Retirement portfolio

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jtelwood
Posts: 190
Joined: Wed Jun 11, 2008 9:45 am

Retirement portfolio

Post by jtelwood »

I am 73 and my wife 69. Our portfolio has been the VG '4 fund portfolio' for many years. Our stock/bond allocation is 50/50. We are planning to continue with this portfolio and asset allocation until I am no longer able to competently manage it. While my wife could continue after I pass, she would rather not. I would like to simplify this part of her life. I want to reduce the stock allocation to 40%. I also want to keep the costs as low as possible and would rather not use the VG Personal Advisor Services or any advisory service. I am looking at 2 possibilities and would like the forum's opinions/ideas on each, as well as other options. One is the VG Life Strategy Conservative Growth Fund (VSCGX), the other is the VG Wellesley Income Fund (VWIAX).

Any help is greatly appreciated.

jte
livesoft
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Joined: Thu Mar 01, 2007 8:00 pm

Re: Retirement portfolio

Post by livesoft »

If your portfolio is large enough and you have no taxable account, it probably doesn't matter what you do. You can leave it alone and your 4 fund would require no managing at all or roll the dice and select one of the other balanced funds.

We cannot predict the future for you, so there is no way to know which one is better, but ....

Some studies show that a rising allocation to equities is not a bad thing. Thus your 4-fund unmanaged after your death would probably naturally increase its allocation to equities which would be OK. You might even start now and stop managing your portfolio and "let it ride" and see how that goes.
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mhadden1
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Re: Retirement portfolio

Post by mhadden1 »

What is your international allocation with your current four fund portfolio? That would likely change if you move toward a life cycle fund or Wellesley.
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balbrec2
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Re: Retirement portfolio

Post by balbrec2 »

Do both Wellesley and LS cons growth. Let it ride. It will be fine!
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David Jay
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Re: Retirement portfolio

Post by David Jay »

I love the LS funds. My "Dear Darlene" letter suggests that she put her entire portfolio (all tax advantaged: tIRA and Roth) in one LS fund.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
dbr
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Re: Retirement portfolio

Post by dbr »

I often wonder, and this is no criticism of you, that if the prospect of watching over an already simple mutual fund portfolio appears daunting, how a person will manage all the rest of one's financial affairs including all sources of income, bank accounts, credit cards, taxes, health care issues (financial aspects), insurance, paying the bills, wills and POAs, etc. Possibly the best solution is a trusted son or daughter who can check in on things. Even an entity such as Vanguard PAS hardly does all the things that are really needed. What does your wife say about learning enough to take care of things? I also tend to agree with livesoft that there might not be much of a real problem.
livesoft
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Re: Retirement portfolio

Post by livesoft »

dbr wrote: Mon Jan 14, 2019 10:39 am... how a person will manage all the rest of one's financial affairs including all sources of income, bank accounts, credit cards, taxes, health care issues (financial aspects), insurance, paying the bills, wills and POAs, etc.
I would like to echo that sentiment because of an experience I have had:

A friend of mine as a new widow with a child in high school was simply incapacitated by the death of her husband. She is pretty sharp, but the depression that ensued prevented her from "taking over" the checking account, the bill paying, the health care stuff, the auto stuff, the insurance stuff, the tax returns, and every possible aspect of her financial life. She asked me for some help, so I was able to review her investments and they are all perfectly fine because she and her husband use a very decent financial advisor. Nevertheless, the well-meaning people at the bank, in her family, at her church, and probably myself were all giving her conflicting advice. It has been a tough go for her, especially with what to do with the life insurance money.

FWIW, I insist that my spouse stay involved with our finances including paying some of the bills, dealing with health insurance, making transactions in her IRA and 401(k) accounts, taking her car to the auto mechanic, etc. Of course, she insists that I stay involved with our finances, too.
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delamer
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Re: Retirement portfolio

Post by delamer »

I would use the LifeStrategy fund because I have strong preference for index funds v. actively managed funds.

The former would be easier to explain to your wife, as in “it invests in 4 categories and you’ll always get the market return for each category. That’s what I did when I took care of the money.”
btenny
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Re: Retirement portfolio

Post by btenny »

How many accounts do you hold and how do you withdrawn $$ regularly and for RMDs and so forth. I think those details will drive how best to set up you asset allocation real simple so your wife can handle things. Plus if you withdraw money and close some accounts to simplify, what are the tax implications? And don't forget about the Medicare income cliff raising costs.

I know I am having the same thoughts about how to make my portfolio and our income taxes really easy to manage. In my case we have 5 accounts and several funds in each. So pretty complex to rebalance and withdraw money regularly and to satisfy RMDs. And in our case I do not like having to get a adviser but I am sure doing the math and spread sheets quarterly and yearly and making the decisions to change stuff will make my wife crazy so she will not do it well. So things could go wrong for her and our kids inheritance. Not good.

