Please review my portfolio as I near retirement

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McDougal
Posts: 242
Joined: Tue Feb 27, 2018 3:42 pm

Please review my portfolio as I near retirement

Post by McDougal »

Hi everyone. I really appreciate all the advice and wisdom I have gleaned from this community. Here is our current financial standing, questions at the end:

Emergency funds: >6 months of expenses in cash
Debt: Only debt is home mortgage, $98K @ 2.875, a 7/1 ARM which is due to adjust in April 2022. (we are paying this off aggressively to avoid any potential interest rate hike in ‘22, and I hope to retire in ’21 and really want to have a paid off house at retirement.) Home worth $1MM. [ETA aggressively paying off mortgage, Paid an extra 78K last year, 96K so far this year.] She plans to retire in 2025 but may work longer if still enjoyable.

Tax Filing Status: Married Filing Jointly
Tax Rate: 32% Federal, 5.75% State
State of Residence: GA
Age: Me 64, her 60
Desired Asset allocation: 60% stocks / 40% bonds
Desired International allocation: 0-10% of stocks (no strong feeling for this, no idea where we are today)
Total portfolio approximately ~$2.5MM

Current retirement assets

Joint Taxable
0.07% Vang dividend apprec index fund (VDADX) (0.08%)
0.22% Vang total stock mkt index fund (VTSAX) (0.04%)

His HSA at Fidelity (now dormant, have family HSA at her workplace)
0.14% Fid US Bond Indx Fund (FXNAX) (0.025%)
0.14% Fid Zero Total Mkt Index (FZROX) (0.00%)

His 401k (Fidelity)
16.75% Fid US Bond index fund (FXNAX) (0.025%)
25.68% Fid 500 Index Fund (FXAIX) (0.015%)
Company match? 4% I max 19.5K plus 6.5K catch up

Funds available in his 401K
DODGE & COX STOCK (DODGX) 0.520%
FID 500 INDEX (FXAIX) 0.015%
FID CONTRAFUND K (FCNKX) 0.770%
FID EXTD MKT IDX (FSMAX) 0.046%
FID LOW PRICED STK K (FLPKX) 0.430%
FIAM SM CAP COR CL G 0.630%
FID DIVERSIFD INTL K (FDIKX) 0.630%
FID INTL INDEX (FSPSX) 0.035%
SS TRGT RET 2020 K 0.120%
SS TRGT RET 2025 K 0.120%
SS TRGT RET 2030 K 0.120%
SS TRGT RET 2035 K 0.120%
SS TRGT RET 2040 K 0.120%
SS TRGT RET 2045 K 0.120%
SS TRGT RET 2050 K 0.120%
SS TRGT RET 2055 K 0.120%
SS TRGT RET 2060 K 0.120%
SS TRGT RET INC K 0.120%
FID TOTAL BOND K6 (FTKFX) 0.300%
FID US BOND IDX (FXNAX) 0.025%
FID GOVT MMRK PRM (FZCXX)

His Roth IRA at Vanguard
0.52% Total stock mkt index fund (VTSAX) (0.04%)

Her 401K at Fidelity
2.54% Legal & General MSCI ACWI ex US DC Collective Investment Trust (0.04%)
8.14% Legal & General S&P 500 DC Collective Investment Trust Fund Class C (0.015%)
3.98% Vanguard target date 2025 Fund (0.05%)
2.37% PIMCO LONG DURATION TOTAL RETURN FUND CL INST (PLRIX) (1.07%)
1.38% Fidelity Inflation-Protected Bond Index Fund (FIPDX) (0.05%)
Company match? Yes, 6% She maxes to $19.5K plus 6.5K catch up
Funds available in her 401K
MFS GROWTH R6 (MFEKX) 0.570%
RT L&G S&P 500 DC C 0.015%
VANG VAL INDEX INST (VIVIX) 0.040%
MFS MID CAP VALUE R6 (MVCKX) 0.680%
TRP INST MDCPEQ GTH (PMEGX) 0.610%
VANG MD CP IDX IS PL (VMCPX) 0.030%
BA SM CAP GRTH INST (BAFSX) 1.000%
VANG S&P SC 600 IS (VSMSX) 0.080%
VANG SM VAL IDX INST (VSIIX) 0.060%
AF EUROPAC GROWTH R6 (RERGX) 0.460%
HARBOR DIVINTAC RET (HNIDX) 0.870%
RBC EMRG MKTS EQ I (REEIX) 0.890%
RT L&G ACWI EX US C 0.020%
VANGUARD TARGET 2015 0.050%
VANGUARD TARGET 2020 0.050%
VANGUARD TARGET 2025 0.050%
VANGUARD TARGET 2030 0.050%
VANGUARD TARGET 2035 0.050%
VANGUARD TARGET 2040 0.050%
VANGUARD TARGET 2045 0.050%
VANGUARD TARGET 2050 0.050%
VANGUARD TARGET 2055 0.050%
VANGUARD TARGET 2060 0.050%
VANGUARD TARGET 2065 0.050%
DODGE & COX INCOME (DODIX) 0.420%
FID INFL PR BD IDX (FIPDX) 0.050%
PIM LG DUR TOT RTN I (PLRIX) 1.070%
BBH LTD DURATION I (BBBIX) 0.280%
VANG TREASURY MM (VUSXX) 0.090%

