Portfolio Review - 62 yo nearing retirement

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Topic Author
NatureBoy
Posts: 12
Joined: Sun Jul 07, 2024 10:07 am

Portfolio Review - 62 yo nearing retirement

Post by NatureBoy »

Hi, new poster, long time passive (and sadly uninterested) investor, seeking a general portfolio review, with an eye on retirement in 1-3 years.
Despite my age, I’ve only recently taken control of my finances, previously managed by a spouse. I've spent the last few months getting up to speed on common-sense investing (reading the Wiki, past posts, recommended books, blogs, and listening to podcasts, probably just scratching the surface). I think there's sufficient organization to my portfolio for review, and have formatted it based on the wiki template. Specific questions follow, though am open to any feedback (not without some apprehension!).

Emergency funds: 8 months of expenses, 2/3 in Vanguard MM

Debt: None
-Own single-family home
-Pay CC monthly

Tax Filing Status: Single

Tax Rate: 24% Federal, 5% State

State of Residence:WI

Age:62

Desired Asset allocation: 70% stocks / 30% bonds
Desired International allocation: 15% of stocks

Approximate total portfolio size 1.8M
- (Not including em. fund or house)

Current retirement assets

Taxable
0% (emergency funds only)

Current employer 401k at Fidelity
9% Fidelity Total Market Index Fund (FSKAX) (0.015%)
- 76% Roth

Current employer funded retirement plan (SEP IRA) at Fidelity
2% Fidelity Total Market Index Fund (FSKAX) (0.015%)

Current HSA at Fidelity
1% Half invested in Fidelity Total Market Index Fund (FSKAX) (0.015%)

Previous employer 401k at Fidelity
24% Vanguard Institutional 500 Index Fund (no ticker) (0.015%)

Roth IRA at Fidelity
5% Fidelity Total International Fund (FTIHX) (0.06%)
5% Fidelity ZERO Total Market Index Fund (FXROX) (0.00%)
4% Fidelity US Bond Index Fund (FXNAX) (0.025%)

Rollover IRA 1 at Fidelity
7% Fidelity ZERO Total Market Index Fund (FXROX) (0.00%)
12% Fidelity US Bond Index Fund (FXNAX) (0.025%)
2% Fidelity Inflation-Protected Bond Index Fund (FIPDX) (0.05%)

Rollover IRA 2 at Fidelity
9% Fidelity Total Market Index Fund (FSKAX) (0.015%)
5% Fidelity Total International Fund (FTIHX) (0.06%)
3% Fidelity Inflation-Protected Bond Index Fund (FIPDX) (0.05%)
6% Treasuries (maturing between retirement and SS, half TIPS)

Inherited IRA at Vanguard
5% Vanguard FTSE Social Index Fund (VFTAX) (0.14%)

Pension from old company
1% of portfolio cash value

SS Monthly starting at 70
4.3k, sufficient to cover non-discretionary expenses

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

Contributions

New annual Contributions
$26k 401k, + $5k Employer match (4%)
$5k Employer SEP IRA
$8k My Roth IRA

Available funds
34 choices, all higher ER than my current election, not listing for now to reduce clutter, happy to provide if it’s helpful

Questions:

1. I've made an effort to simplify starting last year by consolidating most investments to Fidelity, and moving to low-expense index funds (it was far more complicated a year ago, with multiple brokerage firms, more funds, higher expense ratios, and some individual stock). I’d like recommendations on how to further simplify, if appropriate, while maintaining my AA.
2. I plan to retire in 2025 (at the latest in 2026 when I reach 65). My actual expenses in 2023 were 60k, my retirement budget is 85k (1/3 discretionary), and includes an estimate of health care costs. Fidelity retirement planner, VPW, cFireSim, FireCalc, SWR Toolbox, and “Rich, Broke, or, Dead” all suggest I can retire next year (or even this year) and withdraw well above 4% from now until 70, when I plan to collect SS and withdrawal rate would drop closer to 3% (using the most pessimistic models in each tool). For example, FireCalc suggests I could have a WR up to 100k with 100% success ratio. What am I missing (i.e. what homework do I still need to do)?
3. What investment question am I not asking that I should, as I approach retirement?

Retirement goals
A few have asked what my plans are for retirement, so here goes:
- Top of the list is more travel, without the vacation limits I've had for so long. 20 US states I've spent no significant time in, and very excited about more international travel (Visited Panama 2 years ago and it was great!).
- Increase my volunteer time, I already do a bit, but there's so little time left when working full time.
- Spend more time on hobbies
- Develop an exercise plan, so I can continue to do the things I enjoy!
- Spend more time with friends, and make time to meet new friends.
- There are so many books to read and so little time! (My goal is a book per week, but a typical year now is about half that).
- No plans to move out of WI, though may downsize at some point.
- No specific legacy/heir financial goals, but my 2 grown children are beneficiaries of whatever's left.
- Recognize that retirement may be nothing like I expect, and embrace new paths.

I appreciate your help,
NB
Last edited by NatureBoy on Thu Jul 11, 2024 8:17 am, edited 4 times in total.
jimkinny
Posts: 1925
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Re: Portfolio Review - 62 yo nearing retirement

Post by jimkinny »

It looks to me like you did a really nice job of your simplification. I would stick with the funds you have. I might try to have fewer of the funds in each account but that is just me.

Wages, SS and stocks tend to keep up with inflation. Nominal bonds don't, if the inflation is unexpected, like recently. Consider TIPS funds. They are the same as a Treasury fund with all of the associated risks of nominal bonds but they do not have inflation risk.

On your 70/30 stock/bond allocation just something to think about: if you have won, why keep playing? Take the risk you need to take, are willing to take and and have the ability to take. I am not saying your 70/30 split is wrong, just something to consider.
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CyclingDuo
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Re: Portfolio Review - 62 yo nearing retirement

Post by CyclingDuo »

NatureBoy wrote: Tue Jul 09, 2024 8:49 pm Questions:

1. I've made an effort to simplify starting last year by consolidating most investments to Fidelity, and moving to low-expense index funds (it was far more complicated a year ago, with multiple brokerage firms, more funds, higher expense ratios, and some individual stock). I’d like recommendations on how to further simplify, if appropriate, while maintaining my AA.
2. I plan to retire in 2025 (at the latest in 2026 when I reach 65). My actual expenses in 2023 were 60k, my retirement budget is 85k (1/3 discretionary), and includes an estimate of health care costs. Fidelity retirement planner, VPW, cFireSim, FireCalc, SWR Toolbox, and “Rich, Broke, or, Dead” all suggest I can retire next year (or even this year) and withdraw well above 4% from now until 70, when I plan to collect SS and withdrawal rate would drop closer to 3% (using the most pessimistic models in each tool). For example, FireCalc suggests I could have a WR up to 100k with 100% success ratio. What am I missing (i.e. what homework do I still need to do)?
3. What investment question am I not asking that I should, as I approach retirement?
Welcome to the forums with your first post!

