95% equities at 60 need help transitioning to retirement (UPDATE!)

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Topic Author
Designairohio
Posts: 94
Joined: Thu Aug 15, 2019 3:57 pm

95% equities at 60 need help transitioning to retirement (UPDATE!)

Post by Designairohio »

Good afternoon everyone,

I need your help,
for various reasons i am behind in my retirement savings and have had to take a very aggressive asset allocation in order to get caught up we are almost at 1M in retirement assets and am 95% or better in equities mostly vanguard index funds and 1 individual Reit spread across all our iras and taxable accounts.
i turned 60 two months ago and would like retire at 65 or sooner, i would like to grow my accounts to 1.25M or more by that time so I can withdraw around 50K a year but would also like to change my AA so i can be sure money is there on retirement day in case the market is down at that time as i do not want to delay retirement.

I am also looking for advice on the best way to bridge the gap from 65 to 70 to delay SS benefits if I could retire with 50K from investments and 45K from SS i could live pretty nicely, but for those first 5 years i would need to supplement my portfolio withdrawals from a cash account that I create between now and then or take a larger percentage from the portfolio then cut back a little when SS kicks in. I figure i could get by on 75K those first few years or work part time if i really had to.

Hope that makes sense, please be as critical as you need to be to be helpful all thoughts are appreciated

Ken


Emergency funds: 1 year expenses

Debt: 0

Tax Filing Status: Married Filing Jointly,

Tax Rate: 12% Federal, 3.3% State

State of Residence:OH

Age:60/58

Desired Asset allocation: undecided
Desired International allocation: undecided



Current retirement assets: $970,000

Taxable: 445,885
3% cash $30,000
2.6% Vanguard Small Cap Index ETF (VB) (.05)
2.5% Vanguard Mid Cap Index ETF (VO) (.04)
2.5% Vanguard S&P 500 Index ETF (VO0) (.03)
27% Vanguard Total Stock Market Index (VTSAX) (.04)

His Roth IRA at Vanguard
2.7% Chimera Investment Corp (CIM) (0)
14% Vanguard Total Stock Market (VTSAX) (.04)

His SEP IRA at Vanguard
2.5% Chimera Investment Corp (CIM) (0)
10.5% Vanguard Total Stock Market (VTSAX) (.04)


Her Roth IRA at Vanguard
3.57% Chimera Investment Corp (CIM) (0)
14% Vanguard Total Stock Market (VTSAX) (.04)



Her Traditional IRA at Vanguard
.55% Chimera Investment Corp (CIM) (0)
2.2% Vanguard Total Stock Market (VTSAX) (.04)

HSA
.29% Cash
.85% Vanguard Total Stock Market (VTSAX) (.04)

Note: Total percentage of all the above accounts together (not each account individually) should equal 100%.

Contributions

New annual Contributions

$15,000 his SEP IRA
$7,000 his Roth IRA
$7,000 herRoth IRA
$10,000taxable (for retirement, not short term goals)
$8,000 HSA

Please let me know if you need any more information, Thank You
Last edited by Designairohio on Tue Apr 06, 2021 11:12 pm, edited 1 time in total.
bloom2708
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Re: 95% equities at 60 need help transitioning to retirement

Post by bloom2708 »

You won't catch up by being 95% stocks. You will catch up by saving more, spending less and adjusting your spending goals.

It is very risky to be 95% in a 5 year window before retirement.

What if you swapped the Traditional IRA, SEP IRA and HSA to int-term bond index funds? It would be a start. You can't really move the needle unless you add some bonds in taxable. Int-Term Tax-Exempt or a state specific version might be an option if you decide to add bonds.

I'd probably be max 60% stocks in your shoes. 2007-2009 is a distant memory, but it should be a reminder that stocks do not always go up.

I could easily justify 50/50 as well. If your funds drop 30%, 40%, 50% what does that do to your retirement goals?
"We are here to provoke thoughtfulness, not agree with you." Unknown Boglehead
RadAudit
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Location: Second star on the right and straight on 'til morning

Re: 95% equities at 60 need help transitioning to retirement

Post by RadAudit »

bloom2708 wrote: Thu Jan 16, 2020 3:58 pm I'd probably be max 60% stocks in your shoes. 2007-2009 is a distant memory, but it should be a reminder that stocks do not always go up.