Her SEP IRA at Wells Fargo
0.48% EKOAX Wells Fargo Omega Growth (1.28%)

Her Traditional IRA at Vanguard
11.97% Total bond mkt index fund (VBTLX) (0.05%)
2.69% Total Int’l bond index fund (VTABX) (0.11%)
5.43% Total int’l stock Index Fund (VTIAX) (0.11%)
17.49% Total stock mkt index fund (VTSAX) (0.04%)

Contributions
New annual Contributions
$26,000 his 401k (plus 4% match)
$26,000 her 401k (plus 6% match)
Maxing one family HSA at her job, $7,100 plus $1,000 catch-up
His Roth IRA max each year ($7,000) via backdoor started with tax year 2019 (thanks Bogleheads!)
If I retire in 2021 will consider Roth conversions for my accounts but I have to think about our overall marginal tax situation now and later.
Anticipated expenses in retirement are 10K/month. ETA our expenses are much, much higher now as we are paying down the mortgage (see above).

I would like to retire in 2021, and my job situation is not very stable right now. Her job is very stable. My income 225K, hers 185K. No desire to leave a legacy. No desire to move or sell house. Our plan is for me to wait till 70 for SS, her to retire and take SS at 65. Both very healthy (knock wood).
Our work histories and salaries are similar, so SS expectations are almost identical. Only difference is our ages

Questions:
1. Does our current AA look appropriate? We are comfortable with 60/40, unsure if our investment choices in each can be improved upon? Especially Her 401K, as it was recently moved from her company's investment group’s managed 401K to Fidelity after her employer went thru a merger this year and these are the funds she ended up with after the transfer.
2. Can anything be done with her SEP IRA? Would like to consolidate for simplicity, plus the lone fund has a front-end load of 5.75%. It was opened around 20 years ago when she was a self-employed consultant and was never added to after the initial investment. Can it be consolidated with any of her other accounts, or should it? I don’t even know if the money in there is pre or post tax.
3. I am struggling with me doing Roth conversions between retirement and when I start SS (at 70 I am planning). In a high tax rate now, and have to work hard to guesstimate our tax rate in the future. Also I am taking into consideration that at one point in the future one of us will be filing single.
4. I know we are spending more than we should, as we are not able to contribute (save) anything beyond the 401Ks/HSAs. My Roth is new this year, and will do back doors if I am able, but we never contribute to our taxable at VG. We do have our emergency fund in a couple of banks, and that is where we keep any leftover money. Should I consider moving EF to the taxable acct at VG?
5. Am I overlooking anything overall?

Many thanks for looking
Last edited by McDougal on Mon Oct 19, 2020 5:18 am, edited 1 time in total.
infotrader
Posts: 399
Joined: Tue Feb 28, 2017 2:39 pm

Re: Please review my portfolio as I near retirement

Post by infotrader »

I have two quick comments:
Way too many funds.
I'd move her Her SEP IRA at Wells Fargo to Vanguard: One fewer account to deal with.
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retired@50
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Location: Living in the U.S.A.

Re: Please review my portfolio as I near retirement

Post by retired@50 »

McDougal wrote: Sun Oct 18, 2020 11:27 am
Her SEP IRA at Wells Fargo
0.48% EKOAX Wells Fargo Omega Growth (1.28%)
...
2. Can anything be done with her SEP IRA? Would like to consolidate for simplicity, plus the lone fund has a front-end load of 5.75%. It was opened around 20 years ago when she was a self-employed consultant and was never added to after the initial investment. Can it be consolidated with any of her other accounts, or should it? I don’t even know if the money in there is pre or post tax.
...
Many thanks for looking
I'm not certain about SEP IRA consolidation, but I suspect that it could be added to a traditional IRA. If I were you, I'd check with Vanguard about the possibility. Of course, someone is going to have to know the tax status of the dollars in the account. Digging through old records or tax returns might help.

