say 40/60 portfolio...and they won't budge on that...OR the International allocation. They told me that if I want a 30/70 allocation, I would have to do it myself. I was thinking of doing a very simple portfolio of 30-35 total stock and the rest total bond? And I was thinking of an immediate annuity for 10 yrs, which would give me close to 1k/mos(not much, but something)..See, I'm all over the place. I just want to have a plan by this week. I've waited too long. I'm thinking that the market will crash the day I invest it all.

You know, I've read everything but the more I read, the more confused and anxious I get. I need Boglehead advice, because they keep it simple.
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brother7
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Re: 66 yr old Woman Needs HELP!

Post by brother7 »

My Analysis

Income
700k in taxable account. At 3% withdrawal rate = 21,000/year
Social Security at 900/month = 11,000/year
Total = 32,000/year

Taxes
Using the Taxcaster calculator, your estimated 2018 tax liability is 818. (Most likely it will be less because I assumed all investment gain was short-term).

Let's assume you have 30k after taxes to cover all of your expenses. Seems like you have barely enough to get buy, barring any emergency.

Investing
I haven't even considered your 76k IRA. This should be the very last money you tap because you want to maximize the tax deferral benefit.

In my opinion, you need to invest very aggressively. As much as being in the market scares you, it's the greatest wealth-generating tool there is. As much as losing money scares you, you stand a greater chance of running out of money if you miss out on the growth that the stock market provides.

Others will disagree but I think you should be heavily tilted towards stocks, either 100/0 or 90/10.
I have specific allocation recommendations, if you want.

Also, don't use PAS. Even though 0.35% is reasonable, you're really on the borderline and you need to save every dollar.
Topic Author
MillaBurg
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Re: 66 yr old Woman Needs HELP!

Post by MillaBurg »

If I was 30 yrs old, yes, I'd be in 100% stock, Brother...But i'll be 67 in April...I can't afford a market downturn, because I wouldn't have the time frame to recover.
Topic Author
MillaBurg
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Re: 66 yr old Woman Needs HELP!

Post by MillaBurg »

No, no, no Grt2bOutdoors! Not in 30 or 40 diff stocks, but a 40/60 portfolio...I just want to be invested and put this behind me once and for all...It really weighs on me!
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Tamarind
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Re: 66 yr old Woman Needs HELP!

Post by Tamarind »

MillaBurg wrote: Mon Feb 26, 2018 7:03 am
Tamarind wrote: Mon Feb 26, 2018 6:48 am You listed 776k in assets. Is that the sum total? Is everything but the 76k IRA in a taxable brokerage account?

You listed 30k in annual expenses - is that before or after Social Security income? How accurate is that number? Does it include taxes? Would you be willing to write out for us a breakdown of your major expense categories? (Housing, food, transportation, etc)

What are the amounts and interest rates of all your debts, including the car?
Yes, that's the sum TOTAL Tamarind. That's exactly why I cannot afford to lose money.
All accounts are 0 interest except Bank of America at 4.9%; Auto is 0.9%
I'd say 30-35k is accurate. I own my own home so there's no mortgage. Food, is about 120/mos, transportation-gas/ 120/mos; I hardly ever treat myself, so entertainment is sparse. When I have medical, it comes out of the MM fund. I usually sweep up to 1300/month to my checking, which holds my SS money too. I try to live frugally, but I realize I have used plastic to help me not run out. I guess I'm in a real pickle at this point.

I don't go ahead for some reason, because I'm afraid of a downturn in the market. One advisor was totally rude to me, because I'm so skittish, which I understand but there are ALL types of investors. The last woman sounded good, but like I said it's 40/60...SO, is that doable?? I still have 200 left outside of that including IRA, just sitting there in MMA. I know I need an emergency fund too. It took me so long just to get this far because my anxiety was/is so overwhelming just discussing these issues! God forbid, some medical emergency happens, then I'm really in a mess!

Thanks so much for your help!
For ease of reading, rather than copying the post you want to reply to, hit the button with quote marks. It will show who said what and really help people read and reply. You can also edit like I did with my own words above to make it clear which part of the post you are replying to.

If $30-35k is how much you spend total in a year, then don't panic (actually, don't panic regardless). In that case SS will cover almost 1/3 of your expenses and you have a small cushion. If $30-35k is how much you take out of your investments each year, on the other hand, then you have a spending problem, because your likely safe withdrawal rate on $776k is only about $31k per year. Please let us know clearly which of these is your situation.

Part of feeling safe enough to invest responsibly is knowing how much you can afford to spend and what kind of return you need to get. The fact that you are carrying a credit card balance when you have money in a taxable brokerage is the opposite of budgeting. I think you should pay off your credit cards then put the cards in a drawer for a year. You need to develop confidence that you can stick to a planned amount of spending - then you'll know that you have enough to get you through. But let's make a plan before starting to act.