You have learned well from the Wiki, posts, books, blog, podcasts, etc. - so kudos. I'm the same age as you, so can see the finish line when it comes to retirement as well in the coming years. I don't see that you have missed much at all in the steps you have taken with your preparation.

I would ask you three things as they are the only three that stood out to me reading your post. One - is there a reason why you have placed bonds in your Roth IRA space? Two - what are your thoughts on the social index fund in the inherited IRA? Three - an additional question about your inherited IRA would be - is it of the old ilk being a "stretch IRA", or is it one of the newer inheritances that is required to be distributed within a 10 year time frame?

Beyond the target age of retiring and when you were planning on taking your SS, you didn't give us any plans of what you are going to be doing once age 65 hits regarding travel, hobbies, goals, routine, legacy/heirs or not, etc. to see if your $85K expense budget is realistic or not. Beyond that, you didn't mention any plans regarding possible conversions of any of your tax deferred accounts to Roth space in the coming years. I do see you are using Roth space in your current employer's 401k which there has been plenty of discussion on these forums about the pros and cons of that. I am using some of that space as well in my latter working years with my current employer's 401k along with maxing out the Roth IRA.

Others can chime in with their thoughts, but on first glance things look well organized for your current portfolio.

CyclingDuo
"Save like a pessimist, invest like an optimist." - Morgan Housel | "Pick a bushel, save a peck!" - Grandpa
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retiredjg
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Re: Portfolio Review - 62 yo nearing retirement

Post by retiredjg »

Welcome to the forum. :happy

Your portfolio looks fine to me as well. I think 30% is bonds is a bit low if you want to retire in 2025. I suggest that you start adding more bonds now.
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windaar
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Re: Portfolio Review - 62 yo nearing retirement

Post by windaar »

jimkinny wrote: Wed Jul 10, 2024 7:56 amOn your 70/30 stock/bond allocation just something to think about: if you have won, why keep playing? Take the risk you need to take, are willing to take and and have the ability to take. I am not saying your 70/30 split is wrong, just something to consider.
This AA for a person in their 60s with retirement looming, stood out to me as well. Just because "everyone's doing" equities-heavy AAs these days, due to recency, doesn't make it best. I'd suggest that 60/40 would keep you in the game with a bit more of a downside cushion as you wait on SS at 70, and beyond.
Nobody knows nothing.
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retired@50
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Location: Living in the U.S.A.

Re: Portfolio Review - 62 yo nearing retirement

Post by retired@50 »

NatureBoy wrote: Tue Jul 09, 2024 8:49 pm Hi, new poster, long time passive (and sadly uninterested) investor, seeking a general portfolio review, with an eye on retirement in 1-3 years.

Current employer 401k at Fidelity

Current employer funded retirement plan (SEP IRA) at Fidelity

Previous employer 401k at Fidelity

Rollover IRA 1 at Fidelity

Rollover IRA 2 at Fidelity


... I’d like recommendations on how to further simplify, if appropriate, while maintaining my AA.
Welcome to the forum.

I'm seeing 5 accounts (shown above) that you could eventually combine into one account, unless there's some reason to keep them separate that I didn't notice.

If you want to get started now, you could combine the bottom 3 shown in the list, then add your "current employer" accounts once you actually retire.

Regards,
"All of us would be better investors if we just made fewer decisions." - Daniel Kahneman
Parkinglotracer
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Location: Upstate NY

Re: Portfolio Review - 62 yo nearing retirement

Post by Parkinglotracer »

Welcome to the forum

I would combine like accounts as was mentioned and consider plans for Roth conversions as rmds don’t start until age 75. Watch your income next year at age 63 when IRMAA starts. I too might consider reducing stock asset allocation.

What are your plans for the rest of your life? Nice job planning ahead.
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Watty
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Re: Portfolio Review - 62 yo nearing retirement

Post by Watty »

NatureBoy wrote: Tue Jul 09, 2024 8:49 pm 1. I've made an effort to simplify starting last year by consolidating most investments to Fidelity, and moving to low-expense index funds (it was far more complicated a year ago, with multiple brokerage firms, more funds, higher expense ratios, and some individual stock). I’d like recommendations on how to further simplify, if appropriate, while maintaining my AA.
After I retired almost all my funds were in retirement accounts so I moved them to low cost target date funds to make my investments easier to manage when I got older and might not be as financially capable. People sometimes look down on target date funds as some sort of dumbed down "Investing for Dummies" choice that needs to be improved on but in the right situation they can be a great choice for retirement money. The main reason not to use them are;
1) You do not have a low cost target date fund in your 401k, which is way too common a problem.
2) You have significant retirement money in taxable accounts where tax efficiency becomes an issue.

Those do not seem to be a problem for you.

Fidelity calls their target date funds Freedom funds but they have two versions. Freedom Funds which use more expensive actively managed mutual fund. Freedom Index Funds which are lower cost and use index fund. You of course would want to use the index fund version.
NatureBoy wrote: Tue Jul 09, 2024 8:49 pm What am I missing (i.e. what homework do I still need to do)?
A couple of things;

1) You need to look at the tax impact of when you retire. Retiring mid year will likely allow you to max out all your retirement accounts and also be in a low tax bracket for that year.

2) Figure out what you will do for health care before you can get on Medicare. Qualifying for an affordable care act healthcare subsidy will be harder for a single person because of the income limits so COBRA may make sense. You can use COBRA for 18 months in most states and up to 36 months in a couple of states. One advantage of using COBRA is that if you retire midyear you do not need to start your deductible again like you would if you switched to an ACA plan. You will likely also need to switch doctors when if you start an ACA plan. Pay a lot of attention to the networks of doctors in ACA plans. I had a Blue Cross Cobra plan and when I switched to the ACA there was a blue cross option. The problem ACA Blue Cross network was very limited and none of my doctors were in it.

