retirement scenario [safety of IRA funds]

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jim2k
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retirement scenario [safety of IRA funds]

Post by jim2k » Fri Jan 12, 2018 3:02 pm

i have $370k in a vanguard rollover ira. i,m thinking of just dumping the stocks and taking the profit and park that money somewhere i would not loose it. I am not too concerned with making money off of it. i'm just trying to guarantee i have it at age 60. it's not my total nest egg. does anyone know of any good vanguard monmey market funds that are good to put this money in.
at 60 i,ll have a military pension so i will not have draw too much from the 370k. plus i may have another pension from my current job if i stick it out 2 more years. it will only be $500 a month. then at 65 i,ll have $600 a month pension from a previous law firm i worked at and then Social security i,ll collect at 62

By the way i am currently 50 single and no kids and i want to retire at 53 - 55. I plan on living abroad where my money will go further.

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Watty
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Re: retirement scenario [safety of IRA funds]

Post by Watty » Fri Jan 12, 2018 11:34 pm

Insead of a money market fund you could just buy an individual TIPS bond that matures when you are 60.

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David Jay
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Re: retirement scenario [safety of IRA funds]

Post by David Jay » Fri Jan 12, 2018 11:51 pm

Welcome to the Forum!

A few thoughts:

1. Bond funds with durations less than your investment timeframe are reasonably safe. How about a short term, investment grade corporate bond fund.

2. You can purchase brokered CDs inside a Rollover IRA.

3. Even though you talk about "dumping stocks", the stock market is likely the only vehicle that will substantially outperform inflation over the long haul. There is a nice "all-in-one" fund: "LifeStrategy Income" that provides domestic and international diversification but holds only 20% stocks. So it is mostly bonds and provides just a bit of stock "boost" to help with inflation pressures. A terrible, really bad, no good market crash would probably expose you to more than a 5-10% drop. That is what I would do.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

jim2k
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Re: retirement scenario [safety of IRA funds]

Post by jim2k » Sat Jan 13, 2018 7:28 am

Thanks everyone . these are some good ideas that i need to research

Right now the bulk of the money is in
VASGX
Vanguard LifeStrategy Growth Fund
and about 60k is in
VFIJX
Vanguard GNMA Fund Admiral Shares

i'm thinking once the VFIJX goes up sell it and keep everything in the lifestrategy fund

dbr
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Re: retirement scenario [safety of IRA funds]

Post by dbr » Sat Jan 13, 2018 9:20 am

Watty wrote:
Fri Jan 12, 2018 11:34 pm
Insead of a money market fund you could just buy an individual TIPS bond that matures when you are 60.
Based on what the OP said this comes closest to doing what he wants.

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Watty
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Re: retirement scenario [safety of IRA funds]

Post by Watty » Sat Jan 13, 2018 9:24 am

jim2k wrote:
Sat Jan 13, 2018 7:28 am
i'm thinking once the VFIJX goes up sell it and keep everything in the lifestrategy fund
I don't know what VFIKX is but what if it does not go up?

jim2k
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Re: retirement scenario [safety of IRA funds]

Post by jim2k » Sat Jan 13, 2018 6:07 pm

Watty wrote:
Sat Jan 13, 2018 9:24 am
jim2k wrote:
Sat Jan 13, 2018 7:28 am
i'm thinking once the VFIJX goes up sell it and keep everything in the lifestrategy fund
I don't know what VFIKX is but what if it does not go up?
Well I am hoping it goes up. its a vanguard fund that is mostly bonds. its does not seem there is a lot of fluctuation

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David Jay
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Re: retirement scenario [safety of IRA funds]

Post by David Jay » Mon Jan 15, 2018 2:40 pm

Jim:

The LifeStrategy funds include a family of different asset allocations. Because this is an IRA, you can move between funds without any tax issues. If the 80/20 (stocks/bonds) of LS Growth is worrying to you, you can move to LS Moderate (60/40) or LS Conservative (40/60). You get lower long-term gain but with less price volatility.

I really like the LS fund family: my "Dear Wife" letter suggests she move the entire portfolio into a single LS fund for ease of management after my passing.