About how much is your house worth? How much do you pay each year in property taxes?

It's fine to ask VPAS for a different advisor if one was rude to you. Their job is to keep you invested, because running to cash like you did is not a good move. But they need to do that by developing a good working relationship with you so that they are able to persuade you to stay in the market.

Will you do a little thought experiment for me? Imagine that after talking with us, you decide to invest for yourself, at a comfortable and conservative asset allocation like 30/70. Lots of nice safe bonds. Take a moment to imagine your money working for you, producing income, not too risky.

Got that image in your head?

Ok, suddenly there is a market correction! The news is full of people saying this is the worst thing that's happened since 2008. You look at your investments and there's lots of red text. It looks like your investments are down 5%, so they have lost almost $39k.

Did your heart rate change, reading this? As you were imagining, did you feel panic? Would your plan feel like a mistake if that happened? Would it make you feel like you needed to get out of the market before it could go down any further?
Topic Author
MillaBurg
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Re: 66 yr old Woman Needs HELP!

Post by MillaBurg »

Honestly, I just want a simple portfolio that I can manage, and a plan for withdrawing into my bank account each month. Is this possible?
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Tamarind
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Re: 66 yr old Woman Needs HELP!

Post by Tamarind »

MillaBurg wrote: Mon Feb 26, 2018 7:49 am Honestly, I just want a simple portfolio that I can manage, and a plan for withdrawing into my bank account each month. Is this possible?
Yes, absolutely. All these questions are aimed at figuring out what that portfolio should be. Since you have a history of changing plans, we want to find something you can stick with through thick and thin.
Topic Author
MillaBurg
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Re: 66 yr old Woman Needs HELP!

Post by MillaBurg »

Tamarind wrote: Mon Feb 26, 2018 7:50 am
MillaBurg wrote: Mon Feb 26, 2018 7:49 am Honestly, I just want a simple portfolio that I can manage, and a plan for withdrawing into my bank account each month. Is this possible?
Yes, absolutely. All these questions are aimed at figuring out what that portfolio should be. Since you have a history of changing plans, we want to find something you can stick with through thick and thin.
Tamarind wrote: Mon Feb 26, 2018 7:47 am
MillaBurg wrote: Mon Feb 26, 2018 7:03 am
Tamarind wrote: Mon Feb 26, 2018 6:48 am You listed 776k in assets. Is that the sum total? Is everything but the 76k IRA in a taxable brokerage account?

You listed 30k in annual expenses - is that before or after Social Security income? How accurate is that number? Does it include taxes? Would you be willing to write out for us a breakdown of your major expense categories? (Housing, food, transportation, etc)

What are the amounts and interest rates of all your debts, including the car?
Yes, that's the sum TOTAL Tamarind. That's exactly why I cannot afford to lose money.
All accounts are 0 interest except Bank of America at 4.9%; Auto is 0.9%
I'd say 30-35k is accurate. I own my own home so there's no mortgage. Food, is about 120/mos, transportation-gas/ 120/mos; I hardly ever treat myself, so entertainment is sparse. When I have medical, it comes out of the MM fund. I usually sweep up to 1300/month to my checking, which holds my SS money too. I try to live frugally, but I realize I have used plastic to help me not run out. I guess I'm in a real pickle at this point.

I don't go ahead for some reason, because I'm afraid of a downturn in the market. One advisor was totally rude to me, because I'm so skittish, which I understand but there are ALL types of investors. The last woman sounded good, but like I said it's 40/60...SO, is that doable?? I still have 200 left outside of that including IRA, just sitting there in MMA. I know I need an emergency fund too. It took me so long just to get this far because my anxiety was/is so overwhelming just discussing these issues! God forbid, some medical emergency happens, then I'm really in a mess!

Thanks so much for your help!
For ease of reading, rather than copying the post you want to reply to, hit the button with quote marks. It will show who said what and really help people read and reply. You can also edit like I did with my own words above to make it clear which part of the post you are replying to.

If $30-35k is how much you spend total in a year, then don't panic (actually, don't panic regardless). In that case SS will cover almost 1/3 of your expenses and you have a small cushion. If $30-35k is how much you take out of your investments each year, on the other hand, then you have a spending problem, because your likely safe withdrawal rate on $776k is only about $31k per year. Please let us know clearly which of these is your situation.

Part of feeling safe enough to invest responsibly is knowing how much you can afford to spend and what kind of return you need to get. The fact that you are carrying a credit card balance when you have money in a taxable brokerage is the opposite of budgeting. I think you should pay off your credit cards then put the cards in a drawer for a year. You need to develop confidence that you can stick to a planned amount of spending - then you'll know that you have enough to get you through. But let's make a plan before starting to act.

About how much is your house worth? How much do you pay each year in property taxes?