Whether or not it can be consolidated into an existing account, I'd move it away from Wells Fargo just on general principle. They made the news again this week for bad behavior related to one of the Federal loan programs related to the Covid-19 legislation passed this spring. Given the many examples of this firm mistreating customers I wouldn't go near them with a 10 foot pole.

Regards,
This is one person's opinion. Nothing more.
KlangFool
Posts: 19627
Joined: Sat Oct 11, 2008 12:35 pm

Re: Please review my portfolio as I near retirement

Post by KlangFool »

OP,


Your numbers do not add up. What is your current annual expense? It has to be much more than 120K per year.

A) Your gross income is around 400K per year.


B) Your annual saving is only 64K per year.


C) What is your total taxes? 100K per year?

I believe your REAL annual expense is closer to 200K per year. So, why do you think that your retirement expense is only 120K per year?

Make sure that your projected annual expense is correct. That should be your very first step.


Annual Expense = gross income - annual savings (64K) - taxes


You can get your 2019 taxes from your payslips and tax filing.

KlangFool
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Joined: Sun Mar 08, 2009 8:01 am

Re: Please review my portfolio as I near retirement

Post by Outer Marker »

Your AA looks fine. I would work on cleaning up and simplifying your portfolio by eleminating and consolidating trivial positions into your larger holdings. e.g. dividend fund in taxable into TSM, International bond into Total Bond in Her TIRA, Target date fund into your 3-fund overall AA.

I would pay off the mortgage immediately with your emergency fund. Your portfolio is about to become your permanent source of income. No need to be paying 2.8% on a mortgage while earning less than 1% at a bank. That also eliminates a monthly payment obligation -- so you don't need as much "emergency" money. You can start rebuilding your emergency fund to the extent you think you need one at all from what you have identified as excess spending.

Which leads to the $1M question - what are your expenses? If you live in a $1M house and have a tendency to be a bit "spendy" you may be a little lean in retirement with only $2.5M to draw on. At 4% SRW that's "only" $100,000 a year to keep you living the good life, cover health insurance, property taxes, etc. etc. I would be stockpiling more in taxable for the long haul . . .
HomeStretch
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Joined: Thu Dec 27, 2018 3:06 pm

Re: Please review my portfolio as I near retirement

Post by HomeStretch »

+1 to KlangFool’s comment that your overall numbers don’t seem to add up.

You can also make a $1k catchup to your Fidelity HSA. If as you posted you cannot contribute more to retirement savings, consider reducing your 401k contribution by $1k to make His HSA $1k catch-up contribution.
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Duckie
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Joined: Thu Mar 08, 2007 2:55 pm

Re: Please review my portfolio as I near retirement

Post by Duckie »

McDougal wrote:His HSA at Fidelity (now dormant, have family HSA at her workplace)
0.14% Fid US Bond Indx Fund (FXNAX) (0.025%)
0.14% Fid Zero Total Mkt Index (FZROX) (0.00%)
I'd use just one fund in this account.
Funds available in his 401K
The best options are:
  • FID 500 INDEX (FXAIX) 0.015% -- Large caps, 80% of US stocks
  • FID EXTD MKT IDX (FSMAX) 0.046% -- Mid/small caps, 20% of US stocks
  • FID INTL INDEX (FSPSX) 0.035% -- Developed markets, 75% of international stocks
  • FID US BOND IDX (FXNAX) 0.025% -- US bonds
Funds available in her 401K
The best options are:
  • RT L&G S&P 500 DC C 0.015% -- Large caps, 80% of US stocks
  • RT L&G ACWI EX US C 0.02% -- Almost complete international stocks
  • FID INFL PR BD IDX (FIPDX) 0.05% -- TIPS
Her SEP IRA at Wells Fargo
0.48% EKOAX Wells Fargo Omega Growth (1.28%)
Roll this to her TIRA at Vanguard.
Maxing one family HSA at her job, $7,100 plus $1,000 catch-up
What does she hold in that HSA? What are the options?
His Roth IRA max each year ($7,000) via backdoor started with tax year 2019
Does her current 401k allow incoming rollovers? If she rolled her TIRA and SEP IRA into her 401k she could use the backdoor method also.
Does our current AA look appropriate? We are comfortable with 60/40
It's a little low on bonds for your ages, but reasonable.
unsure if our investment choices in each can be improved upon? Especially Her 401K, as it was recently moved from her company's investment group’s managed 401K to Fidelity after her employer went thru a merger this year and these are the funds she ended up with after the transfer.
She can use lower-cost options. She could, in fact, skip bonds completely in her 401k and put them somewhere else.
Can anything be done with her SEP IRA?
Combine with the Vanguard TIRA.
I know we are spending more than we should, as we are not able to contribute (save) anything beyond the 401Ks/HSAs. My Roth is new this year, and will do back doors if I am able, but we never contribute to our taxable at VG. We do have our emergency fund in a couple of banks, and that is where we keep any leftover money. Should I consider moving EF to the taxable acct at VG?
You could move the emergency fund to Vanguard or leave in banks. But any amount above the EF contributions should be invested in taxable, probably all in VTSAX.
__________________