3) It would be good to have money a car fund to be able to pay cash for your next car when you need one. If you do not want to have a separate fund just for your car then at least work it into your plans since you will have lumpy expenses like cars, roofs, HVAC systems, ect which may not be in your planned expenses. It is just my pet peeve but also consider if your current car is relatively safe. Car safety has improved a lot especially since 2012 and around 2018 a lot of the advanced safety features became a lot more common. If you are driving an older car it may make sense to replace it even if it is still running well. I am not saying to buy an expensive car with all the safety bells and whistles but even something like a midrange Toyota could be a lot safer than what you might be driving now.

4) Unless I missed it you did not say what your housing situation is like if you rent, have a mortgage, or a paid off house. You might want to add that to your post and include any details like the home equity and mortgage balance, rate, and how many years left. For a single person having home equity can work out well if you need long term care someday since when you move into LTC the house can be sold.

5) You should look to see if you can find a no cost home equity line of credit which you can set up. That can be useful to help you manage your taxable income if you have some unexpected large expense in retirement and that will be easier to set up while you are still working.
NatureBoy wrote: Tue Jul 09, 2024 8:49 pm SS Monthly starting at 70
4.3k, sufficient to cover non-discretionary expenses
Use this web site to see when it suggests that you should start Social Security.

https://opensocialsecurity.com/

If you checked it a few years ago when interest rates were ultra low then check it again since the recommendations can change with the interest rate.

One nice thing about it is that once you have it's recommendation then you can scroll to the bottom of the screen to see what impact starting SS at different dates would have. In my case it recommended waiting until I was close to 70 but starting it several years earlier at my full retirement age only resulted in a 2% reduction in my expected lifetime value. I had other issues like taxes which were not included in the model which were more important than getting that last 2% so it made sense for me to start it at my full retirement age.

Be sure to understand how SS is taxed since it is complicated and not intuitive. There is a wiki which explains this which is complicated but toward the bottom of the wiki there are color charts which have the effective tax rates calculated.

https://www.bogleheads.org/wiki/Taxatio ... y_benefits

The taxation of SS will impact your decisions about if you should do any Roth conversions or not but any Roth conversions would likely only make sense before you start SS.

You mentioned a spouse doing your finances but you are single now. If you are widowed then be sure to understand and SS survivors benefits(I don't) and you many want to start a seperate thread asking what to do about those.
Last edited by Watty on Wed Jul 10, 2024 9:36 am, edited 2 times in total.
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Watty
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Re: Portfolio Review - 62 yo nearing retirement

Post by Watty »

retiredjg wrote: Wed Jul 10, 2024 8:04 am Welcome to the forum. :happy

Your portfolio looks fine to me as well. I think 30% is bonds is a bit low if you want to retire in 2025. I suggest that you start adding more bonds now.
When trying to figure out what asset allocation to use I like looking at Target Date Funds to see what asset allocation they use to see if I am in the same ballpark. Even they will not agree though since a Fidelity target date fund will use a slightly different asset allocation than some other company like Vanguard, SChwab, etc.

For comparison the Fidelity Freedom Index 2025 fund has a bit over 46% in bonds.

https://fundresearch.fidelity.com/mutua ... /315793604

The OP will also be spending more in the first seven years or so of retirement before they start SS so that would be a good reason to be a bit more conservative with the extra money which which will be needed in the next seven years.

That said 30% in bonds at the age of 62 is not an unreasonable asset allocation it is just being somewhat agressive which could be OK as long as you know that you are being agressive and that is what you want. Once the OP starts SS that will cover most of their expenses so they are not in a high risk situation where they need to be real conservative.
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retiredjg
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Re: Portfolio Review - 62 yo nearing retirement

Post by retiredjg »

Watty wrote: Wed Jul 10, 2024 9:27 am That said 30% in bonds at the age of 62 is not an unreasonable asset allocation it is just being somewhat agressive which could be OK as long as you know that you are being agressive and that is what you want.
I don't disagree with this thinking ...but...age 62 and planning to work several years is different from age 62 and possibly retiring in less than 12 months.

With only 30% in bonds just before retirement, a significant downturn might actually postpone retirement. Staying aggressive, even while comfortable, is not worth that risk in my opinion.

The retirement budget of $85k does include health care but may not include taxes. If the real budget is $100k then the current portfolio is not even 25X expenses. A downturn could reduce that even more. Even if the real budget is $85k including taxes, that's not quite 25X expenses.

If retiring on time is important, I suggest dialing it back is not harmful and might be helpful if things go south.
Topic Author
NatureBoy
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Re: Portfolio Review - 62 yo nearing retirement

Post by NatureBoy »

jimkinny wrote: Wed Jul 10, 2024 7:56 am It looks to me like you did a really nice job of your simplification. I would stick with the funds you have. I might try to have fewer of the funds in each account but that is just me.

Wages, SS and stocks tend to keep up with inflation. Nominal bonds don't, if the inflation is unexpected, like recently. Consider TIPS funds. They are the same as a Treasury fund with all of the associated risks of nominal bonds but they do not have inflation risk.

On your 70/30 stock/bond allocation just something to think about: if you have won, why keep playing? Take the risk you need to take, are willing to take and and have the ability to take. I am not saying your 70/30 split is wrong, just something to consider.
Thank you for your thoughts jimkinny. Re: fewer funds in each account, yes that's a bit of a bother, and the fact I have 2 separate IRA rollover Accounts was due to my limited understanding of a rollover from American Century. Definitely on the list of things to consider.

Re: inflation, you make a good point, and I have started to add more TIPS to my Treasuries bucket, now that I understand them better. In fact, just today I purchased a few more. Small steps!

Re: 70/30, I will give that some thought, and appreciate your feedback. I was 80/20 just 6 months ago, and it became clear this was too much risk. I'll run some more models, though I expect they won't show much difference on the growth side. I'm not convinced I've won, and feel the need for growth, but also realize the consequence of higher risk at this point.

-NatureBoy
Last edited by NatureBoy on Wed Jul 10, 2024 8:15 pm, edited 1 time in total.
Topic Author
NatureBoy
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Re: Portfolio Review - 62 yo nearing retirement

Post by NatureBoy »

CyclingDuo wrote: Wed Jul 10, 2024 7:57 am Welcome to the forums with your first post!

You have learned well from the Wiki, posts, books, blog, podcasts, etc. - so kudos. I'm the same age as you, so can see the finish line when it comes to retirement as well in the coming years. I don't see that you have missed much at all in the steps you have taken with your preparation.