It's fine to ask VPAS for a different advisor if one was rude to you. Their job is to keep you invested, because running to cash like you did is not a good move. But they need to do that by developing a good working relationship with you so that they are able to persuade you to stay in the market.

Will you do a little thought experiment for me? Imagine that after talking with us, you decide to invest for yourself, at a comfortable and conservative asset allocation like 30/70. Lots of nice safe bonds. Take a moment to imagine your money working for you, producing income, not too risky.

Got that image in your head?

Ok, suddenly there is a market correction! The news is full of people saying this is the worst thing that's happened since 2008. You look at your investments and there's lots of red text. It looks like your investments are down 5%, so they have lost almost $39k.

Did your heart rate change, reading this? As you were imagining, did you feel panic? Would your plan feel like a mistake if that happened? Would it make you feel like you needed to get out of the market before it could go down any further?
I hope I'm doing this right, Tamarind. I did click on the quotes. I didn't realize that. Anyway, down 5 % wouldn't really bother me too much. I mean, yes, I'd probably panic, thinking that it will go down more. I'm probably a person who does not have the stomach to be in the stock market, but realize, it's the only way to make my investment grow.

Yes, I take about 30-35k a year.
student
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Re: 66 yr old Woman Needs HELP!

Post by student »

MillaBurg wrote: Mon Feb 26, 2018 7:22 am All the advisors I spoke with at PAS say 40/60 portfolio...and they won't budge on that...OR the International allocation. They told me that if I want a 30/70 allocation, I would have to do it myself. I was thinking of doing a very simple portfolio of 30-35 total stock and the rest total bond? And I was thinking of an immediate annuity for 10 yrs, which would give me close to 1k/mos(not much, but something)..See, I'm all over the place. I just want to have a plan by this week. I've waited too long. I'm thinking that the market will crash the day I invest it all.

You know, I've read everything but the more I read, the more confused and anxious I get. I need Boglehead advice, because they keep it simple.
If you want 30/70, you can do half in https://investor.vanguard.com/mutual-fu ... rview/0723 (20/80) and half in https://investor.vanguard.com/mutual-fu ... rview/0724

Of course, you are just buy 30% TSM and 70% TBM and rebalance it yourself every year.

Edit: Corrected typos for TSM and TBM.
Last edited by student on Mon Feb 26, 2018 8:16 am, edited 1 time in total.
AntsOnTheMarch
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Re: 66 yr old Woman Needs HELP!

Post by AntsOnTheMarch »

Adviser suggestion of 40/60 AA reasonable given how concerned you are of market downturn. If your $776,000 became $620,000 due to market crash tomorrow, how do you think you’d react? Try to think through a few different scenarios before making any changes. Your $$ in money market fund for a few more months is not the worst thing in the world.

Forget individual stocks. That’s like buying lottery tickets in your case. Forget leaving inheritances and focus on your needs. Consider paying off debt. That’s like guaranteed return of whatever the interest rate you’re paying. Make a real budget (sans plastic) and track every expense. You need to know your exact monthly nut barring emergencies. If it’s actually 2500/mo, you can make a reasonable and workable plan going forward. It will be tight but you’re in better shape than many/most seniors. Take heart.
selters
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Re: 66 yr old Woman Needs HELP!

Post by selters »

student wrote: Mon Feb 26, 2018 8:00 am
If you want 30/70, you can do half in https://investor.vanguard.com/mutual-fu ... rview/0723 (20/80) and half in https://investor.vanguard.com/mutual-fu ... rview/0724

Of course, you are just buy 30% TSM and 70% TBM and rebalance it yourself every year.

Edit: Corrected typos for TSM and TBM.
Vanguard Target Retirement Income Fund has a 30/70 allocation if I remember correctly.
naha66
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Re: 66 yr old Woman Needs HELP!

Post by naha66 »

Hate to recommend a SPIA annuity, but it might the best option for you. You can buy thru Vanguard, 50%(388k) of your 776k would give you over $2000 a month plus $900 SS, thats close to $3000 a month and you still have 388k to invest in case inflation comes back.
student
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Re: 66 yr old Woman Needs HELP!

Post by student »

selters wrote: Mon Feb 26, 2018 8:19 am
student wrote: Mon Feb 26, 2018 8:00 am
If you want 30/70, you can do half in https://investor.vanguard.com/mutual-fu ... rview/0723 (20/80) and half in https://investor.vanguard.com/mutual-fu ... rview/0724

Of course, you are just buy 30% TSM and 70% TBM and rebalance it yourself every year.

Edit: Corrected typos for TSM and TBM.
Vanguard Target Retirement Income Fund has a 30/70 allocation if I remember correctly.
Currently it is 20/80.
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JoeRetire
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Re: 66 yr old Woman Needs HELP!