The following example has an AA of 50% US stocks, 10% international stock, and 40% bonds. You could have something like:

Joint taxable at Vanguard -- 0.29%
0.29% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)

His 401k at Fidelity -- 42.44%
2.44% (FXAIX) Fidelity 500 Index Fund (0.015%)
40% (FXNAX) Fidelity U.S. Bond Index Fund (0.025%)

Her 401k at Fidelity -- 18.41%
8.41% (N/A) Legal & General S&P 500 Index CIT (0.015%)
10% (N/A) Legal & General MSCI ACWI ex US CIT (0.04%)

Her Traditional IRA at Vanguard -- 38.06% <-- Includes rollover from Wells Fargo SEP IRA.
38.06% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)

His Roth IRA at Vanguard -- 0.52%
0.52% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)

His old HSA at Fidelity -- 0.28%
0.28% (FZROX) Fidelity Zero Total Market Index Fund (0.00%)

Her HSA at ?? -- ??%
How much is in this? When known the percentages will have to be refigured.

Just some possibilities.
Last edited by Duckie on Sun Oct 18, 2020 5:01 pm, edited 1 time in total.
Outer Marker
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Re: Please review my portfolio as I near retirement

Post by Outer Marker »

Duckie wrote: Sun Oct 18, 2020 4:31 pm
McDougal wrote:Joint Taxable
0.07% Vang dividend apprec index fund (VDADX) (0.08%)
0.22% Vang total stock mkt index fund (VTSAX) (0.04%)
I'm not a fan of dividend-paying funds in taxable but 7% of $2.5MM is $175K and it's not worth the tax-hit to sell it.
Duckie

I always admire your skill at cutting though the fog an simplifying portfolios.

I think you may be off here, though, unless I'm misreading it myself. The Vang. Dividend Fund is not 7% of OP's portfolio, but 0.07%. That's such a small amount, I wouldn't think its worth maintaining as a separate holding, and we don't know what the basis is, so the cost of consolidating may be close to nothing. I have not summed up and tallied all of OP's numbers, so I don't know if the original post tallies to 100% or not . . .
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Duckie
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Re: Please review my portfolio as I near retirement

Post by Duckie »

Outer Marker wrote:The Vang. Dividend Fund is not 7% of OP's portfolio, but 0.07%.
Ack! You're right. Post corrected.
I have not summed up and tallied all of OP's numbers, so I don't know if the original post tallies to 100% or not . . .
It tallies to 99.99% not including her HSA.
BernardShakey
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Location: CA

Re: Please review my portfolio as I near retirement

Post by BernardShakey »

McDougal wrote: Sun Oct 18, 2020 11:27 am Hi everyone. I really appreciate all the advice and wisdom I have gleaned from this community. Here is our current financial standing, questions at the end:

Emergency funds: >6 months of expenses in cash
Debt: Only debt is home mortgage, $98K @ 2.875, a 7/1 ARM which is due to adjust in April 2022. (we are paying this off aggressively to avoid any potential interest rate hike in ‘22, and I hope to retire in ’21 and really want to have a paid off house at retirement.) Home worth $1MM. She plans to retire in 2025 but may work longer if still enjoyable.

