Rolled 401, please recommend strategy, funds, etc.

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Topic Author
Goofy
Posts: 20
Joined: Fri Jan 31, 2025 8:36 am

Rolled 401, please recommend strategy, funds, etc.

Post by Goofy »

I posted earlier that we have a CFP at Fidelity, but I'm looking to self direct. She's been great and will guide us, but I was doing it myself and now have more time to dedicate to it. I'm not a day trader, etc. So I just don't want to screw up a nestegg that is in good shape..

My wife and I have equal balances. She's risk adverse, yet 100% Domestic Stock. I was managing mine with another financial group, but rolled to Fidelity as soon as I could. Ugh...I've been out of the market all of last week while they moved my funds :(

I just retired, 60, but am willing to risk a bit,. My wife needs to first move her passive 401 into an IRA, then sort it out. That 401 is with Nationwide, under FIdelity, but she'll roll it into an IRA with Fideltiy.

The CFP did provide proposals for period and lifetime annuities. It's more the security of income, rather than the need for income that drove our requesting that. Wife moresoe than me. Still, I was open to generate some income now, because we'll have a mortgage for almost 20 years. it's 3% and ~ 13% of our total nestegg. I'm in no rush to pay it off, but need income to pay it.

Wife might retire in 3 years and once we start Social Security, her small pension, my anemic Roth, etc., we'll have plenty of monthly income. Fidelity ran the Monte Carlo model for use and it if we die at 90, we'll leave about 3x our nestegg to our heirs.

Their recomendation, assuming we'd take 20% of our nestegg and purchase an annuiity, is as follows (well discuss annutity at the bottom):

- Dom Stock 49%
- Foriegn Stock 21%
- Bonds - 25%
- Short Term 5%
The idea being that we'll risk a bit more, using the above strategy, because we've secured some guaranteed income with an annuity. The income generated by the annuity would be ~ 25% of our monthly need.

When I saw how much of our nestegg would be spent on an annuity, I balked. My wife, still likes the idea of some (more) guaranteed income. I'm thinking I'll let her make that choice with her funds, but I'm going to press on without it. I'll withdraw monthly income from my 401 for a few years, until she retires, then we'll change strategy.

QUESTIONS:

Am I offbase here?

At the age of 60, and given the above, how close in Fidelity's recommended invvestment allocation?

Please recommend funds to meet whichever allocation you recommend.

Thanks!
gunny
Posts: 136
Joined: Sun Jan 05, 2025 10:22 pm

Re: Rolled 401, please recommend strategy, funds, etc.

Post by gunny »

Not sure I'm clear on how well SS plus pensions/etc will match up against your monthly bills? Like do you really need an annuity to cover that? Also when do you plan to take SS...

Re. annuities, keep in mind that "an annuity" is vague; there are diff kinds that work in diff ways (PS I've only recently learned this myself; paging the resident annuity guy Stinky to the white phone). If you're looking to do one that provides monthly payouts (a SPIA I'm guessing), I wouldn't unless you really need that monthly "paycheck." A diff kind of annuity - a MYGA - would IMO be better (it functions basically like a CD), but either way, between an annuity and your bonds, I think you're in the ballpark of a 60/40 split between stocks and "not stocks," which is a pretty common mix. I wouldn't go quite as heavy on foreign stocks, but that's subjective and just IMO. Basically I might not quite go this exact route, but again subjective...I don't see anything way out of bounds.
Topic Author
Goofy
Posts: 20
Joined: Fri Jan 31, 2025 8:36 am

Re: Rolled 401, please recommend strategy, funds, etc.

Post by Goofy »

Thanks gunny. Once we're collecitng SS, pernsion, 401 draw, etc., our monthly bills will be well covered. It's always in the back of our miind that SS might never come, or perhaps they continue to increase the age to collect. I'm not very concerned, maybe a 2 on a scale of 1-5. I just need to cover my share of the bills, etc., with some income, but still don't think an annuity makes sense She wants an annuity more for peace of mind.

