Rukh O'Rorke
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Post by Rukh O'Rorke on Aug 6, 2021 18:24:05 GMT -5
So, the old msn days are long and far away in time. I was young when I started up there, now I am old.
I'm still pretty much 100% stocks. Have 3k in ibonds, that's it. Wondering how I stand on caps and international, need to investigate that.
13% mutual funds/etfs 87% individual stocks
Thinking to retire/semi-retire soon, definitely time to start decreasing risk. Worried about an extended bear market if I'm not prepared. Was thinking I'd cruise through with minimal cash/bonds, but there have been several bear markets that took 15 years to get to the previous high before the fall - Worried about that kind of thing cropping up.
And living through a 3 year bear and worrying it might be a 15 year bear would be.....anxiety provoking!
I'm 56, almost 57.
What's in your accounts? How old are you? What changes do you antipate making to the AA before pulling the plug?
I just feel like bonds do not offer the mitigation they used to, and interested to see how everyone is approaching this.
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Deleted
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Post by Deleted on Aug 6, 2021 19:09:13 GMT -5
I'm 70% in equities and I'm 68. Yes, that's high. Mitigating factors: I have a decent predictable income from SS and 2 non-COLA pensions. I'm planning to file for SS on my own record at 69 so that will go up by about $1,500/month although a chunk of that will need to be set aside for taxes. My necessary expenses can go pretty low- a significant % of what I spend in a year is charitable donations, travel, non-essential home upgrades and donations to my grandchildren's 529 account.
I think where retirees get into trouble is when they HAVE to liquidate unsustainable %s of their holdings in a down market just to pay regular expenses. I lost a ton in the March, 2020 crash "on paper" but recovered nicely because I could wait it out.
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CCL
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Post by CCL on Aug 6, 2021 21:40:05 GMT -5
I keep ours at about 80/20. Hubby retired at 55, 8 years ago. I've had an automatic monthly withdrawal set up since then. So far, so good.
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minnesotapaintlady
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Post by minnesotapaintlady on Aug 6, 2021 21:44:01 GMT -5
I'm 52 and am at 90/10 stock/bond allocation in retirement accounts. Basically I have about 70K in VTBLX and that's it. The rest is mostly S&P 500 and one managed stock fund. I'm about 85% US stocks, 15% international according the the Vanguard Portfolio watch tool.
I'm trying to figure out what the do the next 7 years before I walk (If I make it that long...). I think I need to build up more cash and/or bonds so I have a few years worth of living expenses there. I started buying I bonds this year and plan to keep that up. I should just suck it up and change some of my new contributions to go to a bond fund in my 401K. But yeah...not real thrilled with that.
I don't think I'll be able to take advantage of Roth conversions until I'm no longer claiming HOH...which could be in my 60's...so I may never do that. I mean, I could, but unless tax laws change it would be too costly to be worthwhile.
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minnesotapaintlady
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Post by minnesotapaintlady on Aug 6, 2021 21:53:20 GMT -5
I keep ours at about 80/20. Hubby retired at 55, 8 years ago. I've had an automatic monthly withdrawal set up since then. So far, so good. So where do your monthly withdrawals come from? Do you have a cash settlement account that you fund by selling off stocks or bonds depending on the market and the monthly withdrawals come from there? Or do you just withdraw from bonds and replenish that from the stocks?
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giramomma
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Post by giramomma on Aug 6, 2021 22:19:48 GMT -5
We're 46, and I can retire in 10 years with a full pension. Covering health insurance premiums is sort of the wildcard right now. We're at about 85/15 in terms of stocks/bonds.
I don't see that changing for a long while, even if I retire early. If DH and I didn't have our pensions, then I'd probably feel differently. If it looks like retirement at 56 becomes a real thing for me, then I'll also be needing to build up cash reserves. Miss M will just be starting high school at that point...so she's going to be expensive. Also, I'm targeting completely redoing/updating our house when we are 56-60. I anticipate its going to run us close to 100K. We'll for sure need a new roof, probably new windows and new siding.. New HVAC. We need to do something with the back patio, and deal with the flower beds too. We also have hardwood floors that will need to be looked at/refinished. The last time the interior of the house was updated was in the early 90s. So, the kitchen, all the bathrooms will need to be completely redone. Anyway, I don't want to retire and then have to sell 100K of our assets right away to pay for getting the house in shape. I also don't want to do any of the major work now, because we still have a lot of folks (including young people) in a small space.
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resolution
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Post by resolution on Aug 6, 2021 22:44:15 GMT -5
I am 51 and DH is 40. Our asset allocation for retirement is 90/10 stocks and bonds. The stocks are 80% domestic and 20% international. In addition, we have a paid off rental house and I qualify for a pension if I were to retire today. The allocation is riskier than standard advice, but I count the pension as the safe part of my retirement, and the rental is a decent income stream that is independent of the stock market.
