Portfolio Help

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Topic Author
Mytoocents
Posts: 10
Joined: Thu Nov 25, 2021 9:59 am

Portfolio Help

Post by Mytoocents »

Hello Bogleheads:

Been following this forum for several months now and want to express my gratitude for the advice that so many of you provide to do many of us lurking in the background. I’ve learned a lot and am now looking for some advice on my portfolio as I think about retiring.

Some background: currently work for a mega corp but would like to retire to travel, volunteer, etc - generally want to leave the rat race behind. I’m a conservative investor and have worked hard to save. But, still learning and would appreciate your advice and counsel on the size, structure and sufficiency of my portfolio given my early retirement goal.

Here’s where I’m at:

Emergency Funds: yes, cash held accumulated in high yield savings account.

Debt: Zero

Tax Filing Status: 37% Federal, 9.85% State; married filing joint

State of Residence: MN

Age: 56

Children: three adult, one in college. Amount fully funded in college savings account.

Married: spouse, homemaker not working. Age 52

Desired Asset Allocation: 60% stocks / 40% bonds
Desired International Allocation: 25% of stocks

Current Portfolio Size: mid-seven figures

Current Portfolio Composition:

Rollover IRA:
Vanguard Total International ETF 9VXUS) – 4.1%
Vanguard Total Stock Index Fund ETF( VTI) –5.5%
Vanguard Primecap Admiral Mutual Fund (VPMAX) – 3.1%
Vanguard Short Term Bond ETF (BSV) - 6.2%
Schwab Strategic Tips ETF (SCHP) - 2.6%

Solo 401K:
Vanguard Total Stock Index Fund (VTI) – 0.7%

Taxable Brokerage Account:
Vanguard Total International (VXUS) – 3.7%
Vanguard Total Stock Index Fund (VTI) – 9.9%
Vanguard Index Fund (VTV) – 3.4%
Vanguard Limited Term Tax Exempt (VMLUX) – 3.0%
Vanguard Tax Managed International Fund (VEA) – 0.8%
Vanguard Total Bond Market (BND) - 4.1%
Fidelity Balanced Fund (FBALX) – 1.7%
Fidelity Government Money Market (SPAXX) – 11.3%
Schwab Strategic Tips ETF (SCHP) - 2.5%
Individual Stocks – 2.4%

Spouse IRA:
Fidelity Balanced Fund (FBALX) – 1.3%

457b – (fully vested, former employer; deferred distribution 12/2025):
Fidelity Balanced K Fund (FBAKK) – 3.7%

401k:
Vanguard Total International Index Stock Index (VTIAX) – 0.1%
Vanguard Balanced Index Fund (VBIAX) – 0.6%

457b:
Federated Hermes Capital Preservation Stable Value - 1.3%

Taxable CD’s:
0.75%, 10/17/2022 – 4.1%
0.65%, 1/17/2022 – 5.6%
1.04%, 6/19/2022 - 0.9%
0.6%, 12/31/2022 - 1.3%

TaxabIe I-Bonds:
4/2021 purchase – 0.4%

Taxable Fixed Deferred Annuity:
3 year MYGA - 2.1%
4 year MYGA - 2.1%
5 year MYGA - 2.1%

Private Party Real Estate Note:
2.5% Interest Rate, 30 year – 4.4%

Cash/Savings/Other:
Ally Bank MM, 0.5% - 4.1%
Other - 0.9%

Key Points:
- Planning to retire in 2022 (age 57).
- Looking to draw $150K per year once retired, to meet annual living expenses. Draw rate ~ 2.5%. This accounts for cost to purchase of health insurance to bridge to Medicare.
- No pension.
- Will defer social security for her to age 66 and me age 70 based on maximization tool that someone had suggested on the board.

Questions and Purpose:

I assume I am in good shape to retire but would like to confirm, as well as seek advice around the overall structure of my portfolio. For example, is there anything I can/should do to be more tax efficient?

As you can see, I have a fair amount sitting in cash. Thoughts on investing this given my proximity to retirement? Guess I’m worried about sequencing risk given the state of the market.

Is there any value to meeting with a financial planner?
User avatar
Alto Astral
Posts: 970
Joined: Thu Oct 08, 2009 10:47 am

Re: Portfolio Help

Post by Alto Astral »

Assuming a portfolio size of $4-6m, you are in a good shape to retire now. I would. At 5% of your AA, $200-$250k cash in Ally is fine given your annual expense is $150k. As the CDs expire, I would put them towards your asset allocation. There is room to simplify your taxable and Rollover IRA into fewer funds.
Dandy
Posts: 6701
Joined: Sun Apr 25, 2010 7:42 pm

Re: Portfolio Help

Post by Dandy »

I think you are in very good financial shape i.e. you have won the game. I reached that understanding in my late 60's and wondered what my allocation should be. I followed Wm Bernstein's idea of having 20 -25 years worth of draw down dollars in "safe" fixed income. For me that was enough "safe" to age 90. This has resulted in peace of mind.

My allocation is 25% FDIC products, money markets or short term bond funds, 25% intermediate bond funds and 50% equities. My withdrawals are from a mix of fixed income and equities unless equities have a big decline. So the "safe" fixed income is more like insurance rather than an ATM.

My view when you have "won" is to preserve the win not to try to run up the score. I am almost 74 and am very satisfied with my decision. What I did underestimate was the growth and impact of my TIRA and the subsequent large RMDs. While I did some Roth conversions I probably should have done more. So you might want to project the size of your assets subject to future RMDs and see what Roth conversions might make sense.
Zeno
Posts: 1042
Joined: Wed Sep 12, 2018 10:44 am

Re: Portfolio Help

Post by Zeno »

Mytoocents wrote: Thu Nov 25, 2021 10:01 am Questions and Purpose:
Last edited by Zeno on Sat Mar 19, 2022 10:18 pm, edited 2 times in total.
stan1
Posts: 14235
Joined: Mon Oct 08, 2007 4:35 pm

Re: Portfolio Help

Post by stan1 »

Congratulations, you have won the game and your prize is being able to do whatever you choose to do with that $150K/year.
Topic Author
Mytoocents
Posts: 10
Joined: Thu Nov 25, 2021 9:59 am

Re: Portfolio Help

Post by Mytoocents »

Thank you all for your replies - very helpful.

Zeno: yes I agree I need to put more of my cash to work to generate a higher average weighted return from the overall portfolio. The cash value amount has accumulated as CD’s have matured in the past few months. To achieve my desired allocation ratio, however, I am needing to put more into equities. I do count my CD’s as part of my fixed income allocation so I think I’m in good shape there currently. It’s just hard to do so now, given the elevated nature of stock valuations. Still, my plan is to stay focused on the long term nature of my horizon before I need to access this part of the portfolio and hope time is my friend, regardless of what may happen in the short term.

Will continue to look for ways to be more tax efficient so any further advice here would be appreciated. I am trying to streamline the number of funds, especially in taxable, but that means realizing capital gains, which I will wait to do until I retire and am in a lower tax bracket.

Stay safe out there all.
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