Retiree's Asset Allocation

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lucky3
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Retiree's Asset Allocation

Postby lucky3 » Tue Jan 10, 2017 1:54 pm

Turned 70 and recently retired, transferring $300k from employer's 401k to Fidelity's IRA Cash option with the intention of placing the funds with their index and perhaps other funds (bond, etc).

Conventional wisdom says you should have your age in bonds...that would be 30% equities and 70% bonds, fixed income. With bond interest so low the only way to make any income or at least keep up with inflation is to go more with equities, say at least 50% vs. 50%.

Currently collecting SS and RMD from IRA's.

What's the opinion of the Bogleheads regarding asset allocation for my age?

Lucky3

ralph124cf
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Re: Retiree's Asset Allocation

Postby ralph124cf » Tue Jan 10, 2017 3:35 pm

I think most people here use bonds less for income and more for preservation of capital. In more "normal" times bonds pay enough to stay a bit ahead of inflation, but not now.

I am age 68, delaying SS and pension to 70, and currently 90/10. I do realize that most people on this board consider that insanely risky.

Ralph

Cyclesafe
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Re: Retiree's Asset Allocation

Postby Cyclesafe » Tue Jan 10, 2017 4:23 pm

Your allocation decision is arguably the most important you will make. I suggest you read the wiki's, take a number of quizzes, and think hard about what level of risk you will be comfortable with. Your personal best allocation is not just a function of your age.

dbr
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Re: Retiree's Asset Allocation

Postby dbr » Tue Jan 10, 2017 4:31 pm

lucky3 wrote:Turned 70 and recently retired, transferring $300k from employer's 401k to Fidelity's IRA Cash option with the intention of placing the funds with their index and perhaps other funds (bond, etc).

Conventional wisdom says you should have your age in bonds...that would be 30% equities and 70% bonds, fixed income. With bond interest so low the only way to make any income or at least keep up with inflation is to go more with equities, say at least 50% vs. 50%.

Asset allocation is not determined by the amount of interest and dividends paid out. It is determined by the risk and return suitable to the situation. That said, 30/70 to 50/50 is representative of likely choices one might make./color]

Currently collecting SS and RMD from IRA's.
[color=#0000FF]
RMDs are not actually withdrawals from you portfolio but just forced transfers from tax deferred to taxable accounts accompanied by a tax bill. The amount the matters is how much you are actually spending.


What's the opinion of the Bogleheads regarding asset allocation for my age?

Lucky3

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Earl Lemongrab
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Re: Retiree's Asset Allocation

Postby Earl Lemongrab » Tue Jan 10, 2017 4:32 pm

Be sure to grab a transfer bonus from Fidelity, if you haven't already.
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lucky3
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Re: Retiree's Asset Allocation

Postby lucky3 » Wed Jan 11, 2017 12:51 pm

Earl Lemongrab:

What would be the typical transfer bonus for $320k at Fidelity?

Lucky3

bigred77
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Re: Retiree's Asset Allocation

Postby bigred77 » Wed Jan 11, 2017 12:52 pm

I think a 50/50 allocation is just fine in retirement.

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Earl Lemongrab
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Re: Retiree's Asset Allocation

Postby Earl Lemongrab » Wed Jan 11, 2017 1:33 pm

lucky3 wrote:What would be the typical transfer bonus for $320k at Fidelity?

It's $600 currently: https://rewards.fidelity.com/offers/depositbonus

You can find more information on bonuses here:

The Final, Definitive Thread on Brokerage Transfer Bonuses
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itstoomuch
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Re: Retiree's Asset Allocation

Postby itstoomuch » Wed Jan 11, 2017 1:33 pm

So, how much are your retirement needs covered by SS, pensions, rents, annuities? IOW, your retirement Funded Ratio (FR).
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lucky3
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Re: Retiree's Asset Allocation

Postby lucky3 » Wed Jan 11, 2017 1:47 pm

Earl:

Thank you for getting back to me with an answer.

Lucky3

btenny
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Re: Retiree's Asset Allocation

Postby btenny » Wed Jan 11, 2017 2:01 pm

I am at 40/60 stocks to bonds at similar age. The key you need to decide is how you will feel and get along if your retirement stash goes down by 25-30%.

And regarding that RMD. Are you sure you need to take a RMD this year? Is your birthday in January?

Good Luck.

The Wizard
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Re: Retiree's Asset Allocation

Postby The Wizard » Wed Jan 11, 2017 2:08 pm

I'm not a bucketeer, but I agree that your AA in retirement should possibly depend on how much you are depending on that portfolio for retirement income.
Additionally, you might want to compute how much of your actual retirement income covers basic expenses and how much is extra, or discretionary.

About 1/3 of my present retirement income derives from my tax deferred portfolio and I would say that it is all discretionary income, either reinvested after tax or spent on recreational travel.

So I'm content to maintain my portfolio a bit over 50% in stock funds...
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RadAudit
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Re: Retiree's Asset Allocation

Postby RadAudit » Wed Jan 11, 2017 2:22 pm

lucky3 wrote:Currently collecting SS and RMD from IRA's.


A question you might want to answer is how much money do you need to withdraw from your portfolio to meet your annual expenses?

That is one aspect of the need, willingness and ability to take risk question that should be answered to come up with an asset allocation. Like you, I'm 70 - in a couple of months - and retired. I have SS, a small pension and a little IRA. The AA I came up with has an expected return that might throw off enough additional money to meet my expected expenses for as long as I need it to. And hopefully, the AA is conservative enough so I won't panic in the next down turn. Age didn't enter in to the picture, per se.

Even RMDs are slightly out of the picture in setting the asset allocation. Sure, the RMD, less taxes, is a possible source of income. But what you don't need to use you can reinvest in a taxable account.
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