Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
2015 launch plan
Old 12-16-2014, 12:51 PM   #1
Thinks s/he gets paid by the post
 
Join Date: Sep 2012
Location: Seattle
Posts: 2,905
2015 launch plan

As our ER date nears, I am starting to hoard cash. We have to sell our house next year and I want to have money available for repairs if required by the buyer (not too familiar with how all of this works as this is our first sale). The home is paid off but I assume it takes awhile before you get the check.

This of course leads to a bit of market timing, as I am collecting near 6 figures in cash across accounts to attend to house needs and also to provide us with income while working, since I plan to direct 100% of earned income in 2015 toward 401K, after tax 401k ($20,000), two Roths, and HSA contribution. Pretty much it will be 3 months of working with paychecks of $0.

After sale of our home we will have a decent chunk of cash which will need to be invested.

I am thinking of keeping 4 years living expenses in cash (perhaps a CD ladder) and putting the rest in the market lump sum. Four years sounds excessive but I think the ability to lower our MAGI for a great subsidized silver ACA plan outweighs any small amount of interest gained by locking up money in longer term investments.

Do you think 4 years is enough? We will be mid 40s and quite a distance from SS. I plan on keeping our 401K and IRAs 100% in the stock market.
__________________

__________________
Fermion is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 12-16-2014, 01:43 PM   #2
Thinks s/he gets paid by the post
 
Join Date: Jan 2008
Posts: 1,495
You'll probably get different viewpoints on this. I've come to the conclusion there's more right way to do it.

I'm going to follow Otar's suggestion of keeping 2 years expenses in cash, 3 years in short-term bond funds, and the rest in bonds/stocks funds. When I withdraw expenses annually, I'll use rebalancing to refill the cash and short-term bond fund buckets. It's been called mental accounting but it's also been called peace of mind.
__________________

__________________
Options is offline   Reply With Quote
Old 12-16-2014, 01:52 PM   #3
Thinks s/he gets paid by the post
Senator's Avatar
 
Join Date: Feb 2014
Location: Eagan, MN
Posts: 3,045
Quote:
Originally Posted by Fermion View Post
The home is paid off but I assume it takes awhile before you get the check.
You will get a check at closing. You can cash (and spend) it that day.

Good Luck!
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
Senator is offline   Reply With Quote
Old 12-16-2014, 05:37 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Lsbcal's Avatar
 
Join Date: May 2006
Location: west coast, hi there!
Posts: 5,676
Maybe try exploring this in the VPW app. I'm guessing you are comfortable with spreadsheets. VPW has a bonds %. Go in and modify this for what you think cash will do. Maybe take the 3 month Tbill (see Fed data for this or ask me for a link). Then add something to this 3 mo Tbill yield to take into account your expected cash yield. Or look for CD data.

This will be more accurate then asking here for people's presonal opinion.
__________________
Lsbcal is offline   Reply With Quote
Old 12-18-2014, 09:56 AM   #5
Recycles dryer sheets
 
Join Date: Jul 2013
Posts: 388
Quote:
Originally Posted by Fermion View Post
Do you think 4 years is enough? We will be mid 40s and quite a distance from SS. I plan on keeping our 401K and IRAs 100% in the stock market.
What will your overall AA be?

Planning on retiring at 50 - we will have 3 or 4 years of expenses in short-term investments (CDs, I Bonds, short term bond funds). Probably no more than 1 year in actual cash, however.
__________________
mrfeh is offline   Reply With Quote
Old 12-18-2014, 10:43 AM   #6
Thinks s/he gets paid by the post
 
Join Date: Sep 2012
Location: Seattle
Posts: 2,905
Quote:
Originally Posted by mrfeh View Post
What will your overall AA be?

Planning on retiring at 50 - we will have 3 or 4 years of expenses in short-term investments (CDs, I Bonds, short term bond funds). Probably no more than 1 year in actual cash, however.
Overall will be about 70% stocks, 30% short term (Ibond, CD) I don't believe in normal bonds at these interest rates.
__________________
Fermion is offline   Reply With Quote
Old 12-18-2014, 10:49 AM   #7
Recycles dryer sheets
 
Join Date: Jul 2013
Posts: 388
Quote:
Originally Posted by Fermion View Post
Overall will be about 70% stocks, 30% short term (Ibond, CD) I don't believe in normal bonds at these interest rates.
I assume you've used the various calculators to see if things should work out?

70% equities would make me a little nervous, but I don't know the size of your portfolio or annual expenses. Be wary of a bad sequence of returns.
__________________
mrfeh is offline   Reply With Quote
Old 12-18-2014, 11:23 AM   #8
Thinks s/he gets paid by the post
 
Join Date: Sep 2012
Location: Seattle
Posts: 2,905
Quote:
Originally Posted by mrfeh View Post
I assume you've used the various calculators to see if things should work out?

70% equities would make me a little nervous, but I don't know the size of your portfolio or annual expenses. Be wary of a bad sequence of returns.
Because of our relatively young age (mid 40s) I feel we need the larger exposure to stocks to combat future inflation. If it fails, it fails.
__________________
Fermion is offline   Reply With Quote
Old 12-18-2014, 12:11 PM   #9
Thinks s/he gets paid by the post
Live And Learn's Avatar
 
Join Date: Feb 2012
Location: Tampa Bay Area
Posts: 1,689
Quote:
Originally Posted by Options View Post
You'll probably get different viewpoints on this. I've come to the conclusion there's more right way to do it.

I'm going to follow Otar's suggestion of keeping 2 years expenses in cash, 3 years in short-term bond funds, and the rest in bonds/stocks funds. When I withdraw expenses annually, I'll use rebalancing to refill the cash and short-term bond fund buckets. It's been called mental accounting but it's also been called peace of mind.
+1
__________________

__________________
"For the time being no discipline brings joy, but seems grievous and painful; but afterwards it yields a peaceable fruit of righteousness to those who have been trained by it." ~
Hebrews 12:11

ER'd in June 2015 at age 52. Initial WR 3%. 50/40/10 (Equity/Bond/Short Term) AA.
Live And Learn is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Need new 2015 ACA plan: Help! tizlo Health and Early Retirement 23 12-12-2014 01:53 PM
18 months from launch (I hope) erkevin Hi, I am... 2 12-08-2014 08:10 PM
4 years 5 months and counting - Starting to prep for ER launch chinaco Hi, I am... 5 02-25-2007 08:21 PM
New SPDRs ETFs launch dasinsin FIRE and Money 0 10-15-2006 08:53 AM

 

 
All times are GMT -6. The time now is 01:40 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.