Post by JoeRetire »

MillaBurg wrote: Mon Feb 26, 2018 7:22 am All the advisors I spoke with at PAS say 40/60 portfolio...and they won't budge on that...OR the International allocation. They told me that if I want a 30/70 allocation, I would have to do it myself. I was thinking of doing a very simple portfolio of 30-35 total stock and the rest total bond? And I was thinking of an immediate annuity for 10 yrs, which would give me close to 1k/mos(not much, but something)..See, I'm all over the place. I just want to have a plan by this week. I've waited too long. I'm thinking that the market will crash the day I invest it all.

You know, I've read everything but the more I read, the more confused and anxious I get. I need Boglehead advice, because they keep it simple.
You have already read a bunch of internet stuff and just gotten confused and anxious. Reading more online is unlikely to change that.

What you need is to sit down with a competent fee-only financial adviser. You need to spend a bit of time and a little money figuring out what your real goals are, and coming up with a financial plan to get there.

A good adviser will listen, analyze, and explain. A good adviser will not tell you what you must do, but will help carry out your (educated) wishes. And a good adviser will keep checking in periodically to make sure you are still comfortable.

Start here: https://www.napfa.org/. Look for a CFP. Schedule an interview.
Then relax and talk. Try not to be so worried. It will work out just fine.
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.
lostdog
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Re: 66 yr old Woman Needs HELP!

Post by lostdog »

I handle it myself currently but if I were to pass away my wife has instructions to trust Vanguard PAS with our portfolio. I currently setup the funds how they would if they are currently managing it.

If I were you I would trust Vanguard PAS with your portfolio, ignore the noise and move on with your life. Go enjoy your hobbies and not pay any attention to your portfolio. Vanguard will handle all this for you. Vanguard is there to stop you from making any moves based on emotions. Give them a chance. I think you'll be fine.
Brokerage: VTI+VXUS || Retirement: VTWAX || Short-Term: Cash+BSV || 33x Expenses
dbr
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Re: 66 yr old Woman Needs HELP!

Post by dbr »

Based on what you have told us here the VPAS recommendation is quite reasonable. . . . But, the idea that they refuse to honor a preference for 30/70 over 40/60 makes no sense and is truly dismaying. Did they really say that?

I would say that a visit to a different competent but disinterested advisor will about 90% likely produce the same recommendations. It would be incredibly easy to visit an incompetent or predatory advisor who will damage your financial prospects.

I agree that an SPIA is worth considering at some point. If VPAS is not will give you advice one way or the other on that, that is also dismaying.

If you are concerned about taxes, you should consult a tax accountant or just fill out a sample tax return to see what will happen. Offhand you could easily have zero in tax costs. VPAS is not a tax accountant and don't take tax advice from a mutual fund company or from most investment advisors, as far as that goes.

The idea that you are afraid of losses in the market but might invest in individual stocks is completely insane. Where on earth would you get such an idea?

Pay off your credit card debt, and we assume you have medical insurance under control.
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BigFoot48
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Re: 66 yr old Woman Needs HELP!

Post by BigFoot48 »

I'm 69 and my portfolio is at 40% Total Stock and 60% Total Bond. If you want 30% (not 30 stocks everyone!), just do it as its better than 0%. I don't think you need to hire yet another advisor to adopt the 3-Fund portfolio and its highly unlikely they would recommend it. You may want to consider the Life Strategy fund to keep it simple. Good luck!

Do note that 70% in bonds will generate more taxable income than 60%, so do keep that in mind.
Last edited by BigFoot48 on Mon Feb 26, 2018 9:14 am, edited 3 times in total.
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carolinaman
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Re: 66 yr old Woman Needs HELP!

Post by carolinaman »

Given your dependence upon your investments and your high anxiety about the market, I think you should seriously consider a fixed immediate annuity for part of your money. I am no expert on annuities as I do not have any myself. However, this type of annuity is fine and seems well suited to you. I did a quick check on the Vanguard site for a $2,000 a month annuity. For your age, it would cost $368,000 per the quote, roughly half you savings. You could adjust the amount to what you prefer and the cost would adjust accordingly. Also, there are options to consider with an annuity. One would be a cost of living adjustment (COLA) which would increase your payments with inflation but would require more money. One key to investing in annuities is to choose high quality, financially sound companies. I know that Metlife is a major player and I am sure there are others. Other Bogleheads can probably offer best insight on this option. Just as choosing a financial adviser, be very cautious in choosing an annuity.

In addition to the annuity, you could dollar cost average into whatever fund(s) you decide for the rest of your savings. You could start by investing 30% of your target investment now and adding 10% a month until you reach your target. I think 40% equity/60% fixed is a good target for you.

Not to further confuse you, but another good option for an all in one fund is the Vanguard Life Strategy Conservative Growth fund (VSCGX). It is similar to target date funds but maintains a constant 40% equity/60% bond allocation regardless of age. IMO, you need to maintain a reasonable percentage of equity to protect yourself from inflation.

