I'm looking for advice regarding where you'd allocate your investments in my position.
Wife and I turned 60 a few months ago and I work for an international company in Texas but am on the local payroll. I plan on retiring in April 2021 - I'll be 61 1/2. Wife retired a few years ago. I have dual nationality (US/UK) and have worked in the US since 2001 as a result of which I have built up about $1.1m in my company 401k/MPP/IRA (all tax deferred & no Roth).
My plan is to move back to the UK and live on the retirement saving until 66 when my wife and I will apply for Social Security (estimated jointly $31360/annum), as well as my UK private pension (estimate $10000/annum) and the UK state pension (estimate jointly $19000/annum) - all index linked. Our spending in retirement would be about $75,000 before tax at current prices so we'd top up the spending needs, about $15k/annum, from the IRA. We have no mortgage and would have minimal health costs (UK National Health Service).
Our Social Security is subject to the Windfall Elimination Provision and has been adjusted accordingly above via the MaximizeMySocialSecurity program.
Upon retirement the 401k and Money Purchase Plan funds will move to the IRA (allocating to the 10 IRA funds) with the SVF funds being kept as cash or short term bonds for spending up until we get Social Security and other pensions. I'm happy with an overall 50/50 stock/bond ratio - or thereabouts.
I have tried to spread the risk, particularly in the IRA, as widely as possible across the Callan periodic table knowing that there would be significant currency risk if I maintained the typical Boglehead 3-fund portfolio with a strong domestic bias and there may be periods when US markets are not in synch with European or Emerging markets.. I have no way of knowing what will do well or badly at any given time hence the spread of investments.
Current retirement assets
I have the following in my IRA - I wanted to diversify:
- ISHARES ESG MSCI EAFE ETF (0.20%) ESGD $74,048
VANECK VECTORS J.P. MORGAN EM LOCAL CRRNCY BOND ETF(0.30%) EMLC $71,904
VANGUARD FTSE EMERGING MARKETS ETF (0.12%) VWO $71,487
VANGUARD FTSE EUROPE ETF (0.09%) VGK $72,783
VANGUARD GLBAL EX US REAL ESTATE ETF (0.12%) VNQI $71,870
VANGUARD HIGH DIVIDEND YIELD ETF (0.06%) VYM $73,807
VANGUARD INTERNATNL HGH DIV YLD ETF (0.32%) VYMI $71,134
INVESCO OPPENHEIMER INTL BOND FD CL A (0.90%) OIBAX $72,134
PGIM GLOBAL TOTAL RETURN Z (0.63%) PZTRX $71,782
SCHWAB US AGGREGATE BOND INDEX FD (0.04%) SWAGX $73,307
My 401k contains:
- TRP STABLE VALUE FUND - N (0.20%) $17,570
VANGUARD INST INDEX (0.04%) VINIX $12,516
VANGUARD TOTAL BOND INDEX ADM (0.05%) VBTLX $17,791
VANGUARD TTL INT STOCK IND ADM (0.11%) VTIAX $12,069
My Money Purchase Plan contains:
- INVESCO OPPENHEIMER DEV MKTS Y (1.10%) ODVYX $15,632
TRP STABLE VALUE FUND - N (0.20%) $119,894
VANGUARD EQUITY INCOME ADM (0.18%) VEIRX $15,456
VANGUARD EXT MARKET INDEX INST (0.06%) VIEIX $15,710
VANGUARD INST INDEX (0.04%) VINIX $31,525
VANGUARD TOTAL BOND INDEX ADM (0.05%) VBTLX $30,019
VANGUARD TTL INT STOCK IND ADM (0.11%) VTIAX $77,964
I will add about another $50k to the above in my 2020/2021 401k and MPP contributions and company matches.
Wife has no retirement savings to speak of apart from US and UK social security.
Additionally we have 3 months cash emergency funds - Ally and Schwab Money Mkt.
So here's my question - given my circumstances would you adopt a 10-fund strategy in the IRA going into and throughout retirement? If not what would be your approach to spread risk (capital and currency)? Any advice most gratefully received.