2015 launch plan

[Fermion]

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.

 

[Options]

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.

 

[Senator]

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!

 

[Lsbcal]

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.

 

[mrfeh]

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.

 

[Fermion]

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.

 

[mrfeh]

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.

 

[Fermion]

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.

 

[Live And Learn]

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