I could easily justify 50/50 as well. If your funds drop 30%, 40%, 50% what does that do to your retirement goals?
+1

The upside of the situation is that because some of your funds are in tax deferred accounts you could get closer to your chosen AA w/o a taxable event. Given the proximity to retirement, sooner rather than later to make the switch would be my choice.

This suggestion doesn't have to do w / market timing - although the rally is a little long in the tooth, rallies don't die of old age. The suggestion is based on the observation that you are putting a lot of the portfolio at considerable risk - it appears to me - with your current AA. It's a risk that probably shouldn't be taken this close to retirement.
Last edited by RadAudit on Thu Jan 16, 2020 4:27 pm, edited 2 times in total.
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.
rich126
Posts: 2520
Joined: Thu Mar 01, 2018 4:56 pm

Re: 95% equities at 60 need help transitioning to retirement

Post by rich126 »

i would like to grow my accounts to 1.25M or more by that time
I think it is nice to have a goal but if you want the market to go up 25% in that time frame, I think it is dangerous to plan on that happening. It could easily go nowhere or down a bit.

Now if you can save more money and it sounds like you are pushing near $50K per year, then maybe you can. Are you more interested in maximizing your potential gains or minimizing your potential losses?

If you have $1M now and are saving $40K+ and your goal is $1.25M then I would imagine reducing risk is goal number 1 and as the other poster stated, you may want to reduce your equity holdings and move to bonds or cash. I'd imagine a 25% drop in the market would cause some serious anxiety at this point in your life.
Topic Author
Designairohio
Posts: 94
Joined: Thu Aug 15, 2019 3:57 pm

Re: 95% equities at 60 need help transitioning to retirement

Post by Designairohio »

bloom2708 wrote: Thu Jan 16, 2020 3:58 pm You won't catch up by being 95% stocks. You will catch up by saving more, spending less and adjusting your spending goals.

It is very risky to be 95% in a 5 year window before retirement.

What if you swapped the Traditional IRA, SEP IRA and HSA to int-term bond index funds? It would be a start. You can't really move the needle unless you add some bonds in taxable. Int-Term Tax-Exempt or a state specific version might be an option if you decide to add bonds.

I'd probably be max 60% stocks in your shoes. 2007-2009 is a distant memory, but it should be a reminder that stocks do not always go up.

I could easily justify 50/50 as well. If your funds drop 30%, 40%, 50% what does that do to your retirement goals?
We are already saving 45% of our income I don’t buy much but necessities anymore used vehicles etc.
I didn’t think about the bond fund in the HSA thanks for that idea. If the market dropped 30-50% now I would probably be alright but if it happened in 3 0r 4 years I wouldn’t be happy that’s why I’m getting your advice.
I could always keep working if physically able I’ve been self employed for 30 years so I’m not getting let go
Thanks for you response
Ken
Unladen_Swallow
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Joined: Tue Dec 10, 2019 6:12 pm

Re: 95% equities at 60 need help transitioning to retirement

Post by Unladen_Swallow »

OP,

Congratulations on your savings and upcoming retirement.

If I were you, I would adjust allocation right away in your tax deferred accounts and desrisk a bit. If you had a much larger nest egg or a longer horizon, it would be a different matter.

60/40 to 70/30 stocks/fixed income is as good as any.

You will be on medicare at 65. I myself don't care for the idea of bonds in HSA. My HSA will be the last pool of funds I intend to dip into. With a long horizon. Your withdrawals and SS can pay your Medicare premiums. This is my approach, decide as you feel appropriate.
"I think it's much more interesting to live not knowing than to have answers which might be wrong." - Richard Feynman
Topic Author
Designairohio
Posts: 94
Joined: Thu Aug 15, 2019 3:57 pm

Re: 95% equities at 60 need help transitioning to retirement

Post by Designairohio »

rich126 wrote: Thu Jan 16, 2020 4:10 pm
i would like to grow my accounts to 1.25M or more by that time
I think it is nice to have a goal but if you want the market to go up 25% in that time frame, I think it is dangerous to plan on that happening. It could easily go nowhere or down a bit.

