New (semi) retiree needs help in these dire times

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Topic Author
linter
Posts: 8
Joined: Fri Mar 06, 2020 8:22 pm

New (semi) retiree needs help in these dire times

Post by linter » Mon May 11, 2020 11:41 am

At age 65, two months until 66, started taking SS at the start of the year (2.5k mo), I'm trying to figure out how to adjust my wee portfolio for what comes next. I figure I need about $3k mo from my investments. If I make more, I'll put it back in for my deserving daughter's benefit, should that be possible.

I'm all set w/ emergency funds.
No debt at all. Pay off my credit cards every month.
Tax status: single.
Tax rate: I'm not sure. This year, I'll probably make 30k from work + SS = 60K. But next year, I"ll probably only get the 30k from SS.
I live in California.
I'm very risk adverse and make terrible decisions whenever I see draw downs over 10%.
Portfolio size: just north of 1.5 mil.

Current retirement portfolio:

IRA (regular, not Roth, I don't have a Roth):

27% PRWCX TR Price Cap Appreciation balanced fund
4% FUAMX, Fidelity Intermediate Treasury
2% RLSFX (fun money) River Park Long Short
25% Money Market

Taxable Account:

2% COTZX (fun money) Columbia Thermostat Fund
4% VTMFX Vanguard Tax Managed Balanced
36% Money Market

As you can tell, I'm not a fan of index funds. It's a constitutional bias over which I have no control, except when dealing with the occasional bond fund. I do get itches that sometimes demand scratching, hence my 5% fun-money allotment.

As I said, I'm 65 ... but I'm not exactly a healthy 65. I have a progressive disease that, while not fatal unto itself, may at some point make life unbearable and, thus, untenable. Most likely in the next 5 or 6 years but, of course, it could be never and I just fade the way all people fade.

Meanwhile, $3k a month would be great but more would mean more for my daughter (and a few friends) and more fun for me, possibly.

BTW / I was raised by Howard-Ruff-type apocalyptics and still retain that bias, so, obviously, I always fear the worst for the future ... but this time might be different and I might be right!

Thoughts, anyone? And ... thanks!

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rterickson
Posts: 309
Joined: Fri May 01, 2015 3:48 pm

Re: New (semi) retiree needs help in these dire times

Post by rterickson » Mon May 11, 2020 1:11 pm

$3000 per month represents only 2.4 percent of your portfolio, even if it never gains a dime, so you should be able to do this without worry. 4% per year is the general rule for your age -- I'm in my late 50's and consider 3% to be conservative for my circumstances.

Enjoy your retirement!

btenny
Posts: 5382
Joined: Sun Oct 07, 2007 6:47 pm

Re: New (semi) retiree needs help in these dire times

Post by btenny » Mon May 11, 2020 5:28 pm

I think you are in great shape. You can spend $4K per month (or more) from your portfolio and be very safe. Spending $48K per year is only 3% of your portfolio. So it will last for decades.

Your asset allocation is about 31% in balanced funds and 69% in cash and treasuries. That is about 20/80 stocks/bonds. So very low risk. If you want it to keep up with inflation and still provide you (or your daughter if you pass) a good income for decades you might increase you AA to at least 35% stocks and 65% bonds. So I suggest buying more Vanguard Balanced fund with some of your cash. Maybe move into the market slowly by buying VBIAX in 1% chunks each month for the next year. Then see if you are still comfortable with your AA and decide then if you should buy more and what your next move should be.

Are you at risk of having to move to a long term care facility and live there for many years as you get older? What is your plan? Do you have any long term care insurance? Or will you pay for the care out of your investments? Do you live close to your daughter? Will she be your guardian and caretaker and live with you if you need help in your old age? Please advise.

Again you are in great shape. You have won the game. Relax and enjoy your retirement. Good Luck.

Topic Author
linter
Posts: 8
Joined: Fri Mar 06, 2020 8:22 pm

Re: New (semi) retiree needs help in these dire times

Post by linter » Mon May 11, 2020 6:40 pm

thanks, ya'll, for weighing in.

nope, no provisions for long term health care or anything like that. i hope when it comes time to needing it that i'll still have the wherewithal and good sense to make sure i don't need it, one way or the other. (i believe in self delivery.)

my main concern, and perhaps i should have made this clear above, is that my girlfriend either exits before me or gets tired of my pessimism and gives me the boot. i live in san diego. kick me out the door and my monthly housing cost goes from 1,150/mo to ... 5,000/mo min, assuming i can get a roommate. but dour as i am, i try not to think about that.