Any suggestions?
btenny
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Re: Retirement portfolio

Post by btenny »

I solved part of this by asking my wife to "take over" most of the bill paying task about 14 years ago. I did this so she would know how to manage stuff if something happened to me. It was tough at first but she has done OK for years. She uses Quicken to keep track of checks and all the money in her checkbooks. I also taught her to use a paper ledger book to make sure every bill is received and paid each month and when and what bills are due to be paid on a quarterly and yearly basis and so forth. This takes care of making sure irregular property taxes and insurance and so forth are paid. And I still pay a few bills from my checkbook but they are simple so she could take them over easily.

Our major issue now is auto pay paperless billing. The companies like auto pay but never tell you by email how much the bill is each month. So we never know the monthly cost coming out of the checkbook without going to each companies website or looking at the on line bank data. We found paper bills were easier.

I also do something for income taxes that helps me understand everything. I log all our income and deductions and house taxes and tax stuff on 4-5 sheets of paper by hand before doing the Turbo tax thing. I enter all our income and taxes withheld on the first sheet and all the investment income on a second sheet and all the savings and interest income on another sheet and all the medical bills on another sheet and so forth. And since we used to itemize everything I went through all the checkbooks and credit card statements and logged every tax related bill I found. Then I used this paper log to enter data to TT and check off each item as I go. It helps me understand what we made as income and what were deductions and what we owe and why for taxes. I am not sure my wife would like doing this task but I am pretty sure she could copy what I did in the past.

I do a similar thing when I do RMDs. I do my RMDs right after I do my taxes usually in mid April or late March. I create a paper trail that defines what I am taking as a RMD for each account and why. Then I copy the RMD form after I fill it out. I keep all this data in the annual tax file.

Hope this helps others. Good Luck.
Beehave
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Re: Retirement portfolio

Post by Beehave »

balbrec2 wrote: Mon Jan 14, 2019 10:13 am Do both Wellesley and LS cons growth. Let it ride. It will be fine!
+1
Both are managed insofar as keeping the 40-60 balance. So that piece works. You are obviously wanting some focused, reliable active management and some highly diversified indexing. I'd say split the funds in half and get each thing you want to protect your spouse.

PS, you can also achieve a 40-60 overall initial balance with the LS Income fund and the Balanced Index. This combo has lower fees, but the overall stock-to-bond ratio will drift over time, although RMDs, if taken equally from each, will sort of mitigate that (take more from the better performer and less from the worse performer each year). This is an all-indexed solution with more foreign bonds and less foreign stock than the 50-50 Wellesley-LS Conservative portfolio. I mention it because it seems less appealing for your purposes than the 50-50 split and may serve to illustrate the advantages of the 50-50 Wellesley/LSC split over any other combination achieving your stock-to-bond ration or either of the single fund solutions.

Best wishes.

(edited to remove typo)
RadAudit
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Re: Retirement portfolio

Post by RadAudit »

jtelwood wrote: Mon Jan 14, 2019 8:39 am I am looking at 2 possibilities and would like the forum's opinions/ideas on each, as well as other options. One is the VG Life Strategy Conservative Growth Fund (VSCGX), the other is the VG Wellesley Income Fund (VWIAX).
OP, I'm about a year younger than you and have similar concerns. FWIW, just after the first of the this year, we switched my spouse's IRAs (tIRA and Roth) from Target Retirement 2015 to Life Strategy Conservative Growth. (We'll switch mine over when I get tired of managing my 4 fund portfolio or when I start to slip more than I already have.)

The primary reasons for the change in her portfolio were (1) the projected risk adjusted returns seemed about right for her, - TR 2015 was trending toward 30 / 70 from 40 /60, if we didn't do something, and (2) to give her some familiarity with that fund before the time came to switch my (the rest of the family's) portfolio over from a 4 fund 50 / 50 portfolio to something a little easier / less time consuming (15 min / yr) to handle.

Like you, I believe the index funds used by the LSCG fund would be the best chance of providing near market returns at a low cost as opposed using PAS to do something nearly equivalent. And, like another poster, I have no doubt of her ability to handle any of the other problems with an eventual transition because she's been handling the day-to-day stuff for a number of years. (I'm more concerned about me handling the day-to-day stuff, so she better outlive me.)
FI is the best revenge. LBYM. Invest the rest. Stay the course. Die anyway. - PS: The cavalry isn't coming, kids. You are on your own.
Broken Man 1999
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Re: Retirement portfolio

Post by Broken Man 1999 »

btenny wrote: Mon Jan 14, 2019 12:18 pm I solved part of this by asking my wife to "take over" most of the bill paying task about 14 years ago. I did this so she would know how to manage stuff if something happened to me. It was tough at first but she has done OK for years. She uses Quicken to keep track of checks and all the money in her checkbooks. I also taught her to use a paper ledger book to make sure every bill is received and paid each month and when and what bills are due to be paid on a quarterly and yearly basis and so forth. This takes care of making sure irregular property taxes and insurance and so forth are paid. And I still pay a few bills from my checkbook but they are simple so she could take them over easily.