Now if you can save more money and it sounds like you are pushing near $50K per year, then maybe you can. Are you more interested in maximizing your potential gains or minimizing your potential losses?
Probably preservation, but this is a big change for me I’ve always kind of been aggressive in everything I have done and it’s weird for someone to tell me to dial it back that far. But I know your right
carmonkie
Posts: 329
Joined: Fri Jun 29, 2018 4:31 pm

Re: 95% equities at 60 need help transitioning to retirement

Post by carmonkie »

OP,
You had a great 12 year bull market run since the financial crisis. Some of us still have 20-25 years to go. Count your blessings.
If you can be at your new desired AA without or minimal taxable events, even better. You can do it all once in one big scoop.
Topic Author
Designairohio
Posts: 94
Joined: Thu Aug 15, 2019 3:57 pm

Re: 95% equities at 60 need help transitioning to retirement

Post by Designairohio »

Unladen_Swallow wrote: Thu Jan 16, 2020 4:34 pm OP,

Congratulations on your savings and upcoming retirement.

If I were you, I would adjust allocation right away in your tax deferred accounts and desrisk a bit. If you had a much larger nest egg or a longer horizon, it would be a different matter.

60/40 to 70/30 stocks/fixed income is as good as any.

You will be on medicare at 65. I myself don't care for the idea of bonds in HSA. My HSA will be the last pool of funds I intend to dip into. With a long horizon. Your withdrawals and SS can pay your Medicare premiums. This is my approach, decide as you feel appropriate.
Thank you for your kind an encouraging response
EfficientInvestor
Posts: 402
Joined: Thu Nov 01, 2018 7:02 pm
Location: Alabama

Re: 95% equities at 60 need help transitioning to retirement

Post by EfficientInvestor »

Designairohio wrote: Thu Jan 16, 2020 4:35 pm
rich126 wrote: Thu Jan 16, 2020 4:10 pm
i would like to grow my accounts to 1.25M or more by that time
I think it is nice to have a goal but if you want the market to go up 25% in that time frame, I think it is dangerous to plan on that happening. It could easily go nowhere or down a bit.

Now if you can save more money and it sounds like you are pushing near $50K per year, then maybe you can. Are you more interested in maximizing your potential gains or minimizing your potential losses?
Probably preservation, but this is a big change for me I’ve always kind of been aggressive in everything I have done and it’s weird for someone to tell me to dial it back that far. But I know your right
If you want to maintain a decent return potential while keeping a better eye on risk, you could consider a risk parity approach. Portfolio 1 below is a relatively low volatility version of risk parity and could be implemented with mutual funds or ETFs. Check out the "Rolling Returns" tab at the backtest link below and notice how its worst 5-year period since Nov 1991 still had a 4.9% annualized return. That would bode well for your 5 year retirement target. Portfolio 2 targets moderate volatility and would require the use of a little more leverage via the use of treasury futures contracts.

Image

source - https://www.portfoliovisualizer.com/bac ... on7_2=-320
Topic Author
Designairohio
Posts: 94
Joined: Thu Aug 15, 2019 3:57 pm

Re: 95% equities at 60 need help transitioning to retirement

Post by Designairohio »

EfficientInvestor wrote: Thu Jan 16, 2020 5:07 pm
Designairohio wrote: Thu Jan 16, 2020 4:35 pm
rich126 wrote: Thu Jan 16, 2020 4:10 pm
i would like to grow my accounts to 1.25M or more by that time
I think it is nice to have a goal but if you want the market to go up 25% in that time frame, I think it is dangerous to plan on that happening. It could easily go nowhere or down a bit.

Now if you can save more money and it sounds like you are pushing near $50K per year, then maybe you can. Are you more interested in maximizing your potential gains or minimizing your potential losses?
Probably preservation, but this is a big change for me I’ve always kind of been aggressive in everything I have done and it’s weird for someone to tell me to dial it back that far. But I know your right
If you want to maintain a decent return potential while keeping a better eye on risk, you could consider a risk parity approach. Portfolio 1 below is a relatively low volatility version of risk parity and could be implemented with mutual funds or ETFs. Check out the "Rolling Returns" tab at the backtest link below and notice how its worst 5-year period since Nov 1991 still had a 4.9% annualized return. That would bode well for your 5 year retirement target. Portfolio 2 targets moderate volatility and would require the use of a little more leverage via the use of treasury futures contracts.