btenny, right now, other than PRWCX and a few small things, i'm mostly in cash. your thinking is that i'd be better of raising the stock percentage somewhat via a balanced fund, thereby raising my bond %, too, to the point where the cash is minimal? I do like the idea of DCAing my way in, esp given what i fear the market might do. i might do it with VWINX, however, since that's a little more conservative.

wish i wasn't such chicken in the markets. i'd sure have a lot more money now than i do. and a lot more to leave to my daughter, too, which i think about all the time.

lakpr
Posts: 5389
Joined: Fri Mar 18, 2011 9:59 am

Re: New (semi) retiree needs help in these dire times

Post by lakpr » Mon May 11, 2020 7:07 pm

linter wrote:
Mon May 11, 2020 6:40 pm
wish i wasn't such chicken in the markets. i'd sure have a lot more money now than i do. and a lot more to leave to my daughter, too, which i think about all the time.
If leaving some money to your daughter is in your plans, I suggest that you start converting some amount of it, say up to the top of the 12% bracket every year, to Roth IRA. Then invest the Roth IRA into 100% equities; you are mentally earmarking this to be your daughter's inheritance, and by extension it has at least 10 to 15 years and possibly longer to grow, so a 100% equities is a right allocation.

btenny
Posts: 5382
Joined: Sun Oct 07, 2007 6:47 pm

Re: New (semi) retiree needs help in these dire times

Post by btenny » Mon May 11, 2020 9:52 pm

I know about PRWCX, I own some. It contains about 65% stocks and some options and some corporate bonds to round out the 100%. It is not a true balanced fund but has done well over time versus the fund risk profile. So I project you own 65% of 27% to get to 17.55% in actual stocks. Then I added 4% times 60% = 2.4% in Tax Balanced in stocks there. The sum of these two funds gives you 20% in stocks.

NO I do not think you should buy more balanced funds like VWINX to get more stocks as you also add more corporate bonds and more active manager risk and more complexity. I previously misspoke. I think you simply need more stocks. So buying Total Stock Market stock fund (VTI) or SP500 stock fund (VOO) to balance out your heavy cash allocation is your best move. So I suggest you DCA and buy 1% of VOO or VTI funds each month for the next year. This will raise your stock allocation from 20% to 32% and still leave you with 24% cash in your Taxable account. Then at a later date you might change some of your IRA cash to more Intermediate Treasuries if the yields get better. The 32/68 allocation is still low risk and will work better to keep up with inflation.

Good Luck.

Topic Author
linter
Posts: 8
Joined: Fri Mar 06, 2020 8:22 pm

Re: New (semi) retiree needs help in these dire times

Post by linter » Tue May 12, 2020 10:23 am

thank you, btenny, that absolutely makes sense. with etfs, i wish there was a way to do automatic investments on a monthly basis the way you can do w/ OEFs. love to have the buy button hit by proxy at times when i might be too nervous nellyish, either at new lows or highs or anywhere along the continuum. that's how i built my position in PRWCX. maybe i'll use a OEF equivalent to the etfs you mentioned. thanks again for your suggestions!

longinvest
Posts: 4289
Joined: Sat Aug 11, 2012 8:44 am

Re: New (semi) retiree needs help in these dire times

Post by longinvest » Wed May 20, 2020 7:28 am

I'm copying here a personal portfolio question that forum member Linter asked in the One-Fund Portfolio thread:
linter wrote:
Tue May 19, 2020 9:22 pm
Hi, Longinvest:

Is there any reason, other than a constitutional bias in favor of index funds, that VWINX wouldn't work in the VPW world? I'm 65 and struggling to find a way to structure my assets for retirement. I myself have a (perhaps misguided) bias against index funds, hence my question about VWINX.

I'm 65 and very risk adverse. VSMGX is too aggressive for my weak knees. And most of the other less dicey funds, like VTINX, AOK, VSCGX and VASIX, just seem to always get outperformed and outclassed by VWINX.

Thoughts?
Linter,

I will let other members help you select the best portfolio for you based on your own personal circumstances and beliefs.

To answer your question, the variable percentage withdrawal (VPW) method works with a large variety of portfolios. In particular, it can be used with the Vanguard Wellesley Income Fund Investor Shares (VWINX). As this fund is allocated about one third in stocks and two thirds in bonds (33/67 stocks/bonds), I would suggest selecting the closest allocation in the VPW Accumulation And Retirement Worksheet or VPW Table which is 30/70 stocks/bonds.
Bogleheads investment philosophy | One-ETF global balanced index portfolio | VPW

Topic Author
linter
Posts: 8
Joined: Fri Mar 06, 2020 8:22 pm

Re: New (semi) retiree needs help in these dire times

Post by linter » Wed May 20, 2020 7:47 am

thank you for this. as you can tell, i'm still trying to sort things out ....

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