Asset allocation is all about your personal Need, Willingess and Ability to take equity (stock market) risk. When thinking through asset allocation, I like this chart from Vanguard. Pay particular attention to the "Worst Year Ever" because that indicates the level of pain that could occur, based on the worst historical case: https://www.vanguard.com/us/insights/sa ... llocations
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

soccerrules
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Re: retirement scenario [safety of IRA funds]

Post by soccerrules » Mon Jan 15, 2018 5:19 pm

you know you will pay a 10% penalty and taxes on this as income in the year you "cash out" -unless you wait until age 59.5?
Don't let your outflow exceed your income or your upkeep will be your downfall.

radiowave
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Re: retirement scenario [safety of IRA funds]

Post by radiowave » Mon Jan 15, 2018 5:30 pm

In addition to David's suggestions, there is also a Vanguard Target Retirement Income fund (30/70) that has some TIPS

https://personal.vanguard.com/us/funds/ ... e#tab=0

It's been a steady 4-5% over the past 10 year returns (this past year 8.5%) and looks like is lost about 16% of it's value at the depth of the 2008-2009 recession. The other high bond percentage LifeStrategy and Target Retirement funds will have similar performance.
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jim2k
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Re: retirement scenario [safety of IRA funds]

Post by jim2k » Mon Jan 15, 2018 8:43 pm

Thanks a lot Guys

I've learned more from this post and searching this forum. then i have from any conversations at work.

I will not be taking this money out before the age of 60. This money is more like a safety net for me. in my retirement plan.

i will still be in the stock market with a Roth IRA and a 401k. i also have money in TD ameritrade a few stocks setup as DRIPS

i also have a lot of money in savings. This money is what i will live off of until i hit 60

MotoTrojan
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Re: retirement scenario [safety of IRA funds]

Post by MotoTrojan » Mon Jan 15, 2018 8:56 pm

Sounds like you could benefit from posting your full situation for review rather than just this IRA.

jim2k
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Re: retirement scenario [safety of IRA funds]

Post by jim2k » Tue Jan 16, 2018 11:30 am

total net worth as of today is $733k $248K is cash and $484k is investments (TSP, 401k roth ira, rollover ira, Ameritrade) of the 484k i want to move 380k of it to a safe place more for a guarantee for when i am 60. i plan on retiring at 53, i do not own a home. i will be moving over to Thailand at this time. in 2 years time that 248k should be close to 300k. this will supplement my lifestyle in Thailand. when i hit 60 i get a little military pension. about $800 a month. i also get health coverage too(tricare). i am going to collect ss at 62. and at 65 i get a pension of $600 from a law firm i worked for. i can collect this earlier at a reduced rate.

i calculated my cost of living in Thailand at $2000 a month but i know i can live below this. my coast of living now is $2700. and 1500 of that is my rent.

i also may have another company paid pension of $500 but i am not vested yet so i do not add that to the mix.

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David Jay
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Re: retirement scenario [safety of IRA funds]

Post by David Jay » Tue Jan 16, 2018 1:30 pm

jim2k wrote:
Tue Jan 16, 2018 11:30 am
total net worth as of today is $733k $248K is cash and $484k is investments (TSP, 401k roth ira, rollover ira, Ameritrade) of the 484k i want to move 380k of it to a safe place more for a guarantee for when i am 60. i plan on retiring at 53, i do not own a home. i will be moving over to Thailand at this time. in 2 years time that 248k should be close to 300k. this will supplement my lifestyle in Thailand. when i hit 60 i get a little military pension. about $800 a month. i also get health coverage too(tricare). i am going to collect ss at 62. and at 65 i get a pension of $600 from a law firm i worked for. i can collect this earlier at a reduced rate.

i calculated my cost of living in Thailand at $2000 a month but i know i can live below this. my coast of living now is $2700. and 1500 of that is my rent.

i also may have another company paid pension of $500 but i am not vested yet so i do not add that to the mix.
It sounds like you want to have 628K in safe investments and only $104K in at-risk assets. This is 16.5% in at-risk assets. And you don't own a home, another potential inflation hedge. Have you considered inflation risk in your planning?