If you decide on an annuity, this will reduce the amount of assets to be managed and the cost of Vanguard's PAS would be pretty small. IMO, it would be helpful to you to have someone to talk to about your investments and at .3%, Vanguard's PAS would be a good choice. I would be very discerning of advisers in general, as many do not have your best interests foremost in their advice.

At your income level, I do not think you will pay much in taxes so that is likely not a major factor.
The Wizard
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Re: 66 yr old Woman Needs HELP!

Post by The Wizard »

OP says she transferred $500k into a money market fund.
From where? From a mix of stock and bond funds?

OP has been on the forum since 2016, so should be familiar with "stay the course" and dealing with stock market fluctuations, minor and major.

We had a 10% stock market correction earlier this month. What was the OP doing or feeling then?
My concern is that OP might react negatively to the next stock market decline and do damage to her proposed 40/60 portfolio.
We need to resolve this issue first...
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The Wizard
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Re: 66 yr old Woman Needs HELP!

Post by The Wizard »

dbr wrote: Mon Feb 26, 2018 9:00 am
...The idea that you are afraid of losses in the market but might invest in individual stocks is completely insane. Where on earth would you get such an idea?
OP never said individual stocks.
Others misinterpreted her "30-45 stocks" to mean that, when she meant 30-45 PERCENT in stock funds...
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dbr
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Re: 66 yr old Woman Needs HELP!

Post by dbr »

The Wizard wrote: Mon Feb 26, 2018 9:13 am
dbr wrote: Mon Feb 26, 2018 9:00 am
...The idea that you are afraid of losses in the market but might invest in individual stocks is completely insane. Where on earth would you get such an idea?
OP never said individual stocks.
Others misinterpreted her "30-45 stocks" to mean that, when she meant 30-45 PERCENT in stock funds...
Of course, that has to be it. I can only read what someone says.
FRANK2009
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Re: 66 yr old Woman Needs HELP!

Post by FRANK2009 »

naha66 wrote: Mon Feb 26, 2018 8:25 am Hate to recommend a SPIA annuity, but it might the best option for you. You can buy thru Vanguard, 50%(388k) of your 776k would give you over $2000 a month plus $900 SS, thats close to $3000 a month and you still have 388k to invest in case inflation comes back.
I agree with naha66 on this.

Also, if not already suggested, look into something like Vanguard Retirement Income. It is a balanced fund. 30% stock, 70% bonds. The fund only lost 10% in '08.
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Tamarind
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Re: 66 yr old Woman Needs HELP!

Post by Tamarind »

The Wizard wrote: Mon Feb 26, 2018 9:09 am OP says she transferred $500k into a money market fund.
From where? From a mix of stock and bond funds?

OP has been on the forum since 2016, so should be familiar with "stay the course" and dealing with stock market fluctuations, minor and major.

We had a 10% stock market correction earlier this month. What was the OP doing or feeling then?
My concern is that OP might react negatively to the next stock market decline and do damage to her proposed 40/60 portfolio.
We need to resolve this issue first...
This is my thinking too. I'm guessing the amount transferred was moved from a VPAS portfolio to the money market in a fear moment.

MillaBurg, are you following this? Two lines of logic emerging:

1) You might know in your head you need to invest, but your fear is too strong to stick with it. Your main option would be a single premium immediate annuity. You give up a chunk of your nest egg in return for a guarantee of set payments monthly for life. You'll know exactly what you are going to get, but have no chance to do better, and you have some risk if inflation jumps that your money won't stretch far enough.

2) You can commit to stay in a reasonable allocation. It sounds like reasonable is between 20/80 and 40/60. In this case, you could use VPAS, or do it yourself. I'd recommend you pick a single all-in-one fund so you don't have to worry about rebalancing. Your risk here is not a market crash, but your own behavior. If you keep going as you have been (jumping in and out) you'll be unlikely to benefit from investing.

Either way you probably need to trim your expenses a little bit for safety, even just a couple hundred dollars a month would help. You also need to make sure you keep your house in good repair, because selling it is your final safety net.
Last edited by Tamarind on Mon Feb 26, 2018 9:23 am, edited 1 time in total.
lostdog
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Re: 66 yr old Woman Needs HELP!

Post by lostdog »

The Wizard wrote: Mon Feb 26, 2018 9:09 am OP says she transferred $500k into a money market fund.
From where? From a mix of stock and bond funds?

OP has been on the forum since 2016, so should be familiar with "stay the course" and dealing with stock market fluctuations, minor and major.

We had a 10% stock market correction earlier this month. What was the OP doing or feeling then?
My concern is that OP might react negatively to the next stock market decline and do damage to her proposed 40/60 portfolio.
We need to resolve this issue first...
+1. All emotional. This is the source of the issue. This is why I think PAS needs to take complete control of it.
Brokerage: VTI+VXUS || Retirement: VTWAX || Short-Term: Cash+BSV || 33x Expenses
dbr
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Re: 66 yr old Woman Needs HELP!