I would ask you three things as they are the only three that stood out to me reading your post. One - is there a reason why you have placed bonds in your Roth IRA space? Two - what are your thoughts on the social index fund in the inherited IRA? Three - an additional question about your inherited IRA would be - is it of the old ilk being a "stretch IRA", or is it one of the newer inheritances that is required to be distributed within a 10 year time frame?

Beyond the target age of retiring and when you were planning on taking your SS, you didn't give us any plans of what you are going to be doing once age 65 hits regarding travel, hobbies, goals, routine, legacy/heirs or not, etc. to see if your $85K expense budget is realistic or not. Beyond that, you didn't mention any plans regarding possible conversions of any of your tax deferred accounts to Roth space in the coming years. I do see you are using Roth space in your current employer's 401k which there has been plenty of discussion on these forums about the pros and cons of that. I am using some of that space as well in my latter working years with my current employer's 401k along with maxing out the Roth IRA.

Others can chime in with their thoughts, but on first glance things look well organized for your current portfolio.

CyclingDuo
Thanks for your feedback CyclingDuo, and the kudos!

Re: Bonds in my Roth IRA, my thought (right or wrong) was that having some bonds there would give me flexibility for early retirement Roth withdrawal, to minimize federal income taxes. Does this make sense? I may not have enough Roth between retirement and 70 to pull that off, and haven't run any detailed models (yet). My Roth was formerly all in "FIDELITY INT'L DISCOVERY (FIGRX) (0.62%)". I need to improve my understanding of optimizing Roth.

Re: Inherited IRA, it's from before the 10 year limit (2009), so I've been just taking RMDs and letting it grow. It's the one fund I've left alone, since it has a fairly low ER, and has done well (undersatnding that's no guarantee it'll continue). There's a little emotional connection on this one, since it was from my Mother, who liked social index funds, and it's nice to see what she left me grow, and get a little birthday gift each year.

Re: Plans, I'll add detail to the initial post. In short, increased travel, increased time on existing hobbies, increase volunteer time in my primary areas of interest, carve out specific time for exercise so I can continue to do the things I enjoy. Legacy/heirs not a high priority. Increased travel is the most significant increase to the budget, and I'd like to bump that up as much as I can, especially for the first few years of retirement. Without getting into unnecessary details, heredity is not favorable to me, but I'm plenty healthy to travel for a while yet.

Re: Roth conversions, I've not put any effort into this (yet). I don't feel like I've got a handle on how it'll help short/long term for me. More homework.

Re: Roth in my workplace 401k, it seemed to make sense when I was married (though I didn't give it much thought), but at single tax rates, I changed to pre-tax deductions to reduce my MAGI.

CyclingDuo, I appreciate you taking the time to read my post and give me some things to think about.

-NB
Last edited by NatureBoy on Sat Jul 13, 2024 1:00 pm, edited 1 time in total.
Topic Author
NatureBoy
Posts: 12
Joined: Sun Jul 07, 2024 10:07 am

Re: Portfolio Review - 62 yo nearing retirement

Post by NatureBoy »

retiredjg wrote: Wed Jul 10, 2024 8:04 am Welcome to the forum. :happy

Your portfolio looks fine to me as well. I think 30% is bonds is a bit low if you want to retire in 2025. I suggest that you start adding more bonds now.
Thanks retiredjg, I appreciate your time reviewing my portfolio. I'll give my bond allocation more thought, I was at just 20% a few months ago, so I'm moving in the right direction, but admittedly not sure how far to go. I've been reading about LMP and RLE, and have slowly building a bond ladder to SS, in an attempt to reduce risk during that period. I've learned the basics of SORR, and am concerned about a sudden downturn either postponing my retirement or reducing my discretionary budget. Will give that some serious thought!

-NB
Topic Author
NatureBoy
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Re: Portfolio Review - 62 yo nearing retirement

Post by NatureBoy »

windaar wrote: Wed Jul 10, 2024 8:07 am
jimkinny wrote: Wed Jul 10, 2024 7:56 amOn your 70/30 stock/bond allocation just something to think about: if you have won, why keep playing? Take the risk you need to take, are willing to take and and have the ability to take. I am not saying your 70/30 split is wrong, just something to consider.
This AA for a person in their 60s with retirement looming, stood out to me as well. Just because "everyone's doing" equities-heavy AAs these days, due to recency, doesn't make it best. I'd suggest that 60/40 would keep you in the game with a bit more of a downside cushion as you wait on SS at 70, and beyond.
windaar, I appreciate your thoughts. I've read quite a bit here about recency bias, and perhaps I'm guilty of it too. I was at 80/20 just a few months ago with nearly 10% of my portfolio in a single company stock! Anyhow, I really don't want to extend working longer than I have to, so probably do need to reduce risk more, especially since I don't plan to be at a terribly low WR from now to 70.

-NB
Topic Author
NatureBoy
Posts: 12
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Re: Portfolio Review - 62 yo nearing retirement

Post by NatureBoy »

retired@50 wrote: Wed Jul 10, 2024 8:14 am
NatureBoy wrote: Tue Jul 09, 2024 8:49 pm Hi, new poster, long time passive (and sadly uninterested) investor, seeking a general portfolio review, with an eye on retirement in 1-3 years.

Current employer 401k at Fidelity

Current employer funded retirement plan (SEP IRA) at Fidelity

Previous employer 401k at Fidelity

Rollover IRA 1 at Fidelity

Rollover IRA 2 at Fidelity


... I’d like recommendations on how to further simplify, if appropriate, while maintaining my AA.
Welcome to the forum.

I'm seeing 5 accounts (shown above) that you could eventually combine into one account, unless there's some reason to keep them separate that I didn't notice.

If you want to get started now, you could combine the bottom 3 shown in the list, then add your "current employer" accounts once you actually retire.

Regards,
Thanks retired@50 for the welcome, and good point about the multiple accounts. I definitely plan on rolling the two current employer accounts into existing accounts when I retire, but that would still leave 3. The 2 Rollover IRAs are my doing, #2 was the first rollover that I did "on my own", and was concerned about potential consequences I didn't fully understand (such as losing 401k ERISA protections). I think about 8% of Rollover IRA #1 is post-tax $, though I need to unearth the records for that. This has been on my list of questions to answer, but hasn't yet become a priority. Since WI has strong IRA protections against creditors, that doesn't seem like an issue, but the basis is still a question for me.