Image

source - https://www.portfoliovisualizer.com/bac ... on7_2=-320
That’s really interesting, would I hold those treasuries in my taxable or one of the roths or traditional IRAs? No one seems to be advising using the Roth for the bonds but that’s where they will end up anyway as I was planning on doing Roth conversions
Thank You
Topic Author
Designairohio
Posts: 94
Joined: Thu Aug 15, 2019 3:57 pm

Re: 95% equities at 60 need help transitioning to retirement

Post by Designairohio »

carmonkie wrote: Thu Jan 16, 2020 5:00 pm OP,
You had a great 12 year bull market run since the financial crisis. Some of us still have 20-25 years to go. Count your blessings.
If you can be at your new desired AA without or minimal taxable events, even better. You can do it all once in one big scoop.
Is it ok to buy the Bonds inside the Roth’s? No one seems to be recommending that.
Thanks for your response
carmonkie
Posts: 329
Joined: Fri Jun 29, 2018 4:31 pm

Re: 95% equities at 60 need help transitioning to retirement

Post by carmonkie »

Designairohio wrote: Thu Jan 16, 2020 5:59 pm
carmonkie wrote: Thu Jan 16, 2020 5:00 pm OP,
You had a great 12 year bull market run since the financial crisis. Some of us still have 20-25 years to go. Count your blessings.
If you can be at your new desired AA without or minimal taxable events, even better. You can do it all once in one big scoop.
Is it ok to buy the Bonds inside the Roth’s? No one seems to be recommending that.
Thanks for your response
That is the usual suggestion, but that advise is for early savers and it has to do mainly with the growth potential over the long run. You have effectively benefited from how Roths are supposed to work. All equities there :sharebeer . Your time horizon is now +/- 5 years and all you doing now is going from accumulation to preparing for retirement.
Between all of your IRAs you have about 50% of your portfolio. If you want to get to the 60/40 that other have suggested you can play with the numbers and still keep 10% VTSAX across the Roths, IRAs or all. Your preference.

You said below you'd be OK if the market tanks 30-50% now, would you? That means your portfolio is now 450Kish? That's a long way back to 1.2M over 5 years.

A year ago and thanks to this forum it was the first time I made a substantial rebalancing from stocks to bonds. Like 10%, it is not easy, like you said, but really helps me sleep at night. You can do this rather easily with a fund exchange. It took me about a week mainly because i also cleaned-up and simplified my portfolio as well. Yours is very simple and elegant.

Congrats on your upcoming retirement...
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Re: 95% equities at 60 need help transitioning to retirement

Post by abuss368 »

Wellcome to the forum! The most important decision an investor can make is the overall asset allocation between stocks and bonds. Generally speaking asset allocation is based on goals, time frame, and tolerance for risk.
John C. Bogle: “Simplicity is the master key to financial success."
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Re: 95% equities at 60 need help transitioning to retirement

Post by abuss368 »

At 60 years of age young, I would consider increasing the amount allocated to bonds. Sometimes protecting what we have accumulated is more important than risking it to try and gain more.
John C. Bogle: “Simplicity is the master key to financial success."
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Re: 95% equities at 60 need help transitioning to retirement

Post by abuss368 »

Designairohio wrote: Thu Jan 16, 2020 3:23 pm Good afternoon everyone,

I need your help,
for various reasons i am behind in my retirement savings and have had to take a very aggressive asset allocation in order to get caught up we are almost at 1M in retirement assets and am 95% or better in equities mostly vanguard index funds and 1 individual Reit spread across all our iras and taxable accounts.
i turned 60 two months ago and would like retire at 65 or sooner, i would like to grow my accounts to 1.25M or more by that time so I can withdraw around 50K a year but would also like to change my AA so i can be sure money is there on retirement day in case the market is down at that time as i do not want to delay retirement.

