FinallyRetired
Thinks s/he gets paid by the post
- Joined
- Aug 1, 2002
- Messages
- 1,322
A couple of times a year I go through an existential crisis about my asset allocation, usually resulting in some dumb move. So this time, instead of acting impulsively, I spent the last 2-3 days searching through the wealth of great articles on this forum to gain from everyone’s ideas. I learned a great deal (there are some awesome financial minds here), but my situation is a little bit different, at least I think it is. Maybe I’m suffering from the TMI syndrome, but I’m confused and would appreciate comments on my situation.
I remain only partially retired but close enough to full retirement that I’ll frame this as if I just retired.
I’m 62 and have run out my projection for 21 years, to age 83. I have several income streams: an inflation protected military pension, an inflation protected (sort of) SS for my wife and myself, and a fixed TIAA Transfer Payout Annuity (TPA) that I will take for 10 years. When I add all of these together, I project that I will be able to live on this income with little or no withdrawal from my investments.
After 10 years, and for the next 11 years after that, I will have to replace the income from my expiring TPA from my investments. My overall withdrawal for the entire 21-year period are within the SWR of 4%, but it is variable, with 0% for 10 years and 5% for the next 11.
If I consider the TPA as the equivalent of a bond my current allocation is 50/50, which seems reasonable. If I remove the TPA from my equation, my allocation for the remaining money is 90/10 towards equity, which seems too aggressive. So I’m seeing this in two ways, and don’t know which is the “correct” way, if there is one.
Way 1: The TPA is part of my retirement income, so should be added into the overall pot and my true allocation is 50/50, which is reasonable.
Way 2: Since I will be withdrawing from the TPA to live on, it is the equivalent of income from a job, and my situation is equivalent to someone still working and 10 years from retirement. The 90/10 for my investment funds to be used in 10 years is too aggressive, and should closer to the 60/40 usually recommended for someone within 10 years of retirement.
I would appreciate any thoughts or advice, and apologize if this has been discussed before, but I couldn’t locate this precise situation.
I remain only partially retired but close enough to full retirement that I’ll frame this as if I just retired.
I’m 62 and have run out my projection for 21 years, to age 83. I have several income streams: an inflation protected military pension, an inflation protected (sort of) SS for my wife and myself, and a fixed TIAA Transfer Payout Annuity (TPA) that I will take for 10 years. When I add all of these together, I project that I will be able to live on this income with little or no withdrawal from my investments.
After 10 years, and for the next 11 years after that, I will have to replace the income from my expiring TPA from my investments. My overall withdrawal for the entire 21-year period are within the SWR of 4%, but it is variable, with 0% for 10 years and 5% for the next 11.
If I consider the TPA as the equivalent of a bond my current allocation is 50/50, which seems reasonable. If I remove the TPA from my equation, my allocation for the remaining money is 90/10 towards equity, which seems too aggressive. So I’m seeing this in two ways, and don’t know which is the “correct” way, if there is one.
Way 1: The TPA is part of my retirement income, so should be added into the overall pot and my true allocation is 50/50, which is reasonable.
Way 2: Since I will be withdrawing from the TPA to live on, it is the equivalent of income from a job, and my situation is equivalent to someone still working and 10 years from retirement. The 90/10 for my investment funds to be used in 10 years is too aggressive, and should closer to the 60/40 usually recommended for someone within 10 years of retirement.
I would appreciate any thoughts or advice, and apologize if this has been discussed before, but I couldn’t locate this precise situation.