Post by dbr »

I still would like to know why VPAS would be so adamant about the asset allocation and whether or not they really do not open the door to alternatives to investing such as the SPIA. I had the idea they set the asset allocation in accord with a risk questionnaire and that the result would have to be somewhat flexible. The withdrawal requirement is modest enough that there is no reason on that account for needing to be 40/60 rather than 30/70.
Topic Author
MillaBurg
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Re: 66 yr old Woman Needs HELP!

Post by MillaBurg »

The Wizard wrote: Mon Feb 26, 2018 9:13 am
dbr wrote: Mon Feb 26, 2018 9:00 am
...The idea that you are afraid of losses in the market but might invest in individual stocks is completely insane. Where on earth would you get such an idea?
OP never said individual stocks.
Others misinterpreted her "30-45 stocks" to mean that, when she meant 30-45 PERCENT in stock funds...
omg, thank you for clearing that up for me Wizard! lol...No, I don't have 30 or 40 stocks...Wizard is right, it's 30 or 40 tsm and then 70 total bond.

Yes I have been on here for awhile lurking to see if there were similar situations to mine. Just looking gets me nervous because I know I should be doing something! It took a lot for me to post, believe me! There are so many suggestions...I always promise myself that I will print the post/answers and study it, but that too gets me more confused. Maybe I should sit down with advisor as dbr suggested...or, get into a fixed annuity...It's not like I'm going to live forever, so I mean, if Ijust have enough finances for the next 20 yrs, I'd be ok...Not even 20 really.
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MillaBurg
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Re: 66 yr old Woman Needs HELP!

Post by MillaBurg »

Tamarind wrote: Mon Feb 26, 2018 9:23 am
The Wizard wrote: Mon Feb 26, 2018 9:09 am OP says she transferred $500k into a money market fund.
From where? From a mix of stock and bond funds?

OP has been on the forum since 2016, so should be familiar with "stay the course" and dealing with stock market fluctuations, minor and major.

We had a 10% stock market correction earlier this month. What was the OP doing or feeling then?
My concern is that OP might react negatively to the next stock market decline and do damage to her proposed 40/60 portfolio.
We need to resolve this issue first...
This is my thinking too. I'm guessing the amount transferred was moved from a VPAS portfolio to the money market in a fear moment.

MillaBurg, are you following this? Two lines of logic emerging:

1) You might know in your head you need to invest, but your fear is too strong to stick with it. Your main option would be a single premium immediate annuity. You give up a chunk of your nest egg in return for a guarantee of set payments monthly for life. You'll know exactly what you are going to get, but have no chance to do better, and you have some risk if inflation jumps that your money won't stretch far enough.

2) You can commit to stay in a reasonable allocation. It sounds like reasonable is between 20/80 and 40/60. In this case, you could use VPAS, or do it yourself. I'd recommend you pick a single all-in-one fund so you don't have to worry about rebalancing. Your risk here is not a market crash, but your own behavior. If you keep going as you have been (jumping in and out) you'll be unlikely to benefit from investing.

Either way you probably need to trim your expenses a little bit for safety, even just a couple hundred dollars a month would help. You also need to make sure you keep your house in good repair, because selling it is your final safety net.
Yes, Wiz, OP was a nervous wreck and relieved she wasn't in market, when correction happened recently! More hesitation.
Tamarin, I enjoy your subtle sense of humor and wise direction. I was invested in Vang Total Ret Income a few years ago, 250k, and when the market corrected, I got out, so that's true! I am skittish. I've learned since then though....I remember in the '90's when I had about 300k saved up( btw, money was acquired through savings through the years, cds, mm, etc) anyway, the stock market really plunged and people/esp retirees lost most of their savings and had to hustle at 65, 70's and go back to work because they lost everything! I remember hearing their panic while listening to radio as I'd drive along. That was the defining moment for me. Because I was out of the market, I didn't lose a dime, but those poor souls lost everything. That's why when I see these corrections, I am fearful that I will be one of them . I have physical issues, where I can not go back to work at this point in life.
You're all so kind...and I appreciate all you offer ...all of us newbies
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MillaBurg
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Re: 66 yr old Woman Needs HELP!

Post by MillaBurg »

dbr wrote: Mon Feb 26, 2018 9:39 am I still would like to know why VPAS would be so adamant about the asset allocation and whether or not they really do not open the door to alternatives to investing such as the SPIA. I had the idea they set the asset allocation in accord with a risk questionnaire and that the result would have to be somewhat flexible. The withdrawal requirement is modest enough that there is no reason on that account for needing to be 40/60 rather than 30/70.
No, actually, I think it's more like a robo advisor, with a personal touch. That's why they charge extra. I had 3 advisors tell me, that I needed to have the 40/60 and I could not lower International. I remember writing to one I was trying to work with at the time, and he emailed me this stock generic email, that didn't even address my concerns. That's when I started having my doubts.