I am also looking for advice on the best way to bridge the gap from 65 to 70 to delay SS benefits if I could retire with 50K from investments and 45K from SS i could live pretty nicely, but for those first 5 years i would need to supplement my portfolio withdrawals from a cash account that I create between now and then or take a larger percentage from the portfolio then cut back a little when SS kicks in. I figure i could get by on 75K those first few years or work part time if i really had to.

Hope that makes sense, please be as critical as you need to be to be helpful all thoughts are appreciated

Ken


Emergency funds: 1 year expenses

Debt: 0

Tax Filing Status: Married Filing Jointly,

Tax Rate: 12% Federal, 3.3% State

State of Residence:OH

Age:60/58

Desired Asset allocation: undecided
Desired International allocation: undecided



Current retirement assets: $970,000

Taxable: 445,885
3% cash $30,000
2.6% Vanguard Small Cap Index ETF (VB) (.05)
2.5% Vanguard Mid Cap Index ETF (VO) (.04)
2.5% Vanguard S&P 500 Index ETF (VO0) (.03)
27% Vanguard Total Stock Market Index (VTSAX) (.04)

His Roth IRA at Vanguard
2.7% Chimera Investment Corp (CIM) (0)
14% Vanguard Total Stock Market (VTSAX) (.04)

His SEP IRA at Vanguard
2.5% Chimera Investment Corp (CIM) (0)
10.5% Vanguard Total Stock Market (VTSAX) (.04)


Her Roth IRA at Vanguard
3.57% Chimera Investment Corp (CIM) (0)
14% Vanguard Total Stock Market (VTSAX) (.04)



Her Traditional IRA at Vanguard
.55% Chimera Investment Corp (CIM) (0)
2.2% Vanguard Total Stock Market (VTSAX) (.04)

HSA
.29% Cash
.85% Vanguard Total Stock Market (VTSAX) (.04)

Note: Total percentage of all the above accounts together (not each account individually) should equal 100%.

Contributions

New annual Contributions

$15,000 his SEP IRA
$7,000 his Roth IRA
$7,000 herRoth IRA
$10,000taxable (for retirement, not short term goals)
$8,000 HSA

Please let me know if you need any more information, Thank You
I would honestly consider keeping it real simple and effective and follow Jack Bogle and Warren Buffett's recommended Two Fund Portfolio of Total Stock (or S&P 500) and Total Bond. This portfolio simply works. Please read more about it and ask questions here: viewtopic.php?f=10&t=188176
John C. Bogle: “Simplicity is the master key to financial success."
Topic Author
Designairohio
Posts: 94
Joined: Thu Aug 15, 2019 3:57 pm

Re: 95% equities at 60 need help transitioning to retirement

Post by Designairohio »

Thanks everyone for your concern I will start converting tomorrow, I really appreciate all of you responding
Ken
EfficientInvestor
Posts: 402
Joined: Thu Nov 01, 2018 7:02 pm
Location: Alabama

Re: 95% equities at 60 need help transitioning to retirement

Post by EfficientInvestor »

Designairohio wrote: Thu Jan 16, 2020 5:55 pm
EfficientInvestor wrote: Thu Jan 16, 2020 5:07 pm
Designairohio wrote: Thu Jan 16, 2020 4:35 pm
rich126 wrote: Thu Jan 16, 2020 4:10 pm
i would like to grow my accounts to 1.25M or more by that time
I think it is nice to have a goal but if you want the market to go up 25% in that time frame, I think it is dangerous to plan on that happening. It could easily go nowhere or down a bit.

Now if you can save more money and it sounds like you are pushing near $50K per year, then maybe you can. Are you more interested in maximizing your potential gains or minimizing your potential losses?
Probably preservation, but this is a big change for me I’ve always kind of been aggressive in everything I have done and it’s weird for someone to tell me to dial it back that far. But I know your right
If you want to maintain a decent return potential while keeping a better eye on risk, you could consider a risk parity approach. Portfolio 1 below is a relatively low volatility version of risk parity and could be implemented with mutual funds or ETFs. Check out the "Rolling Returns" tab at the backtest link below and notice how its worst 5-year period since Nov 1991 still had a 4.9% annualized return. That would bode well for your 5 year retirement target. Portfolio 2 targets moderate volatility and would require the use of a little more leverage via the use of treasury futures contracts.

