New member - close to retirement, and looking to simplify

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Topic Author
Capricorn51
Posts: 59
Joined: Fri Jan 11, 2019 2:26 pm

New member - close to retirement, and looking to simplify

Post by Capricorn51 » Sat Jan 12, 2019 2:38 pm

First, I've enjoyed this board as a lurker for a few months, and have learned a lot. Second, I found the checklist on how to summarize data very helpful in and of itself.

I think I've done reasonably well, though obviously in a more complex (and higher fee) style than Bogleheads. But given that (scroll to end), I'm looking for thoughts and ideas.


Emergency funds: Well over a year (probably close to 18 months)
Debt: None. Own condo and paid off
Tax Filing Status: Married filing jointly
Tax Rate: 19.1% Federal (effective rate), 3.07% State
State of Residence: Pennsylvania
Age: me: 67, wife: 74
Desired Asset allocation: 50% stocks / 50% bonds
Desired International allocation: 25% of stocks

Please provide a hint as to the size of your current total portfolio (including funds in TIAA-CREF) $2.7 million

Current retirement assets

Taxable
3.5% Dodge & Cox Balanced (DODBX) (0.53%)
Remainder below in Fidelity account
2.32% Cash and Cash Equiv (short term treasuries)
1.88% VEU VANGUARD INTL EQUITY INDEX FD INC FTSE ALL-WORLD EX-US INDEX
1.57% TRRBX T ROWE PRICE RET 2020 FUND 0.61% ramping up in 2019
1.37% VBR VANGUARD INDEX FDS VANGUARD SMALL CAP VALUE VIPERS FORMERLY
1.21% VYM VANGUARD WHITEHALL FDS HIGH DIVIDEND YIELD ETF SHS
1.13% JENSX JENSEN QUALITY GROWTH FD CL J 0.88%
1.04% VOE VANGUARD INDEX FDS MID-CAP VALUE INDEX VIPER SHS
1.00% FRESX FIDELITY REAL ESTATE INVESTMENT 0.76%
0.84% BASAX BROWN ADVISORY SMALL CAP GROWTH ADVISOR 1.39% will close out in 2019
0.84% VDC VANGUARD WORLD FDS VANGUARD CONSUMER STAPLES ETF
0.82% GLRBX JAMES BALANCED: GOLDEN RAINBOW FUND 1% will close out in 2019
0.75% SFGIX SEAFARER OVERSEAS GROWTH & INCOME INV 0.97%
0.68% PFOAX PIMCO INTL BD FD (U. S. DOLLAR-HEDGED) A 0.96%
0.61% IBCE ISHARES IBONDS MAR 2023 TERM CORPORATE EX-FINANCIALS ETF ramping up in 2019
0.20% IWM ISHARES RUSSELL 2000 ETF ramping up in 2019
0.16% GLW CORNING INC
0.13% TGT TARGET CORP COM
0.34% BRKB BERKSHIRE HATHAWAY INC DEL CL B NEW

His Roth IRA at Vanguard
1% Balanced Index Fund Admiral Shares (VBIAX) (0.07%)

Her Roth IRA at Vanguard
1% LIFE Strategy Moderate Growth (VSMGX) (0.13%)

His Rollover IRA at Fidelity

0.89% FDRXX FIDELITY GOVERNMENT CASH RESERVES
0.87% AGG ISHARES CORE U.S. AGGREGATE BOND ETF ramping up in 2019
1.25% FPURX FIDELITY PURITAN 0.54%
0.31% FSCSX FIDELITY SELECT SOFTWARE & IT SRVC 0.51%
0.61% FSKAX FIDELITY TOTAL MARKET INDEX FUND 0.015% ramping up in 2019
0.24% JAENX JANUS HENDERSON ENTERPRISE T 0.92% will close out in 2019
0.16% PFOAX PIMCO INTL BD FD (U. S. DOLLAR-HEDGED) A 0.96%
0.19% VIG VANGUARD GROUP DIV APP ETF ramping up in 2019


His 403b (TIAA)
39.4% TIAA Traditional
31.3.% CREF Stock QCSTPX (0.37%)
0.9% TIAA Real Estate QREARX (0.83%)
0.7% CREF Global QCGLRX (0.46%)


Total of All Accounts Together (not each account individually) should equal 100%.

Contributions

New annual Contributions
$50,000 his 403b (including employer match)
$20,000 taxable (for retirement, not short term goals)


Questions:
1. I plan on retiring at 70 or 71. Is my desired asset allocation reasonable?

2. I think I am heavy on the stock side at present and am planning on ramping down over a 1-2 year period. Does this make sense? I’ll do that to minimize gains (though I have a fair amount) and also consolidate into a smaller number of lower fee funds/ETF’s --- ideas?

niceguy7376
Posts: 2407
Joined: Wed Jul 10, 2013 2:59 pm
Location: Metro ATL

Re: New member - close to retirement, and looking to simplify

Post by niceguy7376 » Sat Jan 12, 2019 3:11 pm

Welcome to the forum.
I will kickoff some inputs.
Your 50% each to bonds and stocks is well within generally recommended 40/60 to 60/40.
Where you can make it a lot simple is to go with less number of funds in your accounts.
Looks like you have enough # of funds that match your age(kidding).

Go with three fund portfolio type.

billfromct
Posts: 986
Joined: Tue Dec 03, 2013 9:05 am

Re: New member - close to retirement, and looking to simplify

Post by billfromct » Sat Jan 12, 2019 4:08 pm

You don't mention anything about Social Security.