Tax Filing Status: Married Filing Jointly
Tax Rate: 32% Federal, 5.75% State
State of Residence: GA
Age: Me 64, her 60
Desired Asset allocation: 60% stocks / 40% bonds
Desired International allocation: 0-10% of stocks (no strong feeling for this, no idea where we are today)
Total portfolio approximately ~$2.5MM

Current retirement assets

Joint Taxable
0.07% Vang dividend apprec index fund (VDADX) (0.08%)
0.22% Vang total stock mkt index fund (VTSAX) (0.04%)

His HSA at Fidelity (now dormant, have family HSA at her workplace)
0.14% Fid US Bond Indx Fund (FXNAX) (0.025%)
0.14% Fid Zero Total Mkt Index (FZROX) (0.00%)

His 401k (Fidelity)
16.75% Fid US Bond index fund (FXNAX) (0.025%)
25.68% Fid 500 Index Fund (FXAIX) (0.015%)
Company match? 4% I max 19.5K plus 6.5K catch up

Funds available in his 401K
DODGE & COX STOCK (DODGX) 0.520%
FID 500 INDEX (FXAIX) 0.015%
FID CONTRAFUND K (FCNKX) 0.770%
FID EXTD MKT IDX (FSMAX) 0.046%
FID LOW PRICED STK K (FLPKX) 0.430%
FIAM SM CAP COR CL G 0.630%
FID DIVERSIFD INTL K (FDIKX) 0.630%
FID INTL INDEX (FSPSX) 0.035%
SS TRGT RET 2020 K 0.120%
SS TRGT RET 2025 K 0.120%
SS TRGT RET 2030 K 0.120%
SS TRGT RET 2035 K 0.120%
SS TRGT RET 2040 K 0.120%
SS TRGT RET 2045 K 0.120%
SS TRGT RET 2050 K 0.120%
SS TRGT RET 2055 K 0.120%
SS TRGT RET 2060 K 0.120%
SS TRGT RET INC K 0.120%
FID TOTAL BOND K6 (FTKFX) 0.300%
FID US BOND IDX (FXNAX) 0.025%
FID GOVT MMRK PRM (FZCXX)

His Roth IRA at Vanguard
0.52% Total stock mkt index fund (VTSAX) (0.04%)

Her 401K at Fidelity
2.54% Legal & General MSCI ACWI ex US DC Collective Investment Trust (0.04%)
8.14% Legal & General S&P 500 DC Collective Investment Trust Fund Class C (0.015%)
3.98% Vanguard target date 2025 Fund (0.05%)
2.37% PIMCO LONG DURATION TOTAL RETURN FUND CL INST (PLRIX) (1.07%)
1.38% Fidelity Inflation-Protected Bond Index Fund (FIPDX) (0.05%)
Company match? Yes, 6% She maxes to $19.5K plus 6.5K catch up
Funds available in her 401K
MFS GROWTH R6 (MFEKX) 0.570%
RT L&G S&P 500 DC C 0.015%
VANG VAL INDEX INST (VIVIX) 0.040%
MFS MID CAP VALUE R6 (MVCKX) 0.680%
TRP INST MDCPEQ GTH (PMEGX) 0.610%
VANG MD CP IDX IS PL (VMCPX) 0.030%
BA SM CAP GRTH INST (BAFSX) 1.000%
VANG S&P SC 600 IS (VSMSX) 0.080%
VANG SM VAL IDX INST (VSIIX) 0.060%
AF EUROPAC GROWTH R6 (RERGX) 0.460%
HARBOR DIVINTAC RET (HNIDX) 0.870%
RBC EMRG MKTS EQ I (REEIX) 0.890%
RT L&G ACWI EX US C 0.020%
VANGUARD TARGET 2015 0.050%
VANGUARD TARGET 2020 0.050%
VANGUARD TARGET 2025 0.050%
VANGUARD TARGET 2030 0.050%
VANGUARD TARGET 2035 0.050%
VANGUARD TARGET 2040 0.050%
VANGUARD TARGET 2045 0.050%
VANGUARD TARGET 2050 0.050%
VANGUARD TARGET 2055 0.050%
VANGUARD TARGET 2060 0.050%
VANGUARD TARGET 2065 0.050%
DODGE & COX INCOME (DODIX) 0.420%
FID INFL PR BD IDX (FIPDX) 0.050%
PIM LG DUR TOT RTN I (PLRIX) 1.070%
BBH LTD DURATION I (BBBIX) 0.280%
VANG TREASURY MM (VUSXX) 0.090%

Her SEP IRA at Wells Fargo
0.48% EKOAX Wells Fargo Omega Growth (1.28%)