We also have about 120k in the bank, but that is being used to fix up our house. Once we have the initial work done on the house, we will probably use the rest to make a payment on the mortgage and have it recast to a lower monthly amount. We would like to get the mortgage low enough that my pension would cover all the monthly bills before I retire. Right now the pension would only cover about 60% of our expenses and the rental would cover another 30%, so we would have to draw on the investments each month if we were both to retire today.
If I work two more years and reduce our mortgage amount I think I would be more comfortable with the financial aspects of retiring. DH is planning to work another 10 years, and his salary is enough to cover everything on its own, but I don't want him feeling pressured like I quit working and its all on him to keep things going.
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CCL
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Post by CCL on Aug 7, 2021 0:05:31 GMT -5
I keep ours at about 80/20. Hubby retired at 55, 8 years ago. I've had an automatic monthly withdrawal set up since then. So far, so good. So where do your monthly withdrawals come from? Do you have a cash settlement account that you fund by selling off stocks or bonds depending on the market and the monthly withdrawals come from there? Or do you just withdraw from bonds and replenish that from the stocks? No, neither. Thru Fidelity I set up a cash withdrawal from the 401k. The way they do it automatically is they allocate the withdrawal according to what's in the account. For example, I have 50% of the money in Fidelity Low Priced Stock, 30% in Fidelity S&P 500 Index Fund and 20% in Fidelity Contra Fund. If my auto withdrawal is $1000, then $500 comes from Low Priced Stock, $300 from 500 Index Fund and $200 from Contra Fund. As far as I know I can't change that, but I've never looked into it either. I don't have any bond funds in the 401k. I just let them sell the stock funds and they direct deposit the $$$. It's actually worked out well. My original goal was to make it last until hubby could draw Social Security. Even with 8 years of monthly withdrawals we have more than we started with in the 401k.
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Deleted
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Post by Deleted on Aug 7, 2021 8:09:13 GMT -5
One painless change I made to shift towards more cash was to stop reinvesting dividends and capital gain distributions from stock mutual funds. You get taxed on them whether they're reinvested or not, but those are amounts you won't need to raise by selling other holdings.
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buystoys
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Post by buystoys on Aug 7, 2021 8:21:27 GMT -5
We're at 65/30/5. I decided to go a bit more conservative when we both retired. Before that, when DH went out on disability, we were at 90/10. When we were both working, I was at 100% equities. DH's account wasn't under his control, so we don't know exactly how it was invested without looking up a lot of information.
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CCL
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Post by CCL on Aug 7, 2021 9:05:50 GMT -5
One painless change I made to shift towards more cash was to stop reinvesting dividends and capital gain distributions from stock mutual funds. You get taxed on them whether they're reinvested or not, but those are amounts you won't need to raise by selling other holdings. In a brokerage account?
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Rukh O'Rorke
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Post by Rukh O'Rorke on Aug 7, 2021 9:25:44 GMT -5
Even with 8 years of monthly withdrawals we have more than we started with in the 401k. Thats the sweet spot!
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Deleted
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Post by Deleted on Aug 7, 2021 9:53:03 GMT -5
One painless change I made to shift towards more cash was to stop reinvesting dividends and capital gain distributions from stock mutual funds. You get taxed on them whether they're reinvested or not, but those are amounts you won't need to raise by selling other holdings. In a brokerage account? Yes.
