Rebalancing advice for 83 yr old woman

[DobraHalinka]

I've had my 401K retirement $$ in Vanguard's Mutual Funds for over ten years. With not a great deal to invest, I need to be conservative, and I've been comfortable with the funds I've had. Never had a financial advisor and have been relying on my pretty limited investing experience. I'm a healthy, vigorous 83 year old woman and have gotten this far without having to raid my funds to cover high medical expenses or cover outrageous credit card debt. My goal is to continue to invest for income.

Currently I have $126,000.00 invested:
23% Stocks
64% Bonds
12.6% Short Term Reserves.

My funds are:
VWIAX Wellesly Income Investor Shares $82,343
VBTLX Total Bond Index $20,650
VBIRX Short Term Bond Index $ 6,358
VMMXX Prime Money Market $15,680

I try to keep it simple...but maybe I'm overly conservative. Appreciate your advice on what I'm doing with what I have to work with. Thankyou!

[HomeStretch]

Welcome to the forum!

You will get better responses if you post your financial picture in the format outlined in “Asking Portfolio Questions”. You can add the additional information to your original post using the pencil icon.

Additional information would include your federal and state tax brackets, what income you receive or will receive (i.e., social security, pensions, annuity income, etc.), what your annual expense level is (including healthcare and income taxes), whether you have an emergency fund, and what other investments, if any, you have in addition to the $126k retirement account described in your post.

[livesoft]

You probably don't need to change a thing. It seems to have gotten you this far, so what is causing you to worry about this?

I will state this: One should not invest for income. One should invest for total return.

[retiredjg]

I think your portfolio is just perfect as it is.

You are not being overly conservative - you really cannot afford to take more risk that you are currently taking. And having 23% stocks is just enough.

[Watty]

..

Currently I have $126,000.00 invested:
23% Stocks
64% Bonds
12.6% Short Term Reserves.
....
I try to keep it simple...but maybe I'm overly conservative. ...

For comparison the Vanguard Target Retirement Income fund is 30% stocks and 70% bonds so you are just bit more conservative than that, which could make sense because you are older than many people who would be using that fund.

https://investor.vanguard.com/mutual-fu ... view/vtinx

I think at a high level what you have is very reasonable even if it might not be what I would use if I was setting up a portfolio from scratch.

If this is in a taxable account there would likely be some capital gains to pay if you tried to move the money around to make some small improvement in the mutual fund selections. That likely would not be worthwhile so leaving it the way that it is would be pretty reasonable if this is in a taxable account.

If it is all in retirement accounts where taxes are not an issue then using the Vanguard Target Retirement Income fund would be a reasonable choice too.

There is a lot that we do not know about your situation like your tax bracket, if you have have a pension or a lot of home equity, or if these investments are in a taxable account or a retirement account. That makes it pretty hard to give you suggestions on how your might fine tune your investments.

The main thing I would be concerned about is that with four mutual funds it may be difficult to manage ten years from now when you are 93 and may not be as financially capable as you are now. When you start spending the money you might want to first sell off all of the two bond funds when you need money. Once those are sold off you would only have the Wellesly and the money market account which would be easier to manage.

[Christine_NM]

Don't know if you will like this, but I would keep only Wellesley and Prime MM. You can do this gradually by taking RMDs from the bond funds for a couple of years or so, until they are too small to matter.

You do need to think of a little growth (Wellesley) just to stay even because you are depleting the account with RMDs faster than bond returns will accumulate.

My traditional IRA is 90% Wellesley, 10% VFIAX (500 Index). Most years it grows back the amount I have to take in RMD.

But as long as you keep most of the account in Wellesley it is hard to go wrong. If you suspect that the other 2 bond funds are hurting more than helping, that is where to make a change.

[Nestegg_User]

I've had my 401K retirement $$ in Vanguard's Mutual Funds for over ten years. With not a great deal to invest, I need to be conservative, and I've been comfortable with the funds I've had. Never had a financial advisor and have been relying on my pretty limited investing experience. I'm a healthy, vigorous 83 year old woman and have gotten this far without having to raid my funds to cover high medical expenses or cover outrageous credit card debt. My goal is to continue to invest for income.

Currently I have $126,000.00 invested:
23% Stocks
64% Bonds
12.6% Short Term Reserves.

My funds are:
VWIAX Wellesly Income Investor Shares $82,343
VBTLX Total Bond Index $20,650
VBIRX Short Term Bond Index $ 6,358
VMMXX Prime Money Market $15,680

I try to keep it simple...but maybe I'm overly conservative. Appreciate your advice on what I'm doing with what I have to work with. Thankyou!

You might want to look at one year Treasuries, instead of the Total Bond... similar yield without the duration risk (VBTLX is about six years)
then you can withdraw from MM when needed and leave Treasuries to mature...
otherwise, I agree with allocation

[BL]

I need to congratulate you on a wise selection. I would guess you have a better portfolio than almost all of our age-mates. Agree to using up Total Bond first, although it probably doesn't matter.

[02nz]

I think your investments are fine as they are. Does the 401k charge any fees, on top of the fund expenses? If so, it would make sense to transfer the holdings to an IRA at Vanguard.

However, since you mainly want this portfolio to provide income, I'd also give serious consideration to buying a single premium immediate annuity (SPIA) with the $126K. A quick quote shows this would generate about $1200/mo of income. To generate anywhere near that kind of income from $126K, you'd need to draw down your account, likely at a faster rate than you're comfortable with. The SPIA is a great form of "longevity insurance," and the only kind of annuity we generally recommend on this forum.

[Watty]

Does the 401k charge any fees, on top of the fund expenses? If so, it would make sense to transfer the holdings to an IRA at Vanguard.

That reminded me of one other thing. The inheritance rules for a 401k can be different than an IRA since the plan documents may not allow all the options that are legally possible.

For example it might not allow a 401k account that has already been inherited to be inherited again so whoever inherits it the second time may not be be able to roll it out to an inherited IRA. This could cause them to have to withdraw all the money over five years.

I suspect that this would not be a problem if it is your 401k, but if you inherited it from someone else you might want to transfer it to an IRA to get better inheritance rules. You could keep this an Vanguard so it would not be a big deal and they will walk you through the process.

Either way be sure that the beneficiary is correct since that will normally override whatever your will says.

[printer86]

Your plan seems fine, but I will tell you mine. I manage my similarly young mother’s portfolio held at Vanguard. To make things simple, I put her in one of Vanguard’s Life Strategy funds. There are 4 account variations based on the stock/bond mix. I also set it up so that she gets a monthly Withdrawal sent to her checking account. My goal was to set it and forget it. But we do talk about it every couple of months just to make sure things are going well. Good luck

[willthrill81]

Honestly, I think that a 100% allocation to Wellesley Income would be perfectly plausible. I would have no issues whatsoever making such a recommendation for my grandmother, who is at a very similar age. It would make things even simpler.

[DobraHalinka]

Thank you Everyone! All advice is appreciated, and if I tweak anything, it won't be done with concern, because your input is exactly what I need. Most of all, I am pleased to see I am on a good path for where I am today. "And so it goes. K. Vonnegut"