Her Traditional IRA at Vanguard
11.97% Total bond mkt index fund (VBTLX) (0.05%)
2.69% Total Int’l bond index fund (VTABX) (0.11%)
5.43% Total int’l stock Index Fund (VTIAX) (0.11%)
17.49% Total stock mkt index fund (VTSAX) (0.04%)

Contributions
New annual Contributions
$26,000 his 401k (plus 4% match)
$26,000 her 401k (plus 6% match)
Maxing one family HSA at her job, $7,100 plus $1,000 catch-up
His Roth IRA max each year ($7,000) via backdoor started with tax year 2019 (thanks Bogleheads!)
If I retire in 2021 will consider Roth conversions for my accounts but I have to think about our overall marginal tax situation now and later.
Anticipated expenses in retirement are 10K/month.

I would like to retire in 2021, and my job situation is not very stable right now. Her job is very stable. My income 225K, hers 185K. No desire to leave a legacy. No desire to move or sell house. Our plan is for me to wait till 70 for SS, her to retire and take SS at 65. Both very healthy (knock wood).
Our work histories and salaries are similar, so SS expectations are almost identical. Only difference is our ages

Questions:
1. Does our current AA look appropriate? We are comfortable with 60/40, unsure if our investment choices in each can be improved upon? Especially Her 401K, as it was recently moved from her company's investment group’s managed 401K to Fidelity after her employer went thru a merger this year and these are the funds she ended up with after the transfer.
2. Can anything be done with her SEP IRA? Would like to consolidate for simplicity, plus the lone fund has a front-end load of 5.75%. It was opened around 20 years ago when she was a self-employed consultant and was never added to after the initial investment. Can it be consolidated with any of her other accounts, or should it? I don’t even know if the money in there is pre or post tax.
3. I am struggling with me doing Roth conversions between retirement and when I start SS (at 70 I am planning). In a high tax rate now, and have to work hard to guesstimate our tax rate in the future. Also I am taking into consideration that at one point in the future one of us will be filing single.
4. I know we are spending more than we should, as we are not able to contribute (save) anything beyond the 401Ks/HSAs. My Roth is new this year, and will do back doors if I am able, but we never contribute to our taxable at VG. We do have our emergency fund in a couple of banks, and that is where we keep any leftover money. Should I consider moving EF to the taxable acct at VG?
5. Am I overlooking anything overall?

Many thanks for looking
Your expenses must be excluding taxes and so your monthly need is more like $13k or something like that, right ? Getting a firm handle on this number and then estimating what your expenses will be in retirement (no mortgage and assuming eventually neither of you are working) is going to be an important first step. Seems that once you turn 70 and draw SS you'll be fine, but you'll have some hefty withdrawals those first few years especially if your spouse gets the retirement itch when she see's you living the easy life while she is still working.
An important key to investing is having a well-calibrated sense of your future regret.
Topic Author
McDougal
Posts: 242
Joined: Tue Feb 27, 2018 3:42 pm

Re: Please review my portfolio as I near retirement

Post by McDougal »

KlangFool wrote: Sun Oct 18, 2020 11:48 am OP,


Your numbers do not add up. What is your current annual expense? It has to be much more than 120K per year.

A) Your gross income is around 400K per year.


B) Your annual saving is only 64K per year.


C) What is your total taxes? 100K per year?

I believe your REAL annual expense is closer to 200K per year. So, why do you think that your retirement expense is only 120K per year?

Make sure that your projected annual expense is correct. That should be your very first step.


Annual Expense = gross income - annual savings (64K) - taxes


You can get your 2019 taxes from your payslips and tax filing.

KlangFool
Thanks KlangFool,

I will sharpen my pencil to look at expenses much more deeply, but I do think it is because we are paying off the mortgage so aggressively (I know how you feel about that!). Paid 96K extra this year. I edited the OP to reflect this.
KlangFool
Posts: 19627
Joined: Sat Oct 11, 2008 12:35 pm

Re: Please review my portfolio as I near retirement

Post by KlangFool »

McDougal wrote: Mon Oct 19, 2020 5:14 am
KlangFool wrote: Sun Oct 18, 2020 11:48 am OP,


Your numbers do not add up. What is your current annual expense? It has to be much more than 120K per year.

A) Your gross income is around 400K per year.


B) Your annual saving is only 64K per year.


C) What is your total taxes? 100K per year?

I believe your REAL annual expense is closer to 200K per year. So, why do you think that your retirement expense is only 120K per year?

Make sure that your projected annual expense is correct. That should be your very first step.