Image

source - https://www.portfoliovisualizer.com/bac ... on7_2=-320
That’s really interesting, would I hold those treasuries in my taxable or one of the roths or traditional IRAs? No one seems to be advising using the Roth for the bonds but that’s where they will end up anyway as I was planning on doing Roth conversions
Thank You
It would be best to hold them in your retirement accounts due to how they are taxed, but some brokerages don’t allow futures. Before you go down that path, you would need to make sure you are extremely comfortable with how the products work. You can really mess up and get over leveraged if you don’t know what you’re doing.

An alternative would be to use an ETF, NTSX, that does the futures trading for you. I’m doing something similar right now for my father in law who is 60. With 90% of funds NTSX buys stocks directly in an attempt to track the S&P 500. They use the other 10% of funds as collateral to hold treasury futures in an amount equal to 60% of the fund. So it’s like a 60/40 portfolio with 1.5x leverage. You could consider putting 50% of funds in NTSX, 35% of funds in mid to long term treasuries or TIPS, and 15% in gold to hedge against inflation. All in, you would have a portfolio that looks similar to portfolio 1 in the backtest below. It has shown to have better return than a 60/40 portfolio but with less volatility and drawdown.

https://www.portfoliovisualizer.com/ba ... ion6_1=-25
Topic Author
Designairohio
Posts: 94
Joined: Thu Aug 15, 2019 3:57 pm

Re: 95% equities at 60 need help transitioning to retirement

Post by Designairohio »

EfficientInvestor wrote: Thu Jan 16, 2020 11:25 pm
Designairohio wrote: Thu Jan 16, 2020 5:55 pm
EfficientInvestor wrote: Thu Jan 16, 2020 5:07 pm
Designairohio wrote: Thu Jan 16, 2020 4:35 pm
rich126 wrote: Thu Jan 16, 2020 4:10 pm

I think it is nice to have a goal but if you want the market to go up 25% in that time frame, I think it is dangerous to plan on that happening. It could easily go nowhere or down a bit.

Now if you can save more money and it sounds like you are pushing near $50K per year, then maybe you can. Are you more interested in maximizing your potential gains or minimizing your potential losses?
Probably preservation, but this is a big change for me I’ve always kind of been aggressive in everything I have done and it’s weird for someone to tell me to dial it back that far. But I know your right
If you want to maintain a decent return potential while keeping a better eye on risk, you could consider a risk parity approach. Portfolio 1 below is a relatively low volatility version of risk parity and could be implemented with mutual funds or ETFs. Check out the "Rolling Returns" tab at the backtest link below and notice how its worst 5-year period since Nov 1991 still had a 4.9% annualized return. That would bode well for your 5 year retirement target. Portfolio 2 targets moderate volatility and would require the use of a little more leverage via the use of treasury futures contracts.

Image

source - https://www.portfoliovisualizer.com/bac ... on7_2=-320
That’s really interesting, would I hold those treasuries in my taxable or one of the roths or traditional IRAs? No one seems to be advising using the Roth for the bonds but that’s where they will end up anyway as I was planning on doing Roth conversions
Thank You
It would be best to hold them in your retirement accounts due to how they are taxed, but some brokerages don’t allow futures. Before you go down that path, you would need to make sure you are extremely comfortable with how the products work. You can really mess up and get over leveraged if you don’t know what you’re doing.

An alternative would be to use an ETF, NTSX, that does the futures trading for you. I’m doing something similar right now for my father in law who is 60. With 90% of funds NTSX buys stocks directly in an attempt to track the S&P 500. They use the other 10% of funds as collateral to hold treasury futures in an amount equal to 60% of the fund. So it’s like a 60/40 portfolio with 1.5x leverage. You could consider putting 50% of funds in NTSX, 35% of funds in mid to long term treasuries or TIPS, and 15% in gold to hedge against inflation. All in, you would have a portfolio that looks similar to portfolio 1 in the backtest below. It has shown to have better return than a 60/40 portfolio but with less volatility and drawdown.

https://www.portfoliovisualizer.com/ba ... ion6_1=-25
Thanks I’ll look into that this weekend
1130Super
Posts: 523
Joined: Thu Nov 07, 2019 8:59 am
Location: Minnesota

Re: 95% equities at 60 need help transitioning to retirement

Post by 1130Super »

bloom2708 wrote: Thu Jan 16, 2020 3:58 pm You won't catch up by being 95% stocks. You will catch up by saving more, spending less and adjusting your spending goals.