RE: "Previous employer 401k at Fidelity", since it was already in Fidelity, and in a low ER fund, it's also been low priority. I kind of like having one good-sized chunk in a low ER Vanguard fund, but it probably makes little real difference than an equivalent Fidelity fund, and would simplify rebalancing if I rolled it over to an existing account. I still like the ERISA protection, but in WI, doesn't seem like an issue, and I also carry an umbrella policy. So many decisions! :)

-NB
Harmanic
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Re: Portfolio Review - 62 yo nearing retirement

Post by Harmanic »

retiredjg wrote: Wed Jul 10, 2024 8:04 am Welcome to the forum. :happy

Your portfolio looks fine to me as well. I think 30% is bonds is a bit low if you want to retire in 2025. I suggest that you start adding more bonds now.

I have to disagree. The OP only needs enough to guarantee until social security kicks in. She could retire now with 30% bonds and be fine without touching her stocks.

Actually, she could convert her bonds to cash and just live on that until age 70. If anything, she has too much bonds.
Results Summary
Total amount you will have withdrawn $420,000
Ending balance after 7 years $246,291.33
Starting amount $560,000
Years you wish to make withdrawals 7 years
Periodic withdrawal from savings* $60,000 per year
Rate of return 4% compounded monthly
*This calculator assumes that you make your withdrawal at the beginning of each period.

Savings Balance
Year Withdrawals Interest Balance
$560,000
1 $60,000.00 $20,370.77 $520,370.77
2 $60,000.00 $18,756.22 $479,126.99
3 $60,000.00 $17,075.88 $436,202.87
4 $60,000.00 $15,327.09 $391,529.96
5 $60,000.00 $13,507.04 $345,037.00
6 $60,000.00 $11,612.85 $296,649.85
7 $60,000.00 $9,641.48 $246,291.33

Source: https://www.360financialliteracy.org/Ca ... Calculator

She could retire now and create a 7 year bond ladder from the $560,000 (30% of her total) and have money left over for discretionary.
Last edited by Harmanic on Wed Jul 10, 2024 8:19 pm, edited 2 times in total.
The question isn't at what age I want to retire, it's at what income. | - George Foreman
Topic Author
NatureBoy
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Re: Portfolio Review - 62 yo nearing retirement

Post by NatureBoy »

Parkinglotracer wrote: Wed Jul 10, 2024 8:21 am Welcome to the forum

I would combine like accounts as was mentioned and consider plans for Roth conversions as rmds don’t start until age 75. Watch your income next year at age 63 when IRMAA starts. I too might consider reducing stock asset allocation.

What are your plans for the rest of your life? Nice job planning ahead.
Thanks for the welcome Parkinglotracer! Your handle reminds me of the driving lessons I took in an RX7 so many years ago...

Anyhow, I agree about combining the accounts, I just need to answer a question about basis in Rollover #1 and ERISA protection in the Previous Employer 401K for myself. I don't think either way the answers go will have significant consequences, though.

Re: IRMAA, I haven't thought about that one bit. Another rabbit hole! Where do you suggest I start?

I'll add a bit about my retirement goals to the OP, but in short, I really want to travel more, and have a long bucket list of locations. In the US alone, there are 20 states I have yet to spend any significant time in, and so many countries to visit! I also plan to increase my volunteer time locally (already do a bit, but so little time when working full time), spend more time on my hobbies and exercise, spend more time with friends, and make new friends! No plans to move, though may downsize locally at some point. I also realize that retirement may be nothing like I expect, and will discover new paths to explore.

-NatureBoy
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NatureBoy
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Re: Portfolio Review - 62 yo nearing retirement

Post by NatureBoy »

So many responses, this is fantastic! Thanks to everyone so far - I haven't responded to Watty or Harmonic yet, there's much detail I want to absorb, and I get up for work at 4am.

-NB
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retired@50
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Re: Portfolio Review - 62 yo nearing retirement

Post by retired@50 »

NatureBoy wrote: Wed Jul 10, 2024 7:55 pm
retired@50 wrote: Wed Jul 10, 2024 8:14 am
NatureBoy wrote: Tue Jul 09, 2024 8:49 pm Hi, new poster, long time passive (and sadly uninterested) investor, seeking a general portfolio review, with an eye on retirement in 1-3 years.

Current employer 401k at Fidelity

Current employer funded retirement plan (SEP IRA) at Fidelity

Previous employer 401k at Fidelity

Rollover IRA 1 at Fidelity

Rollover IRA 2 at Fidelity


... I’d like recommendations on how to further simplify, if appropriate, while maintaining my AA.
Welcome to the forum.

I'm seeing 5 accounts (shown above) that you could eventually combine into one account, unless there's some reason to keep them separate that I didn't notice.

If you want to get started now, you could combine the bottom 3 shown in the list, then add your "current employer" accounts once you actually retire.

Regards,
Thanks retired@50 for the welcome, and good point about the multiple accounts. I definitely plan on rolling the two current employer accounts into existing accounts when I retire, but that would still leave 3. The 2 Rollover IRAs are my doing, #2 was the first rollover that I did "on my own", and was concerned about potential consequences I didn't fully understand (such as losing 401k ERISA protections). I think about 8% of Rollover IRA #1 is post-tax $, though I need to unearth the records for that. This has been on my list of questions to answer, but hasn't yet become a priority. Since WI has strong IRA protections against creditors, that doesn't seem like an issue, but the basis is still a question for me.

RE: "Previous employer 401k at Fidelity", since it was already in Fidelity, and in a low ER fund, it's also been low priority. I kind of like having one good-sized chunk in a low ER Vanguard fund, but it probably makes little real difference than an equivalent Fidelity fund, and would simplify rebalancing if I rolled it over to an existing account. I still like the ERISA protection, but in WI, doesn't seem like an issue, and I also carry an umbrella policy. So many decisions! :)

-NB
Looking down the road, you'll have an easier time in life if you have only one IRA when RMDs come around at age 75. You've got some time to get it sorted, so that's good.

Regards,
"All of us would be better investors if we just made fewer decisions." - Daniel Kahneman
Parkinglotracer
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Re: Portfolio Review - 62 yo nearing retirement

Post by Parkinglotracer »

NatureBoy wrote: Wed Jul 10, 2024 8:14 pm
Parkinglotracer wrote: Wed Jul 10, 2024 8:21 am Welcome to the forum

I would combine like accounts as was mentioned and consider plans for Roth conversions as rmds don’t start until age 75. Watch your income next year at age 63 when IRMAA starts. I too might consider reducing stock asset allocation.