Annual Expense = gross income - annual savings (64K) - taxes


You can get your 2019 taxes from your payslips and tax filing.

KlangFool
Thanks KlangFool,

I will sharpen my pencil to look at expenses much more deeply, but I do think it is because we are paying off the mortgage so aggressively (I know how you feel about that!). Paid 96K extra this year. I edited the OP to reflect this.
You still have to pay property tax even after the mortgage is gone. What is the amount for the property tax?

KlangFool
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Watty
Posts: 21787
Joined: Wed Oct 10, 2007 3:55 pm

Re: Please review my portfolio as I near retirement

Post by Watty »

McDougal wrote: Sun Oct 18, 2020 11:27 am 3. I am struggling with me doing Roth conversions between retirement and when I start SS (at 70 I am planning). In a high tax rate now, and have to work hard to guesstimate our tax rate in the future. Also I am taking into consideration that at one point in the future one of us will be filing single.
I am also in Georgia.

When looking at the Roth conversions be sure to take the Georgia Retirement Income exclusion into account. It starts at 62 and when you are 65 it is $65K($130K for a couple) and that is in addition to Georgia not taxing Social Security. This means that you very well may not need to pay much if any Georgia state income taxes when you are over 65 and retired.

The issue with that is that if you do Roth conversions then you could exceed that limit and have to pay Georgia income tax on the Roth conversion but if you just waited until you needed the money you might have been able to avoid paying the Georgia taxes later.

Doing the Roth conversion could still make sense but it will be harder to justify.
Topic Author
McDougal
Posts: 242
Joined: Tue Feb 27, 2018 3:42 pm

Re: Please review my portfolio as I near retirement

Post by McDougal »

KlangFool wrote: Mon Oct 19, 2020 7:45 am
McDougal wrote: Mon Oct 19, 2020 5:14 am
KlangFool wrote: Sun Oct 18, 2020 11:48 am OP,


Your numbers do not add up. What is your current annual expense? It has to be much more than 120K per year.

A) Your gross income is around 400K per year.


B) Your annual saving is only 64K per year.


C) What is your total taxes? 100K per year?

I believe your REAL annual expense is closer to 200K per year. So, why do you think that your retirement expense is only 120K per year?

Make sure that your projected annual expense is correct. That should be your very first step.


Annual Expense = gross income - annual savings (64K) - taxes


You can get your 2019 taxes from your payslips and tax filing.

KlangFool
Thanks KlangFool,

I will sharpen my pencil to look at expenses much more deeply, but I do think it is because we are paying off the mortgage so aggressively (I know how you feel about that!). Paid 96K extra this year. I edited the OP to reflect this.
You still have to pay property tax even after the mortgage is gone. What is the amount for the property tax?

KlangFool
Property tax/utilities/HOA = $12,360 today.
Insurance (home/car/umbrella) = $3950 today
KlangFool
Posts: 19627
Joined: Sat Oct 11, 2008 12:35 pm

Re: Please review my portfolio as I near retirement

Post by KlangFool »

McDougal wrote: Mon Oct 19, 2020 8:38 am
KlangFool wrote: Mon Oct 19, 2020 7:45 am
McDougal wrote: Mon Oct 19, 2020 5:14 am
KlangFool wrote: Sun Oct 18, 2020 11:48 am OP,


Your numbers do not add up. What is your current annual expense? It has to be much more than 120K per year.

A) Your gross income is around 400K per year.


B) Your annual saving is only 64K per year.


C) What is your total taxes? 100K per year?

I believe your REAL annual expense is closer to 200K per year. So, why do you think that your retirement expense is only 120K per year?

Make sure that your projected annual expense is correct. That should be your very first step.


Annual Expense = gross income - annual savings (64K) - taxes


You can get your 2019 taxes from your payslips and tax filing.

KlangFool
Thanks KlangFool,

I will sharpen my pencil to look at expenses much more deeply, but I do think it is because we are paying off the mortgage so aggressively (I know how you feel about that!). Paid 96K extra this year. I edited the OP to reflect this.
You still have to pay property tax even after the mortgage is gone. What is the amount for the property tax?

KlangFool
Property tax/utilities/HOA = $12,360 today.
Insurance (home/car/umbrella) = $3950 today

Is your 120K per year expense include those numbers?