It is very risky to be 95% in a 5 year window before retirement.

What if you swapped the Traditional IRA, SEP IRA and HSA to int-term bond index funds? It would be a start. You can't really move the needle unless you add some bonds in taxable. Int-Term Tax-Exempt or a state specific version might be an option if you decide to add bonds.

I'd probably be max 60% stocks in your shoes. 2007-2009 is a distant memory, but it should be a reminder that stocks do not always go up.

I could easily justify 50/50 as well. If your funds drop 30%, 40%, 50% what does that do to your retirement goals?
We just had a nearly 20% correction 13 months ago. What is OP’s target AA in retirement? 95% stocks have done great for him so far and at the current pace of the market he could have his $1.25 million by the end of the year. Although now wouldn’t be a bad time to take some chips off of table
BalancedJCB19
Posts: 249
Joined: Sat Jul 13, 2019 11:30 am

Re: 95% equities at 60 need help transitioning to retirement

Post by BalancedJCB19 »

First to the OP, you may have been behind, but with what you have in there now, you are far ahead of many people your age. I know quite a few 60 year olds who have less than $200K.

Jack Bogle has often said for most investors a simple balanced index fund will do the trick. You don't have to rebalance and it is essentially like having a fiduciary look after your entire portfolio.

Full disclosure: That is what I have done and still do. I'm 55 with around 900K in the Vanguard Balanced Index Fund (60/40).
3feetpete
Posts: 514
Joined: Sun Dec 14, 2014 7:30 pm

Re: 95% equities at 60 need help transitioning to retirement

Post by 3feetpete »

Go to firecalc.com. You can input everything you have provided here. And more. And it will tell you your probability of success based on past experience of over 100 years of returns of the stock and bond markets. You can try different allocations.

You’ve had a good run up in stocks. It would be good to diversify.
Topic Author
Designairohio
Posts: 94
Joined: Thu Aug 15, 2019 3:57 pm

Re: 95% equities at 60 need help transitioning to retirement

Post by Designairohio »

1130Super wrote: Fri Jan 17, 2020 9:51 am
bloom2708 wrote: Thu Jan 16, 2020 3:58 pm You won't catch up by being 95% stocks. You will catch up by saving more, spending less and adjusting your spending goals.

It is very risky to be 95% in a 5 year window before retirement.

What if you swapped the Traditional IRA, SEP IRA and HSA to int-term bond index funds? It would be a start. You can't really move the needle unless you add some bonds in taxable. Int-Term Tax-Exempt or a state specific version might be an option if you decide to add bonds.

I'd probably be max 60% stocks in your shoes. 2007-2009 is a distant memory, but it should be a reminder that stocks do not always go up.

I could easily justify 50/50 as well. If your funds drop 30%, 40%, 50% what does that do to your retirement goals?

We just had a nearly 20% correction 13 months ago. What is OP’s target AA in retirement? 95% stocks have done great for him so far and at the current pace of the market he could have his $1.25 million by the end of the year. Although now wouldn’t be a bad time to take some chips off of table
What your saying here is exactly what is making it so hard for me to change, I made way more in the market than I saved, so being at 95% really has put me in a better situation, and now I’m looking to make sure a market crash doesn’t delay my retirement, it seemed that as soon as I Turn 60 and knew I was 5 years out it started to creep into my mind. I’m thinking 70/30 or 60/40 in retirement.
I’m going to start the transition next week nothing too swift but a steady conversion
Thanks for your supportive response
Topic Author
Designairohio
Posts: 94
Joined: Thu Aug 15, 2019 3:57 pm

Re: 95% equities at 60 need help transitioning to retirement

Post by Designairohio »

BalancedJCB19 wrote: Fri Jan 17, 2020 12:40 pm First to the OP, you may have been behind, but with what you have in there now, you are far ahead of many people your age. I know quite a few 60 year olds who have less than $200K.