I've thought about the SPIA believe me, in addition to a portfolio but I need so much direction. I guess I could do a 35/65 myself, distribute into my checking every month, or go to PAS.
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Tamarind
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Re: 66 yr old Woman Needs HELP!

Post by Tamarind »

MillaBurg wrote: Mon Feb 26, 2018 10:11 am
Tamarind wrote: Mon Feb 26, 2018 9:23 am
The Wizard wrote: Mon Feb 26, 2018 9:09 am OP says she transferred $500k into a money market fund.
From where? From a mix of stock and bond funds?

OP has been on the forum since 2016, so should be familiar with "stay the course" and dealing with stock market fluctuations, minor and major.

We had a 10% stock market correction earlier this month. What was the OP doing or feeling then?
My concern is that OP might react negatively to the next stock market decline and do damage to her proposed 40/60 portfolio.
We need to resolve this issue first...
This is my thinking too. I'm guessing the amount transferred was moved from a VPAS portfolio to the money market in a fear moment.

MillaBurg, are you following this? Two lines of logic emerging:

1) You might know in your head you need to invest, but your fear is too strong to stick with it. Your main option would be a single premium immediate annuity. You give up a chunk of your nest egg in return for a guarantee of set payments monthly for life. You'll know exactly what you are going to get, but have no chance to do better, and you have some risk if inflation jumps that your money won't stretch far enough.

2) You can commit to stay in a reasonable allocation. It sounds like reasonable is between 20/80 and 40/60. In this case, you could use VPAS, or do it yourself. I'd recommend you pick a single all-in-one fund so you don't have to worry about rebalancing. Your risk here is not a market crash, but your own behavior. If you keep going as you have been (jumping in and out) you'll be unlikely to benefit from investing.

Either way you probably need to trim your expenses a little bit for safety, even just a couple hundred dollars a month would help. You also need to make sure you keep your house in good repair, because selling it is your final safety net.
Yes, Wiz, OP was a nervous wreck and relieved she wasn't in market, when correction happened recently! More hesitation.
Tamarin, I enjoy your subtle sense of humor and wise direction. I was invested in Vang Total Ret Income a few years ago, 250k, and when the market corrected, I got out, so that's true! I am skittish. I've learned since then though....I remember in the '90's when I had about 300k saved up( btw, money was acquired through savings through the years, cds, mm, etc) anyway, the stock market really plunged and people/esp retirees lost most of their savings and had to hustle at 65, 70's and go back to work because they lost everything! I remember hearing their panic while listening to radio as I'd drive along. That was the defining moment for me. Because I was out of the market, I didn't lose a dime, but those poor souls lost everything. That's why when I see these corrections, I am fearful that I will be one of them . I have physical issues, where I can not go back to work at this point in life.
You're all so kind...and I appreciate all you offer ...all of us newbies
Thanks for this, MillaBurg. This sort of detail helps get at your emotions which are real, understandable, and also the biggest impediment to success.

From my POV, the retirees who lost everything made a big mistake. They sold when the market dropped. If they had hung on and tightened their belts after that crash which was so defining for you, their investments would have recovered and they would have continued to have enough money to live. There are people on this forum (I was too young) who held out through all the crashes you've watched.

You also made a mistake. By not investing, you have had a much harder struggle to save for retirement. You haven't gotten much gains from all the good years, and those would have added up to much more than you would have lost in bad years. You must have saved hard for a long time to build up $776k mostly in CDs and money markets.

But you can't change the past, and it might be too much to ask for your risk tolerance to go up just when you are beginning to rely on the money.

I'm leaning towards the SPIA (single premium immediate annuity) for you. I would suggest you figure out the minimum amount you need to get by on top of SS, and buy an annuity to give you that much each month for the rest of your life. Don't guess how long you'll live, because this is your longevity insurance. It should cost less than half of your money, and we can help you confirm you have the best offer before you pull the trigger. Get quotes for COLA-adjusted and non-adjusted annuities so you can compare.

Once you know you have that income guaranteed like your social security, you should invest the rest. VPAS is probably best, or a target fund if you can really promise you will never change it ever again. Don't even check the balance. Just tell them you need $x (whatever takes you from your SS + SPIA floor to your full expenses) each month in your checking account and have them automate it. Don't worry about the allocation because you only need the principal from this money if you live longer than you expect to.

The important thing is to get your risk down to a point where you can leave your money be no matter how bad the market is.
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MillaBurg
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Re: 66 yr old Woman Needs HELP!

Post by MillaBurg »

I was even thinking of selling my home, which is about 399k. I don't know where the heck I'd move to. Presently living in Massachusetts. Was helping family past few years. No wonder.
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Tamarind
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Re: 66 yr old Woman Needs HELP!