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Tiny
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Post by Tiny on Aug 7, 2021 10:16:52 GMT -5
I'm complicated. I'm 57.5 and I will need my easy to access cash to cover my expenses from now until I'm 59.5 (in case I am unemployed any time in the next 2 years.) As of July 2021, I have 2 years of expenses. It's all in cash (or CDs or HYSA). This is a uncertain period - I may or may not have W2 income at some point. I'm still contributing to this/growing it. Every month I continue working - is one less month I need this money to cover. I have a Roth (and HSA) at 70/30 - they've been that way since I was 50. I probably should have been more aggressive but they both keep growing. Right now I see using this as "fill in" money - should I need to manipulate my taxable income so that I fall below some level to achieve a useful/meaningful/worthwhile savings in expenses (healthcare most likely). I started late in life on the Roth and HSA. I have a Roll Over IRA that needs to bridge me from 59.5 to 65 (the goal is to fully FIre at 59.5) This account hit 6 years expenses (in July 2021). I'm slowly moving this from an 80/20 to a 70/30 allocation. The goal is that I will have a rolling 2 years of 'cash' but I have to figure this strategy out. I expect to zero this account (best case scenario is there's some left over when I get to 65). I expect to have some sort of W2 income from a part time job or something else - just for fun I'm hoping I don't need the job for financial reasons. Then the final piece: I've got a Pension and an employer 401K that takes me from 65 to infinity (ok 90yo)! Right now the 401K is 80/20 and I'm slowly moving to 70/30 using new contributions to achieve this. Social Security is the "safety net" and right now the plan is to take it at 70 - but if things go really bad - I could take it as soon as 65. In July 2021 - FireCalc indicated that if I were to quit my day job (no more contributions to the 401K, pension payout set in stone, no more contributions to SS) the final leg of my retirement journey: my Pension, employer 401K and SS at 65 (not 70) would get me thru 100% of the time. So, I guess the answer to the OP - is I'm moving to a 70/30 or a 70/something/something cash allocation. I'm in a transition period right now and I have a lot of accounts that I need to do different things at different times. I'm not very good at "just do it in one fell swoop" - I like to make a decision and then spread out the agony/pain of accomplishing the decision. I feel like I'm in a very "delicate balance" place right now financially - if the market drops dramatically - the above plans fall back to the not making it 100% of the time. on the other hand - I'm guessing that if more time passes (and I continue contributing/saving and keep my expenses as planned) and if the investments keep growing... a drop in the market won't put me in as precarious a position. Right now - I just need time and the power of compounding...
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CCL
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Post by CCL on Aug 7, 2021 10:27:19 GMT -5
Even with 8 years of monthly withdrawals we have more than we started with in the 401k. Thats the sweet spot! I remember way back when, Crone used to say it was like magic how the $$$ accumulated lol.
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Rukh O'Rorke
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Post by Rukh O'Rorke on Aug 7, 2021 12:52:05 GMT -5
I remember way back when, Crone used to say it was like magic how the $$$ accumulated lol. I'm worried when I pull the plug, which will be soon!, it's going to be like 1972 it'll be magic, but the question wll be where did it all disappear to?
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susana1954
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Post by susana1954 on Aug 7, 2021 13:10:38 GMT -5
I use a Vanguard Retirement Target Fund (2025). It is fairly conservative even though I set the retirement date 5 years out from my real date.
As near as I can tell, I am about 60/40 in favor of stocks. That's fine. I don't have as long a time frame to recover once the stock market corrects.
Good news is that I don't "need" the money to live on.
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teen persuasion
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Post by teen persuasion on Aug 7, 2021 17:24:28 GMT -5
We are mid 50s. During accumulation we were nearly 100% stock. A few years back when the market hit a random all time high I decided it was time to lock in some of the gains, and get more conservative - swapped 30% of the total to bonds (in DH's rollover tIRA). It's drifted to 75/25, so I need to rebalance eventually, probably when we clean up accounts and roll DH's 401k and 403b to Vanguard, and the HSA to Fidelity.
The plan is I continue working part-time, push enough to my SIMPLE IRA to qualify for max EITC (still one dependent) and keep AGI low enough for FAFSA auto SAI = 0 in 2 years. If there's any room left, start tiny Roth conversions, and withdraw from Roth contributions as needed (we stashed cash leading up to DH retiring). Repeat as long as we have a dependent/eligible for EITC/I want to work.
Biggest problem is it limits Roth conversions, and I want to keep the tIRA size under control (by shifting growth + a bit more the Roth). But I also want to pad my SIMPLE IRA before I stop working - I've only had access 2 years, so the lion's share of our tIRA balances are in DH's name. So I want to add to my side while drawing his down for expenses, to get a better balance (there's a state tax benefit).
We have roughly 40/60 tax-free/tax-deferred, with all bonds in tax-deferred (limit growth where it will be taxed, encourage growth in tax-free). So a withdrawal of 4% (of the total) is equivalent to 6.6% of the tIRA balances - ok, technically I'd convert that amount from tIRA to Roth, then withdraw from previous Roth contributions or conversions, but it's effectively withdrawing from tIRA (to get around pre 59.5 penalties). Let Roth grow, withdraw from tIRA, hopefully Roth grows more than tIRA shrinks, and future RMDs are minimal.
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saveinla
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Post by saveinla on Aug 7, 2021 21:59:21 GMT -5
Do any of your plans change if Congress enacts the Secure 2.0 act that will allow people to delay RMDs until 75 or eventually remove that completely as they are planning to? That would give people more time to do Roth conversions if needed etc. But taxes could increase , so there is a risk of that.