Our major issue now is auto pay paperless billing. The companies like auto pay but never tell you by email how much the bill is each month. So we never know the monthly cost coming out of the checkbook without going to each companies website or looking at the on line bank data. We found paper bills were easier.

I also do something for income taxes that helps me understand everything. I log all our income and deductions and house taxes and tax stuff on 4-5 sheets of paper by hand before doing the Turbo tax thing. I enter all our income and taxes withheld on the first sheet and all the investment income on a second sheet and all the savings and interest income on another sheet and all the medical bills on another sheet and so forth. And since we used to itemize everything I went through all the checkbooks and credit card statements and logged every tax related bill I found. Then I used this paper log to enter data to TT and check off each item as I go. It helps me understand what we made as income and what were deductions and what we owe and why for taxes. I am not sure my wife would like doing this task but I am pretty sure she could copy what I did in the past.

I do a similar thing when I do RMDs. I do my RMDs right after I do my taxes usually in mid April or late March. I create a paper trail that defines what I am taking as a RMD for each account and why. Then I copy the RMD form after I fill it out. I keep all this data in the annual tax file.

Hope this helps others. Good Luck.
Concerning the paperless billing, do you have account alerts on? Many sites offer different email alerts, making it easy to see what is going on with a particular account without having to sign on at all.

All my paperless billing emails state the balances, due date, etc. Nice thing is even though most of my accounts are set to auto-pay, I still see exactly what is owed, what payment date is, payment acknowledgement on several, etc. I would be very remiss if I didn't check my emails, so it works very well for me. It helped my wife greatly when I had some medical issues in 2017 as all she had to do was look at my emails, and everything worked fine while I wasn't "sound of mind or body." :(

Even with this setup, I am pruning the number of credit cards, keeping only the best rewards cards. I used to have extended payments @ zero% interest through the years at Home Depot and Best Buy. But I just bought a suite of kitchen appliances and we have relatively new TVs. So, don't need them any longer. Two fewer accounts to worry with.

I haven't yet pared our portfolio to Mr. Larimore's three-fund portfolio, but I have heard his "simplify, simplify, simplify" mantra and I'm getting closer.

Best of luck!

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven then I shall not go. " -Mark Twain
Prudence
Posts: 598
Joined: Fri Mar 09, 2012 4:55 pm

Re: Retirement portfolio

Post by Prudence »

jtelwood:
Do have either tIRAs or 401Ks now? If so, would you rather move your portfolio to one or both of these funds, to gain simplicity, rather than separating the bond and equity pieces where appropriate, for tax efficiency?
delamer
Posts: 10902
Joined: Tue Feb 08, 2011 6:13 pm

Re: Retirement portfolio

Post by delamer »

btenny wrote: Mon Jan 14, 2019 12:18 pm I solved part of this by asking my wife to "take over" most of the bill paying task about 14 years ago. I did this so she would know how to manage stuff if something happened to me. It was tough at first but she has done OK for years. She uses Quicken to keep track of checks and all the money in her checkbooks. I also taught her to use a paper ledger book to make sure every bill is received and paid each month and when and what bills are due to be paid on a quarterly and yearly basis and so forth. This takes care of making sure irregular property taxes and insurance and so forth are paid. And I still pay a few bills from my checkbook but they are simple so she could take them over easily.

Our major issue now is auto pay paperless billing. The companies like auto pay but never tell you by email how much the bill is each month. So we never know the monthly cost coming out of the checkbook without going to each companies website or looking at the on line bank data. We found paper bills were easier.

I also do something for income taxes that helps me understand everything. I log all our income and deductions and house taxes and tax stuff on 4-5 sheets of paper by hand before doing the Turbo tax thing. I enter all our income and taxes withheld on the first sheet and all the investment income on a second sheet and all the savings and interest income on another sheet and all the medical bills on another sheet and so forth. And since we used to itemize everything I went through all the checkbooks and credit card statements and logged every tax related bill I found. Then I used this paper log to enter data to TT and check off each item as I go. It helps me understand what we made as income and what were deductions and what we owe and why for taxes. I am not sure my wife would like doing this task but I am pretty sure she could copy what I did in the past.

I do a similar thing when I do RMDs. I do my RMDs right after I do my taxes usually in mid April or late March. I create a paper trail that defines what I am taking as a RMD for each account and why. Then I copy the RMD form after I fill it out. I keep all this data in the annual tax file.

Hope this helps others. Good Luck.
You can do paperless billing without autopay. You get the bills sent to your bank account and then pay them by initiating an EFT.
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