Post by Tamarind »

MillaBurg wrote: Mon Feb 26, 2018 10:57 am I was even thinking of selling my home, which is about 399k. I don't know where the heck I'd move to. Presently living in Massachusetts. Was helping family past few years. No wonder.
This is not a bad idea, but there is no rush. You will have better quality of life if you are near family and friends (probably), but your money will go farther if you move somewhere cheaper (just about anywhere being cheaper than MA).
FCM
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Re: 66 yr old Woman Needs HELP!

Post by FCM »

One other possible source of income for the poster would be a reverse mortgage, especially since she owns her home outright with no mortgage.
Lynette
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Re: 66 yr old Woman Needs HELP!

Post by Lynette »

Is it possible that you could get a part time job even if it is minimum wage? I do not know what your health is like but this would give you additional income and relieve some of the stress. I am in good health but I worked until I was 73. I have pensions that cover my needs as well as social security that even allows me to save some. I am conservative and if I did not have my floor covered, I would buy SPIAś. So this is a consideration if you do not wish to/or unable to go back to work. I am pleased with my decision as I can ignore how my portfolio does as that is only for long-term health care emergencies.
Last edited by Lynette on Mon Feb 26, 2018 2:12 pm, edited 1 time in total.
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warowits
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Re: 66 yr old Woman Needs HELP!

Post by warowits »

In this case a SPIA seems appropriate with about half of the savings. You don't have to worry about market fluctuations, you know what you're getting and you get a check every month. With this level of anxiety about the stock market it seems right.
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Christine_NM
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Re: 66 yr old Woman Needs HELP!

Post by Christine_NM »

FRANK2009 wrote: Mon Feb 26, 2018 9:20 am
naha66 wrote: Mon Feb 26, 2018 8:25 am Hate to recommend a SPIA annuity, but it might the best option for you. You can buy thru Vanguard, 50%(388k) of your 776k would give you over $2000 a month plus $900 SS, thats close to $3000 a month and you still have 388k to invest in case inflation comes back.
I agree with naha66 on this.

Also, if not already suggested, look into something like Vanguard Retirement Income. It is a balanced fund. 30% stock, 70% bonds. The fund only lost 10% in '08.
I agree on Vanguard Retirement Income. I don't own it, but it would be a good choice for OP. No need for ongoing PAS except to talk things over once or twice. But if PAS is more annoyance than help, tell them no thanks. It's difficult for a single person to make decisions when there's no one to discuss the issues with. Ask me how I know. So, BHs to the rescue.

I disagree about the annuity. It sounds like you have plenty of money for your needs. 20 years from now you may be looking at Medicaid, and you don't want an annuity income to dash any eligibility hopes. The thought of giving my life savings to an insurance company gives me chills.

The only way I keep my stock allocation without going crazy is to have plenty of cash between it and me. So I'd put an even $500k in Target Retirement Income (VTINX). Reinvest dividends and capital gains or it won't grow. Keep the rest in MM or CDs and dole it to yourself monthly as you've been doing. Should last quite a while. You can do this.
18% cash 44% stock 38% bond. Retired, w/d rate 2.5%
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MillaBurg
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Re: 66 yr old Woman Needs HELP!

Post by MillaBurg »

If I put all my money in Target Income Fund or Wellesly or 50/50, would I have the same tax implications that I would if I went with a PAS advisor?? If the tax savings wouldn't be that much with PAS, I would gladly place 600k in Target Income and/or Wellesly Income today. Seriously. The only reason I haven't is because I always see how taxable in these funds is not a good idea, but then again, i'm in the low tax bracket. Thanks again~
SuzBanyan
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Re: 66 yr old Woman Needs HELP!

Post by SuzBanyan »

I agree with those who have said there is no need to rush.

You said your health is poor and you only expect to live 20 years or less. Even if you never earn another penny in interest, dividends or gains, your accounts would give you almost $39K per year for 20 years. This is more than you currently take per year (but inflation eating into earning power could be a future problem).

So, first take a deep breath.

Second, pat yourself on the back for the great job you did in amassing a paid-off home and almost $800k in liquid assets. Many people could never have done that.

Third, you need to get a better idea of your actual spending needs, including those paid monthly, yearly and only occasionally. It’s hard to make a hit a goal when you don’t know what that goal is. If you are comfortable sharing some of those numbers here, the advice given will be that much better.

Next, think about your home as another source of income. Can you rent out a room? Given your health, do you expect to continue to live there? If so, as has already been suggested, a reverse mortgage might be an option to increase your current cash flow. While there are potential issues with reverse mortgages, they can be a very valuable tool for some homeowners and might be a better option for you than a SPIA.

Once you have a better handle on your spending needs and wants and other options such as a reverse mortgage, then you will be in a better position to decide how much of your nest egg you need to invest in the stock market through mutual funds.
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