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giramomma
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Post by giramomma on Aug 7, 2021 22:20:29 GMT -5
One painless change I made to shift towards more cash was to stop reinvesting dividends and capital gain distributions from stock mutual funds. You get taxed on them whether they're reinvested or not, but those are amounts you won't need to raise by selling other holdings. The taxing of dividends depends on your tax bracket. We're in the 12% tax bracket, so our dividends aren't taxed. I'm not sure when/if we'll ever get to the 22% tax bracket. If I have a normal life expectancy, we could be 20+ years away from worrying about being taxed on dividends.
Of course, if I go early, then DH will lose a whole heck of a lot of space. It's pretty shocking at how singles end up taking a bath tax wise.
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CCL
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Post by CCL on Aug 7, 2021 23:10:59 GMT -5
Gira, just my opinion, but I don't expect tax rates, including capital gains, to stay this low for long. That's why I'm doing my Roth conversions now, rather than later. We're also currently in the 12%/$0% bracket. I convert as much as I can without going into the next bracket.
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minnesotapaintlady
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Post by minnesotapaintlady on Aug 7, 2021 23:49:41 GMT -5
The plan is I continue working part-time, push enough to my SIMPLE IRA to qualify for max EITC (still one dependent) and keep AGI low enough for FAFSA auto SAI = 0 in 2 years. If there's any room left, start tiny Roth conversions, and withdraw from Roth contributions as needed (we stashed cash leading up to DH retiring). Repeat as long as we have a dependent/eligible for EITC/I want to work. Our situations are very similar. Assuming tax laws stay similar, EITC and FAFSA will be driving a lot of my decisions for a long time...like 2032 if my youngest goes to college.
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Regis
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Post by Regis on Aug 9, 2021 6:19:51 GMT -5
I'm 57 and DW is 56. We're 73/14/13 right now. Cash is a little higher than normal, but we've got a home addition and our daughter's wedding in the next year or so, so that's staying safely tucked away. We'll keep backing down our stock position as we continue to get older, but will probably never be less than 50%.
And I keep seeing people post that "we're 100% in stocks with mutual funds." That's probably not the case. For example, if you're in a 2025 target date fund, it's probably only holding about 50-60% stocks right now with 30-40% in bonds and 5-10% in cash. You'll need to drill down into each fund to find your true allocation. We use Morningstar to do that.
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jeffreymo
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Post by jeffreymo on Aug 9, 2021 10:30:09 GMT -5
We’re 45 and 39 and our allocation is 97/3 - with 13% being individual stocks. No target date funds. All mutual funds that we own mention equity holdings and nothing regarding debt.
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MN-Investor
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Post by MN-Investor on Aug 9, 2021 10:30:47 GMT -5
A couple of years before my sweetie retired, we were at 81/2/17. I don't remember why we had so much cash, but we were always heavy into stocks up to that point. Then my DH sold the company stock in his 401(k) and moved it to bonds. When he retired in mid-2016 we were at 39/50/11. My DH passed away in 2018. My current asset allocation is 43/54/3. That's ok for the time being. At some point I'm going to increase my stock holdings to at least 50%, maybe up to 60%. I need to think about it for a bit first. By the way, I'm 68 years old.
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bean29
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Post by bean29 on Aug 9, 2021 11:28:59 GMT -5
I am confused - can someone define the components of XX/YY/ZZ? I know one is Equities and one is Bonds but not sure what the other is?
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minnesotapaintlady
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Post by minnesotapaintlady on Aug 9, 2021 11:33:54 GMT -5
I am confused - can someone define the components of XX/YY/ZZ? I know one is Equities and one is Bonds but not sure what the other is? Cash
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buystoys
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Post by buystoys on Aug 9, 2021 14:23:48 GMT -5
Equities/bonds/cash
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tskeeter
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Post by tskeeter on Aug 9, 2021 21:43:00 GMT -5
We’re at 70/30 at age 65. This might be a bit equity heavy for many early retirees. Since pensions, SS, and the like cover most of our living expenses, I’m inclined to beef up the equity allocation another 10% or so if a good opportunity presents itself.
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jerseygirl
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Post by jerseygirl on Aug 10, 2021 16:50:22 GMT -5
At one time I had 40% individual bonds but as interest rates fell this decreased a lot. I took an annuity that is about 30% of assets - it replaced the bonds. Yields about 8% with yearly increases, the principal (money I put in) will go to my heirs . I like the stability of the annuity payments plus the yearly increases and safe insurance company backing The rest is primarily individual stocks with maybe 12% in ETFs I saved too much in tIRA and now am required to take RMDs that are more than we need along with SS So now just living on SS and annuity payments with rest of RMDs rolled into brokerage account. Buy stocks a few times/year, most recent was NovoNordisk - they have an obesity drug recently approved that may be a big seller along with their insulins.
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