Pension Lump sum rollover investment

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Richard6593969
Posts: 3
Joined: Sat Jan 13, 2018 5:25 pm

Pension Lump sum rollover investment

Post by Richard6593969 »

Hello,
I am 70 years old and received a lump sum ($148,700 which I plan to rollover to an IRA (traditional IRA) probably at Vanguard where I have other investment accounts. I'm primarily doing this because I am concerned about inflation and want the money to grow more than inflation. I will have to start taking required minimum distributions from the IRA when I'm 72, My other investments are allocated 65 % stocks and 35% bonds but 60/40 would be fine too. I am thinking of rolling the money over to a balanced fund or life strategy fund, maybe VBIAX (Vanguard Balanced Index Fund Admiral Shares) or VSMGX (Vanguard LifeStrategy Moderate Growth Fund Investor Shares). I have other sources of income which are the bedrock of my retirement income, so probably won't withdraw more from this rollover beyond the required minimum distribution. I am interested in your thoughts on my ideas above, whether these investments selections make sense to you or maybe you have a better idea about an appropriate investment option. Thank you for your thoughts.
Last edited by Richard6593969 on Wed Nov 24, 2021 10:25 am, edited 2 times in total.
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Watty
Posts: 23849
Joined: Wed Oct 10, 2007 3:55 pm

Re: Pension Lump sum rollover investment

Post by Watty »

Richard6593969 wrote: Wed Nov 24, 2021 9:27 am My other investments are allocated 65 % stocks and 35% bonds but 60/40 would be fine too. I am thinking of rolling the money over to a balanced fund or life strategy fund, maybe VBIAX or VSMGX.
You might get better responses if you edit your post to add the fund names instead of just the ticker symbols since most people, including myself, do not know what those are. You can use the icon with the pencil in it to edit your post.

The general approach sounds reasonable but the details of what to do really depend on the rest of your investments since you should look at your asset allocation with all your accounts combined. You can then put the different investments in the most tax efficient accounts. For example bonds are not very tax efficient so you normally want to try to hold them in retirement accounts instead of taxable accounts.

https://www.bogleheads.org/wiki/Tax-eff ... _placement

https://www.bogleheads.org/wiki/Three-fund_portfolio

Here is the suggested format for asking portfolio questions but you do not need to follow it exactly.

viewtopic.php?f=1&t=6212
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WoodSpinner
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Re: Pension Lump sum rollover investment

Post by WoodSpinner »

OP,

Why would you treat this pot of money any different than your current portfolio?

WoodSpinner
RetiredAL
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Joined: Tue Jun 06, 2017 12:09 am
Location: SF Bay Area

Re: Pension Lump sum rollover investment

Post by RetiredAL »

Richard6593969 wrote: Wed Nov 24, 2021 9:27 am Hello,
I am 70 years old and received a lump sum ($148,700 which I plan to rollover to an IRA (traditional IRA) probably at Vanguard where I have other investment accounts. I'm primarily doing this because I am concerned about inflation and want the money to grow more than inflation. I will have to start taking required minimum distributions from the IRA when I'm 72, My other investments are allocated 65 % stocks and 35% bonds but 60/40 would be fine too. I am thinking of rolling the money over to a balanced fund or life strategy fund, maybe VBIAX (Vanguard Balanced Index Fund Admiral Shares) or VSMGX (Vanguard LifeStrategy Moderate Growth Fund Investor Shares). I have other sources of income which are the bedrock of my retirement income, so probably won't withdraw more from this rollover beyond the required minimum distribution. I am interested in your thoughts on my ideas above, whether these investments selections make sense to you or maybe you have a better idea about an appropriate investment option. Thank you for your thoughts.
When I took my Pension Lump Sum, I rolled it over into it's own IRA for tracking purposes. I withdraw from the pension based IRA monthly the amount the pension annuity would have been, which is about 90% of all the withdrawals. I chose to use a different AA allocations between my pension based IRA (55/45), 401K based IRA (65/35), and our Roth's (70/30), as current $ needs, future $ needs, and unlikely to touch $ needs, respectively.

When I created the pension base IRA, Fidelity did not have good low ER balanced funds, so I did separate low cost funds.
superbobbyg
Posts: 77
Joined: Sat Sep 28, 2019 1:20 pm

Re: Pension Lump sum rollover investment

Post by superbobbyg »

Sounds like you want to have a no maintenance investment; so I agree with your thinking on a balanced/life strategy type fund.
Based on my readings from Mr. Ferri and Mr. Merriman and others that I trust, I think you can go as low as 40/60 or 50/50 and keep up with inflation.

I am 65/35-full disclosure. Also took lump sum since no inflation factor in pension annuity.

Probably suggest 60/40 in your situation since you mention you have other sources of income and probably want to be a bit less risk.

Keep it simple.

My 2c.

Bob
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