I know you were a teenager in the late 70s, but didn't your parents talk about the rise in prices? I am not quite a decade older than you but I remember trying to qualify for a 14% mortgage on my first house.

Someone your age should have at least 30% of portfolio in at-risk assets. According to author William Bernstein (in his book: "Deep Risk"), stocks are an excellent long-term inflation hedge.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

dbr
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Re: retirement scenario [safety of IRA funds]

Post by dbr » Tue Jan 16, 2018 4:46 pm

David Jay wrote:
Tue Jan 16, 2018 1:30 pm
jim2k wrote:
Tue Jan 16, 2018 11:30 am
total net worth as of today is $733k $248K is cash and $484k is investments (TSP, 401k roth ira, rollover ira, Ameritrade) of the 484k i want to move 380k of it to a safe place more for a guarantee for when i am 60. i plan on retiring at 53, i do not own a home. i will be moving over to Thailand at this time. in 2 years time that 248k should be close to 300k. this will supplement my lifestyle in Thailand. when i hit 60 i get a little military pension. about $800 a month. i also get health coverage too(tricare). i am going to collect ss at 62. and at 65 i get a pension of $600 from a law firm i worked for. i can collect this earlier at a reduced rate.

i calculated my cost of living in Thailand at $2000 a month but i know i can live below this. my coast of living now is $2700. and 1500 of that is my rent.

i also may have another company paid pension of $500 but i am not vested yet so i do not add that to the mix.
It sounds like you want to have 628K in safe investments and only $104K in at-risk assets. This is 16.5% in at-risk assets. And you don't own a home, another potential inflation hedge. Have you considered inflation risk in your planning?

I know you were a teenager in the late 70s, but didn't your parents talk about the rise in prices? I am not quite a decade older than you but I remember trying to qualify for a 14% mortgage on my first house.

Someone your age should have at least 30% of portfolio in at-risk assets. According to author William Bernstein (in his book: "Deep Risk"), stocks are an excellent long-term inflation hedge.
By definition "safe" assets cannot have inflation risk. That limits this investment planning category to TIPS (ladders) and inflation indexed annuities. Your point about inflation is apt. Simply having investments that have little volatility in nominal dollars is far from safe. Also, actual expenses may increase greater than official inflation which makes safety even more problematic. To your point, "at risk" assets may be essential to actually being safe.

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arcticpineapplecorp.
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Re: retirement scenario [safety of IRA funds]

Post by arcticpineapplecorp. » Tue Jan 16, 2018 4:56 pm

Watty wrote:
Sat Jan 13, 2018 9:24 am
jim2k wrote:
Sat Jan 13, 2018 7:28 am
i'm thinking once the VFIJX goes up sell it and keep everything in the lifestrategy fund
I don't know what VFIKX is but what if it does not go up?
it's vfijx, not vfikx and it's GNMA fund admiral shares if that helps.
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

jim2k
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Re: retirement scenario [safety of IRA funds]

Post by jim2k » Tue Jan 16, 2018 6:06 pm

as far as inflation goes I was looking at vanguards life strategy conservative as was recommended to me. i actually like it. i will still have money in the stock market with my Roth IRA, Ameritrade and company 401k. when i decide to leave my job i will then roll the 401k into a roth-rollover ira

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David Jay
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Re: retirement scenario [safety of IRA funds]

Post by David Jay » Tue Jan 16, 2018 6:38 pm

jim2k wrote:
Tue Jan 16, 2018 6:06 pm
as far as inflation goes I was looking at vanguards life strategy conservative as was recommended to me. i actually like it. i will still have money in the stock market with my Roth IRA, Ameritrade and company 401k. when i decide to leave my job i will then roll the 401k into a roth-rollover ira
Great choice. It is only 40% stocks, so it should have about half the volatility of your current fund (which is 80% stocks).
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

jim2k
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Re: retirement scenario [safety of IRA funds]

Post by jim2k » Thu Jan 18, 2018 8:34 pm

my final decision was. after all the advice and a little research and since the market is still going strong. i decided to split 50/50 into vanguards life strategy growth fund and moderate growth fund. then when the market corrects hopefully i will fast enough to move it all to life strategy growth fund conservative. just doing this move it jump $2k more


Thanks for all the advice

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