What are your plans for the rest of your life? Nice job planning ahead.
Thanks for the welcome Parkinglotracer! Your handle reminds me of the driving lessons I took in an RX7 so many years ago...

Anyhow, I agree about combining the accounts, I just need to answer a question about basis in Rollover #1 and ERISA protection in the Previous Employer 401K for myself. I don't think either way the answers go will have significant consequences, though.

Re: IRMAA, I haven't thought about that one bit. Another rabbit hole! Where do you suggest I start?

I'll add a bit about my retirement goals to the OP, but in short, I really want to travel more, and have a long bucket list of locations. In the US alone, there are 20 states I have yet to spend any significant time in, and so many countries to visit! I also plan to increase my volunteer time locally (already do a bit, but so little time when working full time), spend more time on my hobbies and exercise, spend more time with friends, and make new friends! No plans to move, though may downsize locally at some point. I also realize that retirement may be nothing like I expect, and will discover new paths to explore.

-NatureBoy
Excellent! This is exciting

Here is an intro to IRMAA.

https://www.irmaacertifiedplanner.com/2 ... -brackets/

At age 63 when you file your taxes that will determine how much you pay a month for Medicare at age 65.
Topic Author
NatureBoy
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Re: Portfolio Review - 62 yo nearing retirement

Post by NatureBoy »

Watty wrote: Wed Jul 10, 2024 9:10 am
NatureBoy wrote: Tue Jul 09, 2024 8:49 pm What am I missing (i.e. what homework do I still need to do)?
A couple of things;

1) You need to look at the tax impact of when you retire. Retiring mid year will likely allow you to max out all your retirement accounts and also be in a low tax bracket for that year.
I've been wondering what time of year would be beneficial, I"ll take a look at this. Let's say 6/30 - if I max out my Roth and 401k, my take home is cut quite a bit. I'd need to use savings or IRA withdrawal for the second half of the year. Since I have no investments in taxable accounts, just my 8 month emergency cash, not sure this would work for me. Am I missing something here?
Watty wrote: Wed Jul 10, 2024 9:10 am 2) Figure out what you will do for health care before you can get on Medicare. Qualifying for an affordable care act healthcare subsidy will be harder for a single person because of the income limits so COBRA may make sense. You can use COBRA for 18 months in most states and up to 36 months in a couple of states. One advantage of using COBRA is that if you retire midyear you do not need to start your deductible again like you would if you switched to an ACA plan. You will likely also need to switch doctors when if you start an ACA plan. Pay a lot of attention to the networks of doctors in ACA plans. I had a Blue Cross Cobra plan and when I switched to the ACA there was a blue cross option. The problem ACA Blue Cross network was very limited and none of my doctors were in it.
Good points. I've thought about COBRA, if I retire in April or later next year, I could use it until Medicare comes along. It would be the easier path, though I would expect it to be more costly than ACA. I could use Roth during that period to increase ACA subsidy. I'll try to get firm COBRA numbers ahead of time so I'm prepared.
Watty wrote: Wed Jul 10, 2024 9:10 am 3) It would be good to have money a car fund to be able to pay cash for your next car when you need one. If you do not want to have a separate fund just for your car then at least work it into your plans since you will have lumpy expenses like cars, roofs, HVAC systems, ect which may not be in your planned expenses. It is just my pet peeve but also consider if your current car is relatively safe. Car safety has improved a lot especially since 2012 and around 2018 a lot of the advanced safety features became a lot more common. If you are driving an older car it may make sense to replace it even if it is still running well. I am not saying to buy an expensive car with all the safety bells and whistles but even something like a midrange Toyota could be a lot safer than what you might be driving now.
Though I don't currently have a specific car fund, I did add it as a lump expense in the Fidelity Retirement Planner, the first year of SS, so that my withdrawal rate stays roughly the same in the first year of SS. I drive a 2021 now, hoping it lasts until 2031, though I've put on a lot of miles in the last 3 years. I drive a mid-range Toyota, how'd you know? :wink:
Watty wrote: Wed Jul 10, 2024 9:10 am 4) Unless I missed it you did not say what your housing situation is like if you rent, have a mortgage, or a paid off house. You might want to add that to your post and include any details like the home equity and mortgage balance, rate, and how many years left. For a single person having home equity can work out well if you need long term care someday since when you move into LTC the house can be sold.
Sorry if it wasn't clear, under [Debt] I listed "own single-family home". No mortgage, paid off years ago. It's more house & yard than I need in the long run, but not it's not a money pit. I have included estimated house maintenance in my budget, including lumpy expenses (e.g. roof). No segregated account, though.
Watty wrote: Wed Jul 10, 2024 9:10 am 5) You should look to see if you can find a no cost home equity line of credit which you can set up. That can be useful to help you manage your taxable income if you have some unexpected large expense in retirement and that will be easier to set up while you are still working.
I haven't thought about this at all. So this would potentially be used in place of some IRA withdrawals to keep me in a lower income tax bracket? This can be setup and not used if not needed? There's still interest, though, so wouldn't that cancel out any gains by being in a lower tax bracket?
Watty wrote: Wed Jul 10, 2024 9:10 am
NatureBoy wrote: Tue Jul 09, 2024 8:49 pm SS Monthly starting at 70
4.3k, sufficient to cover non-discretionary expenses
Use this web site to see when it suggests that you should start Social Security.

https://opensocialsecurity.com/

If you checked it a few years ago when interest rates were ultra low then check it again since the recommendations can change with the interest rate.

One nice thing about it is that once you have it's recommendation then you can scroll to the bottom of the screen to see what impact starting SS at different dates would have. In my case it recommended waiting until I was close to 70 but starting it several years earlier at my full retirement age only resulted in a 2% reduction in my expected lifetime value. I had other issues like taxes which were not included in the model which were more important than getting that last 2% so it made sense for me to start it at my full retirement age.