It's a SPIA that they're proposing, so any growth goes to the insurance company.
gunny
Posts: 136
Joined: Sun Jan 05, 2025 10:22 pm

Re: Rolled 401, please recommend strategy, funds, etc.

Post by gunny »

I would simply suggest don't let fear control your decisions. Not to ignore it completely, but as the saying goes, fear is a good servant but a poor master. If your monthly income is well taken care of by SS/pensions/etc, you have more freedom to be a little more aggressive and realistically come out ahead in the long run. I'm in a similar situation and looking at about a 70/5/25 mix currently (stocks/bonds/cash). I plan to shift a bit more to bonds but also looking at a chunk in a MYGA for guaranteed income. Rates are quite good at the moment so IMO makes sense to lock in. Still debating how much and for how long....
Topic Author
Goofy
Posts: 20
Joined: Fri Jan 31, 2025 8:36 am

Re: Rolled 401, please recommend strategy, funds, etc.

Post by Goofy »

gunny wrote: Mon Feb 03, 2025 9:20 pm I would simply suggest don't let fear control your decisions. Not to ignore it completely, but as the saying goes, fear is a good servant but a poor master. If your monthly income is well taken care of by SS/pensions/etc, you have more freedom to be a little more aggressive and realistically come out ahead in the long run. I'm in a similar situation and looking at about a 70/5/25 mix currently (stocks/bonds/cash). I plan to shift a bit more to bonds but also looking at a chunk in a MYGA for guaranteed income. Rates are quite good at the moment so IMO makes sense to lock in. Still debating how much and for how long....
Agreed on fear. My biggest fear is that my give-a-crap level is way down. I just don’t care if I eat Mac N Cheese at 80.

So you’re looking at a MYGA, which will earn interest as you go, but give income. What age would you expect to draw that. 70?
gunny
Posts: 136
Joined: Sun Jan 05, 2025 10:22 pm

Re: Rolled 401, please recommend strategy, funds, etc.

Post by gunny »

Goofy wrote: Mon Feb 03, 2025 9:27 pm So you’re looking at a MYGA, which will earn interest as you go, but give income. What age would you expect to draw that. 70?
No, it won't give income. Again, it's basically like a CD. I put X money in and in X years get that money plus interest back. I'm looking at options ranging from 5 to 10 yrs. It to me seems like a good way to put the conservative part of my investment in action with the guaranteed rate.
secondopinion
Posts: 6389
Joined: Wed Dec 02, 2020 12:18 pm

Re: Rolled 401, please recommend strategy, funds, etc.

Post by secondopinion »

Your wife had 100% stocks and now wants to cut some risk. In this juncture of life and this context, I think this makes sense to at least consider an SPIA. Now, I would take into account what the state will guarantee in the case of insolvency of the annuity; and whether some deferment (or using a DIA) makes sense while someone is still working.

Also, you have a mortgage still; much of the qualms of SPIAs are moot when there is a major nominal liability in existence. If “certain” clauses are added to the SPIA, then that does help the mortgage.

Tell me, what makes the 20% in an SPIA such a bad idea? What about 10%?
Passive investing: not about making big bucks but making profits. Active investing: not about beating the market but meeting goals. Speculation: not about timing the market but taking profitable risks.
Topic Author
Goofy
Posts: 20
Joined: Fri Jan 31, 2025 8:36 am

Re: Rolled 401, please recommend strategy, funds, etc.

Post by Goofy »

Thanks secondopinion.

On the 20%, that would be one annuity, which I figured would be from my end. We’ve always kept accounts, etc., separate, and me paying out 20% of my total just seems like a lot. Moreover, wife wants an annuity as well, so that’d be 40% of the total and too high to me (CFP recommended 20% and we haven’t presented 40% to her, nor do I want to).

Maybe we consider a joint annuity for 20% of the total.
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