KlangFool
Topic Author
McDougal
Posts: 242
Joined: Tue Feb 27, 2018 3:42 pm

Re: Please review my portfolio as I near retirement

Post by McDougal »

Watty wrote: Mon Oct 19, 2020 8:37 am
McDougal wrote: Sun Oct 18, 2020 11:27 am 3. I am struggling with me doing Roth conversions between retirement and when I start SS (at 70 I am planning). In a high tax rate now, and have to work hard to guesstimate our tax rate in the future. Also I am taking into consideration that at one point in the future one of us will be filing single.
I am also in Georgia.

When looking at the Roth conversions be sure to take the Georgia Retirement Income exclusion into account. It starts at 62 and when you are 65 it is $65K($130K for a couple) and that is in addition to Georgia not taxing Social Security. This means that you very well may not need to pay much if any Georgia state income taxes when you are over 65 and retired.

The issue with that is that if you do Roth conversions then you could exceed that limit and have to pay Georgia income tax on the Roth conversion but if you just waited until you needed the money you might have been able to avoid paying the Georgia taxes later.

Doing the Roth conversion could still make sense but it will be harder to justify.
Thanks for the reminder Watty!
Nowizard
Posts: 3204
Joined: Tue Oct 23, 2007 5:33 pm

Re: Please review my portfolio as I near retirement

Post by Nowizard »

We have a SEP-IRA, two traditional IRA's, and two ROTH-IRAS in our portfolio, all with Vanguard. The way they set accounts makes it very easy to visualize each, and we have seen no reason to consolidate further. As Einstein said, make things simple, but not too simple. Certainly no reason not to consolidate if that is desired, but could there be an advantage in seeing how different, original portfolios were performing at some point, a possibility lost with this minimal consolidation?

Tim
Topic Author
McDougal
Posts: 242
Joined: Tue Feb 27, 2018 3:42 pm

Re: Please review my portfolio as I near retirement

Post by McDougal »

KlangFool wrote: Mon Oct 19, 2020 8:46 am
Thanks KlangFool,

I will sharpen my pencil to look at expenses much more deeply, but I do think it is because we are paying off the mortgage so aggressively (I know how you feel about that!). Paid 96K extra this year. I edited the OP to reflect this.


You still have to pay property tax even after the mortgage is gone. What is the amount for the property tax?

KlangFool
======================================================================
Property tax/utilities/HOA = $12,360 today.
Insurance (home/car/umbrella) = $3950 today
======================================================================

Is your 120K per year expense include those numbers?


KlangFool
My intention was to include taxes, insurance, food, travel, etc., that is ALL expenses. But I am now thinking I need to re-assess my expected future expenses as it appears I may not even have an accurate grasp or number for my CURRENT expenses.

Thanks!
KlangFool
Posts: 19627
Joined: Sat Oct 11, 2008 12:35 pm

Re: Please review my portfolio as I near retirement

Post by KlangFool »

McDougal wrote: Mon Oct 19, 2020 8:55 am
KlangFool wrote: Mon Oct 19, 2020 8:46 am
Thanks KlangFool,

I will sharpen my pencil to look at expenses much more deeply, but I do think it is because we are paying off the mortgage so aggressively (I know how you feel about that!). Paid 96K extra this year. I edited the OP to reflect this.


You still have to pay property tax even after the mortgage is gone. What is the amount for the property tax?

KlangFool
======================================================================
Property tax/utilities/HOA = $12,360 today.
Insurance (home/car/umbrella) = $3950 today
======================================================================

Is your 120K per year expense include those numbers?


KlangFool
My intention was to include taxes, insurance, food, travel, etc., that is ALL expenses. But I am now thinking I need to re-assess my expected future expenses as it appears I may not even have an accurate grasp or number for my CURRENT expenses.

Thanks!
McDougal,

1) Please get a good estimate of your current expense excluding income taxes, social security, and Medicare taxes.


2) After that, try to get an estimate of your retirement expense excluding income taxes.


3) Try to estimate your retirement income taxes.


Without a proper estimate of your retirement expense, you cannot go further.

My gut feeling is you are cutting pretty close. You have to reduce your expense somehow if you want to keep the house.


KlangFool
Outer Marker
Posts: 1531
Joined: Sun Mar 08, 2009 8:01 am

Re: Please review my portfolio as I near retirement

Post by Outer Marker »

McDougal wrote: Mon Oct 19, 2020 8:55 am ...I am now thinking I need to re-assess my expected future expenses as it appears I may not even have an accurate grasp or number for my CURRENT expenses.
Better to find out now than later!

Hope you act on and implement Duckie's vastly simplified and streamlined portfolio.
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