Be sure to understand how SS is taxed since it is complicated and not intuitive. There is a wiki which explains this which is complicated but toward the bottom of the wiki there are color charts which have the effective tax rates calculated.

https://www.bogleheads.org/wiki/Taxatio ... y_benefits

The taxation of SS will impact your decisions about if you should do any Roth conversions or not but any Roth conversions would likely only make sense before you start SS.
opensocialsecurity says I should start at 65 & 3 months, which goes against much of what I've read. It is an interesting site for a quick what-if, though I don't see where it states what expected lifetime is being used. (Presumably some commonly used actuarial table for a US male?) I tend to think of taking SS at 70 being inflation protected "live too long insurance" (even if longevity doesn't run in the family). An interesting site I hadn't come across previously. I haven't put any thought into taxation of SS, so I'll read that part of the wiki. I've been somewhat laser-focused on the time before 70.
Watty wrote: Wed Jul 10, 2024 9:10 am You mentioned a spouse doing your finances but you are single now. If you are widowed then be sure to understand and SS survivors benefits(I don't) and you many want to start a seperate thread asking what to do about those.
Not widowed, but thanks for pointing it out.

I appreciate your time, Watty. In particular, time of year I retire, and COBRA vs ACA are things I need to put more thought into.

-NB
Last edited by NatureBoy on Thu Jul 11, 2024 8:27 am, edited 1 time in total.
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CyclingDuo
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Re: Portfolio Review - 62 yo nearing retirement

Post by CyclingDuo »

NatureBoy wrote: Wed Jul 10, 2024 6:45 pm
CyclingDuo wrote: Wed Jul 10, 2024 7:57 am Welcome to the forums with your first post!

You have learned well from the Wiki, posts, books, blog, podcasts, etc. - so kudos. I'm the same age as you, so can see the finish line when it comes to retirement as well in the coming years. I don't see that you have missed much at all in the steps you have taken with your preparation.

I would ask you three things as they are the only three that stood out to me reading your post. One - is there a reason why you have placed bonds in your Roth IRA space? Two - what are your thoughts on the social index fund in the inherited IRA? Three - an additional question about your inherited IRA would be - is it of the old ilk being a "stretch IRA", or is it one of the newer inheritances that is required to be distributed within a 10 year time frame?

Beyond the target age of retiring and when you were planning on taking your SS, you didn't give us any plans of what you are going to be doing once age 65 hits regarding travel, hobbies, goals, routine, legacy/heirs or not, etc. to see if your $85K expense budget is realistic or not. Beyond that, you didn't mention any plans regarding possible conversions of any of your tax deferred accounts to Roth space in the coming years. I do see you are using Roth space in your current employer's 401k which there has been plenty of discussion on these forums about the pros and cons of that. I am using some of that space as well in my latter working years with my current employer's 401k along with maxing out the Roth IRA.

Others can chime in with their thoughts, but on first glance things look well organized for your current portfolio.

CyclingDuo
Thanks for your feedback CyclingDuo, and the kudos!

Re: Bonds in my Roth IRA, my thought (right or wrong) was that having some bonds there would give me flexibility for early retirement Roth withdrawal, to minimize federal income taxes. Does this make sense? I may not have enough Roth between retirement and 70 to pull that off, and haven't run any detailed models (yet). My Roth was formerly all in "FIDELITY INT'L DISCOVERY (FIGRX) (0.62%)". I need to improve my understanding of optimizing Roth.
Most of us would do just the opposite of what you mention of using early withdrawals from the Roth space, and instead we would choose to delay them as long as possible to maximize growth in the Roth as the funds within the space have already been taxed and will not be taxed when you eventually do withdraw them. Being that they do not have the RMD requirement, consider it rather coveted space in the tax diversification trifecta of traditional retirement accounts (t401k/tIRA yet to be taxed), taxable accounts, and the Roth accounts. That being said, having equities to maximize the growth within the Roth space is usually the best prescription.

Thinking of each leg of the modern retirement income stool, trying to make each one as sturdy as possible for tax diversification has some of us trying to shore up one or more of the other legs in our final years or decade of working...

Image
NatureBoy wrote: Wed Jul 10, 2024 6:45 pmRe: Inherited IRA, it's from before the 10 year limit (2009), so I've been just taking RMDs and letting it grow. It's the one fund I've left alone, since it has a fairly low ER, and has done well (undersatnding that's no guarantee it'll continue). There's a little emotional connection on this one, since it was from my Mother, who liked social index funds, and it's nice to see what she left me grow, and get a little birthday gift each year.
Totally understand the emotional connection to the investment your Mother made and passed on to you. Again, maximizing the growth of that particular inherited IRA with the lowest cost funds would make the most financial sense if you can move beyond the emotional connection to the underlying fund. Think of the inheritance as a "gift" and it is the dollar amount that is of import more so than the underlying investments. My spouse had a similar emotional connection (she inherited something like 178 individual stocks) from her parents. I inherited a lesser amount, but was from a managed account from Morgan Stanley filled with high cost funds that took me very little time to sell and reinvest the money in low cost index funds. The fine line I walked with my spouse was initially discussing how we could use all the dividends to reinvest in low cost index funds, as well as to use her RMDs from the stretch IRA to help fund her Roth IRA each and every year. I have been able to have more discussions with her over the years to continue to trim down some of those individual stock positions and get the money from those trimmed positions into broad index equity and bond funds (as well as TIPS). Simply suggesting you compare and contrast the social index fund fees with low cost total stock market US and international funds, as well as bond funds to make sure you are maximizing the growth for future use. There are ways to keep the emotional attachment beyond the fund it is invested in. For example...

To capture the emotional connection for myself from what I inherited, I used some of the proceeds to buy a new bicycle and a new truck which I see and use every day to keep the emotional connection alive.
NatureBoy wrote: Wed Jul 10, 2024 6:45 pmRe: Plans, I'll add detail to the initial post. In short, increased travel, increased time on existing hobbies, increase volunteer time in my primary areas of interest, carve out specific time for exercise so I can continue to do the things I enjoy. Legacy/heirs not a high priority. Increased travel is the most significant increase to the budget, and I'd like to bump that up as much as I can, especially for the first few years of retirement. Without getting into unnecessary details, heredity is not favorable to me, but I'm plenty healthy to travel for a while yet.
Got it regarding the legacy. Sounds like a more typical spending smile with go-go years, slow-go years, and the eventual no-go years. Front loading the go-go years with lots of travel sounds wonderful! :beer
NatureBoy wrote: Wed Jul 10, 2024 6:45 pmRe: Roth conersions, I've not put any effort into this (yet). I don't feel like I've got a handle on how it'll help short/long term for me. More homework.
You are of the age that your RMDs from your traditional 401k/IRA space will officially begin at age 75 as you enter your slow-go years, giving you time to do some conversions if the math works in your favor and the travel expenses are within reason leading up to that.
NatureBoy wrote: Wed Jul 10, 2024 6:45 pmRe: Roth in my workplace 401k, it seemed to make sense when I was married (though I didn't give it much thought), but at single tax rates, I changed to pre-tax deductions to reduce my MAGI.
Understood. Some of us split the difference by having some percentage going into both in an effort to address MAGI and get a bit into the Roth space to take advantage of the tax rates until they are scheduled to revert back in 2026.