Jack Bogle has often said for most investors a simple balanced index fund will do the trick. You don't have to rebalance and it is essentially like having a fiduciary look after your entire portfolio.

Full disclosure: That is what I have done and still do. I'm 55 with around 900K in the Vanguard Balanced Index Fund (60/40).
thanks for responding to my post, do you hold that in a Taxable account also? If I Decide on 60/40 I probably will take your advice simple is better
BalancedJCB19
Posts: 249
Joined: Sat Jul 13, 2019 11:30 am

Re: 95% equities at 60 need help transitioning to retirement

Post by BalancedJCB19 »

No. Tax deferred. I hold an emergency fund in a simple savings account and invest via my 401k. I also paid off my mortgage.
Balanced funds are not ideal in taxable accounts
METT-TC
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Joined: Tue Nov 22, 2016 11:37 pm

Re: 95% equities at 60 need help transitioning to retirement

Post by METT-TC »

Diversification seems to be covered. One thing I'm seeing is that with 1 million in assets, reaching 1,250k in five years is extremely doable with relatively moderate rates (and compounding). I did a simple calculation of .07% per year just based off principle and this is what I came up with. Any additional you add to the principle will make it reach the goal that much faster. And since you will most likely reach it, risk mitigation/wealth preservation is a good thing.

Year 0: $1,000,000 / annual rate of return: 7%
1: 1,070,000
2: 1,144,900‬
3: 1,225,043
4. 1,310,796
Topic Author
Designairohio
Posts: 94
Joined: Thu Aug 15, 2019 3:57 pm

Re: 95% equities at 60 need help transitioning to retirement

Post by Designairohio »

thanks to everyone who responded to help me,
I wanted to let you know that I bought Bonds so I am now at 80/20 I have one VTSAX in my taxable account that will turn to LTGC in July so I will convert something more then to get to at least 70/30 and am probably going to go to 60/40
Thanks Again
Ken
Topic Author
Designairohio
Posts: 94
Joined: Thu Aug 15, 2019 3:57 pm

Re: 95% equities at 60 need help transitioning to retirement

Post by Designairohio »

OP here,
I wanted to update and say Thank You to everyone who encouraged me, and provided guidance when I posted this last January(2020) at that time I was 95/5 five years from retirement with 970K and a goal of 1.25m.
I immediately transitioned to 80/20 and the timing couldn’t have been better with the market dip in March.
Having a couple hundred thousand in bonds really helped me sit back and be able to take it all in.

16 months later I’m at 75/25 with $1,270,000.
All new contributions will go to Vbtlx along with rebalancing into Bonds as I transition to 60/40 over the next year or so.

Thanks Again for all your wisdom and encouragement, I really cannot express how grateful I am

Ken
lostdog
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Joined: Thu Feb 04, 2016 2:15 pm

Re: 95% equities at 60 need help transitioning to retirement

Post by lostdog »

Designairohio wrote: Tue Apr 06, 2021 11:00 pm OP here,
I wanted to update and say Thank You to everyone who encouraged me, and provided guidance when I posted this last January(2020) at that time I was 95/5 five years from retirement with 970K and a goal of 1.25m.
I immediately transitioned to 80/20 and the timing couldn’t have been better with the market dip in March.
Having a couple hundred thousand in bonds really helped me sit back and be able to take it all in.

16 months later I’m at 75/25 with $1,270,000.
All new contributions will go to Vbtlx along with rebalancing into Bonds as I transition to 60/40 over the next year or so.

Thanks Again for all your wisdom and encouragement, I really cannot express how grateful I am

Ken
Congratulations! You hit the number quick. Happy retirement. :sharebeer
60% VTI+VXUS | 40% BNDW | 21x Expenses
Candor
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Joined: Sat May 28, 2011 4:25 pm

Re: 95% equities at 60 need help transitioning to retirement (UPDATE!)

Post by Candor »

Congrats. The results speak for themselves. Well done!
Time is your friend, impulse is your enemy. - John C. Bogle
RCL
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Joined: Sat Jul 05, 2014 2:48 am

Re: 95% equities at 60 need help transitioning to retirement (UPDATE!)

Post by RCL »

Another satisfied customer :sharebeer
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