I'm assuming your wife is collecting SS since she is over age 70. Are you collecting SS spousal benefits while waiting to collect your own higher SS benefit at age 70?

bill

Topic Author
Capricorn51
Posts: 59
Joined: Fri Jan 11, 2019 2:26 pm

Re: New member - close to retirement, and looking to simplify

Post by Capricorn51 » Sat Jan 12, 2019 4:10 pm

My wife is collecting SS. I have not put in for spousal SS on her credit.

Living Free
Posts: 332
Joined: Thu Jul 19, 2018 7:31 pm

Re: New member - close to retirement, and looking to simplify

Post by Living Free » Sat Jan 12, 2019 4:18 pm

What is the cost basis like on those taxable investments?
If you have any that have a loss I'd favor selling and trying to move as much of the taxable account as possible to broad market stock index funds (then put extra bonds in the traditional IRA to reach your desired AA)

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BL
Posts: 9117
Joined: Sun Mar 01, 2009 2:28 pm

Re: New member - close to retirement, and looking to simplify

Post by BL » Sat Jan 12, 2019 4:55 pm

You might want to check out SS options. Things changed a couple years ago, and you also might be grandfathered in to some of the old rules, depending on what year you were born. Anyway, see if you can file for spousal at your FRA, while delaying your own until 70. One source is Mike Piper's book on Social Security that was updated with new rules. Also a search here for threads in which he gave some good info after the law changed.

Taylor has a new book on the 3-fund portfolio, besides a long thread here. There is also a lot in the Wiki here.

Print out the basis or unrealized gains for your taxable funds. You might even want to change to Specific Id basis so you can sell lots that have losses on covered lots (2011 (stocks) or 2012 (mutual funds) or later purchases). Also stop reinvesting dividends and Capital Gains, so you are not buying still more lots of funds you don't plan to keep. If you don't have room for all your bonds in 401k and IRA, probably use muni bond funds in taxable if you are above 24% tax bracket (you didn't show actual bracket above).

Topic Author
Capricorn51
Posts: 59
Joined: Fri Jan 11, 2019 2:26 pm

Re: New member - close to retirement, and looking to simplify

Post by Capricorn51 » Sun Jan 13, 2019 7:06 am

Thanks all for some useful ideas. I need to look into the spousal SS idea. "Unfortunately", I don't have really much that I could use for TLH, which is why I'm thinking about ramping down from some higher cost funds into index based approaches over 2019 into 2020.

But I have stopped the reinvestment orders into funds I am going to ramp out of, which was a great idea.

samsdad
Posts: 739
Joined: Sat Jan 02, 2016 6:20 pm

Re: New member - close to retirement, and looking to simplify

Post by samsdad » Sun Jan 13, 2019 7:24 am

50/50 Wellesley and Wellington? That’ll keep you at about 50/50 equities and bonds and includes some international exposure.

Edit: Since 1996 it outperformed the three-fund portfolio with higher risk-adjusted returns as measured by the Sharpe and Sortino ratios and has a much smaller drawdown during the 2008 period.
https://www.portfoliovisualizer.com/bac ... tion5_2=20 The future may be different of course.

cas
Posts: 669
Joined: Wed Apr 26, 2017 8:41 am

Re: New member - close to retirement, and looking to simplify

Post by cas » Sun Jan 13, 2019 7:42 am

Capricorn51 wrote:
Sat Jan 12, 2019 2:38 pm

Tax Filing Status: Married filing jointly
Tax Rate: 19.1% Federal (effective rate), 3.07% State
Age: me: 67, wife: 74

1. I plan on retiring at 70 or 71. [ . . .]

2. I think I am heavy on the stock side at present and am planning on ramping down over a 1-2 year period. [ . . .]
If your effective tax rate is 19.1% federal, I'm guessing your tax bracket is 22% or 24%?

And I'm guessing that you and your wife are currently getting primary health insurance through your employer? Does your employer require you and/or your wife to get Medicare B as secondary?

These questions are leading up to this one: Are you familiar with IRMAA (Income Related Monthly Adjustment Amount) for Medicare Part B and Part D premiums?* (The amount of your Medicare B/D premiums is tied to the income you report on your tax return.)

If you aren't familiar with IRMAA, it looks to me like your income could possibly be up near (at least) the first IRMAA threshold ($170,000 modified adjusted gross income, MFJ for 2019). (If your portfolio includes any tax-exempt municipal bond funds, note that IRMAA-style MAGI requires you to add your tax-exempt interest to your AGI to get MAGI.)

Especially if you are thinking of realizing some capital gains in order to make some portfolio adjustments, I suspect you are at an income level where you will want to be cognizant of the thresholds for the various IRMAA tiers. (Judging from the irate posts that appear on bogleheads, it really, really annoys people when they aren't aware of IRMAA, then inadvertently go just a little over a threshold.)

*For more information, see "Medicare Premiums: Rules For Higher-Income Beneficiaries" https://www.ssa.gov/pubs/EN-05-10536.pdf

student
Posts: 3964
Joined: Fri Apr 03, 2015 6:58 am

Re: New member - close to retirement, and looking to simplify

Post by student » Sun Jan 13, 2019 8:11 am

50/50 is reasonable. I would allocate the entire "bond" position to TIAA Traditional. I would simplify the number of holdings. It is easy to do in tax advantaged accounts. For taxable, you may have to do it slowing due to tax consequences when you sell. You said you are heavy on stock right now. I don't see it. You have close to 40% in TIAA Traditional and you have bond funds in your portfolio.

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