Your answers illustrate that we all have our own unique tax, household cash flow, and goals when it comes to our investing that means one formula that works for one does not automatically apply to another. I would, however, have you revisit the withdrawal plans for your Roth space not to be in the early years, but to extend that space until later in your retirement.

CyclingDuo
"Save like a pessimist, invest like an optimist." - Morgan Housel | "Pick a bushel, save a peck!" - Grandpa
Topic Author
NatureBoy
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Re: Portfolio Review - 62 yo nearing retirement

Post by NatureBoy »

CyclingDuo wrote: Thu Jul 11, 2024 8:24 am Most of us would do just the opposite of what you mention of using early withdrawals from the Roth space, and instead we would choose to delay them as long as possible to maximize growth in the Roth as the funds within the space have already been taxed and will not be taxed when you eventually do withdraw them. Being that they do not have the RMD requirement, consider it rather coveted space in the tax diversification trifecta of traditional retirement accounts (t401k/tIRA yet to be taxed), taxable accounts, and the Roth accounts. That being said, having equities to maximize the growth within the Roth space is usually the best prescription.

Thinking of each leg of the modern retirement income stool, trying to make each one as sturdy as possible for tax diversification has some of us trying to shore up one or more of the other legs in our final years or decade of working...
Thanks, I’ll give that some thought! I need to develop a more detailed withdrawal plan considering RMDs and taxes. None of the modeling tools I’ve used have sufficient detail, so time to break out the spreadsheet. Sometimes I feel like I need to retire so I’ll have enough time to figure this all out.🙂
CyclingDuo wrote: Thu Jul 11, 2024 8:24 am Simply suggesting you compare and contrast the social index fund fees with low cost total stock market US and international funds, as well as bond funds to make sure you are maximizing the growth for future use. There are ways to keep the emotional attachment beyond the fund it is invested in.
Got it, thanks. It’s helpful hearing how other folks have managed similar situations.
CyclingDuo wrote: Thu Jul 11, 2024 8:24 am Got it regarding the legacy. Sounds like a more typical spending smile with go-go years, slow-go years, and the eventual no-go years. Front loading the go-go years with lots of travel sounds wonderful! :beer
Yes, that’s the idea!
CyclingDuo wrote: Thu Jul 11, 2024 8:24 am Understood. Some of us split the difference by having some percentage going into both in an effort to address MAGI and get a bit into the Roth space to take advantage of the tax rates until they are scheduled to revert back in 2026.

Your answers illustrate that we all have our own unique tax, household cash flow, and goals when it comes to our investing that means one formula that works for one does not automatically apply to another. I would, however, have you revisit the withdrawal plans for your Roth space not to be in the early years, but to extend that space until later in your retirement.

CyclingDuo
I’ll give that some thought. I appreciate your follow-up.

-NatureBoy
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NatureBoy
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Re: Portfolio Review - 62 yo nearing retirement

Post by NatureBoy »

Harmanic wrote: Wed Jul 10, 2024 8:06 pm
retiredjg wrote: Wed Jul 10, 2024 8:04 am Welcome to the forum. :happy

Your portfolio looks fine to me as well. I think 30% is bonds is a bit low if you want to retire in 2025. I suggest that you start adding more bonds now.

I have to disagree. The OP only needs enough to guarantee until social security kicks in. She could retire now with 30% bonds and be fine without touching her stocks.

Actually, she could convert her bonds to cash and just live on that until age 70. If anything, she has too much bonds.
Results Summary
Total amount you will have withdrawn $420,000
Ending balance after 7 years $246,291.33
Starting amount $560,000
Years you wish to make withdrawals 7 years
Periodic withdrawal from savings* $60,000 per year
Rate of return 4% compounded monthly
*This calculator assumes that you make your withdrawal at the beginning of each period.

Savings Balance
Year Withdrawals Interest Balance
$560,000
1 $60,000.00 $20,370.77 $520,370.77
2 $60,000.00 $18,756.22 $479,126.99
3 $60,000.00 $17,075.88 $436,202.87
4 $60,000.00 $15,327.09 $391,529.96
5 $60,000.00 $13,507.04 $345,037.00
6 $60,000.00 $11,612.85 $296,649.85
7 $60,000.00 $9,641.48 $246,291.33

Source: https://www.360financialliteracy.org/Ca ... Calculator

She could retire now and create a 7 year bond ladder from the $560,000 (30% of her total) and have money left over for discretionary.
Appreciate the diversity of opinions here. I do consider SS as the best way to provide inflation protected income should I exceed the actuarial tables. I’m still working on my bond ladder as I continue to learn. My T-Bills (maturing in the next 7 years) are earning around 4%, and am mostly adding TIPs now. I would adjust discretionary based on market conditions. Uneasy, of course drawing more early, but at the same time, the clock is ticking. My father passed before he enjoyed any retirement.

-NatureBoy
Back Dr
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Re: Portfolio Review - 62 yo nearing retirement

Post by Back Dr »

1) Residual expenses should be fully/ or very nearly fully funded in safe asset classes. It makes no sense to risk one's retirement in 'risky' unpredictable assets.

2) Once basic residual expenses are factored in I personally invest in equities

3) Basic residual expenses also include items such as autos, HVAC, roof, emergency medical estimations....obviously one won't know an exact amount
Retiree mantra: keep your stock allocation below your risk tolerance and do not kid yourself about your risk tolerance.
Topic Author
NatureBoy
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Re: Portfolio Review - 62 yo nearing retirement

Post by NatureBoy »

Back Dr wrote: Fri Jul 12, 2024 11:59 pm 1) Residual expenses should be fully/ or very nearly fully funded in safe asset classes. It makes no sense to risk one's retirement in 'risky' unpredictable assets.

2) Once basic residual expenses are factored in I personally invest in equities

3) Basic residual expenses also include items such as autos, HVAC, roof, emergency medical estimations....obviously one won't know an exact amount
Thanks Back Dr - I presume when you say safe asset classes you're referring to Treasuries, Money Market, CDs, and cash. Would you consider a treasury bond index fund "safe"?

-NB
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