First off, I’ve been reading these forums since 2008 and without the knowledge I’ve gained from your stories and advice, I’d still be w**king 80 hour weeks under two horrible bosses instead of retired at age 54. So thank you!!!
I'm single, no kids. FireCalc and my spreadsheets show a 100% success rate if all goes according to plan, but I need some help in getting off the investing ledge. I have a [-]little [/-]big problem with risk aversion and paralysis as you’ll see below.
Assets:
$100k in MM at 1% interest rate
$200k in CDs averaging 1.75% (2 & 3 year CDs)
$385k in Fidelity 401K (still with my former employer). ). You’ll see my risk aversion in action with my current asset allocation, and this is after I moved some $ from MM!
73.83% PIM TOTAL RT INST $284,528.96
8.74% VANG TOT BD MKT INST $33,696.71
6.91% VANG TOT STK MKT IS $26,610.93
5.65% FID DIVERSIFD INTL K $21,788.54
2.53% SEQUOIA FUND $9,756.78
2.33% ROYCE LOW PR STK IS $8,981.22
Non-Cola’d pension of $62K beginning at age 65, or lesser amounts starting at $31K at age 55. (No plans to start before 65.)
Eligible for Social Security at close to the max amount.
Paid off home valued around $300k.
I’m currently living off the $300k in savings with annual expenses averaging $37k for the next two years, then rising to $45k when Cobra and Cal-Cobra run out and I’ll have to get a HIPPA conversion policy (pre-existing conditions). If I’m lucky, the Affordable Care Act won’t get repealed and expenses won’t be so high. I have extra money earmarked for a new car every ten years and some padding for home maintenance/repairs. For health, I budgeted for the premium plus expenses up to the max out-of-pocket. When the savings run low, I’ll need to tap into the 401k money until the pension (from a stable Fortune 500 company) kicks in.
So here’s where I’m stuck: I know that I should roll the 401K money into a traditional IRA, then tax-efficiently convert as much as possible to a ROTH each year until I start needing to withdraw from the traditional. And I know I need to do a much better job at choosing my asset allocation and funds. But every time I get ready to pick up the phone and call Vanguard, I get knots in my stomach and freeze. I guess the biggest issue is that I need account stability between now and 2023 when the pension starts. At that point, the pension alone should cover my expenses until inflation (I estimated 3%) eats away at its spending power. But with SS and whatever is left in the IRA(s), my spreadsheets show that I’m good through age 95+.
Question 1:
A) Should I leave my money at Fido in the 401K?
B ) Leave it at Fido and roll into an IRA?
C) Roll the 401K into a Vanguard IRA?
Question 2:
Advice please on asset allocation and funds. I’m afraid to have too much in stocks, but maybe even more afraid to have as much as I do in bond funds with interest rates pegged to increase in the next couple of years.
Question 3:
Does my thought process make sense regarding the ROTH conversion?
Question 4:
What am I missing?
Thank you in advance, and sorry this is so long!
Zan
I'm single, no kids. FireCalc and my spreadsheets show a 100% success rate if all goes according to plan, but I need some help in getting off the investing ledge. I have a [-]little [/-]big problem with risk aversion and paralysis as you’ll see below.
Assets:
$100k in MM at 1% interest rate
$200k in CDs averaging 1.75% (2 & 3 year CDs)
$385k in Fidelity 401K (still with my former employer). ). You’ll see my risk aversion in action with my current asset allocation, and this is after I moved some $ from MM!
73.83% PIM TOTAL RT INST $284,528.96
8.74% VANG TOT BD MKT INST $33,696.71
6.91% VANG TOT STK MKT IS $26,610.93
5.65% FID DIVERSIFD INTL K $21,788.54
2.53% SEQUOIA FUND $9,756.78
2.33% ROYCE LOW PR STK IS $8,981.22
Non-Cola’d pension of $62K beginning at age 65, or lesser amounts starting at $31K at age 55. (No plans to start before 65.)
Eligible for Social Security at close to the max amount.
Paid off home valued around $300k.
I’m currently living off the $300k in savings with annual expenses averaging $37k for the next two years, then rising to $45k when Cobra and Cal-Cobra run out and I’ll have to get a HIPPA conversion policy (pre-existing conditions). If I’m lucky, the Affordable Care Act won’t get repealed and expenses won’t be so high. I have extra money earmarked for a new car every ten years and some padding for home maintenance/repairs. For health, I budgeted for the premium plus expenses up to the max out-of-pocket. When the savings run low, I’ll need to tap into the 401k money until the pension (from a stable Fortune 500 company) kicks in.
So here’s where I’m stuck: I know that I should roll the 401K money into a traditional IRA, then tax-efficiently convert as much as possible to a ROTH each year until I start needing to withdraw from the traditional. And I know I need to do a much better job at choosing my asset allocation and funds. But every time I get ready to pick up the phone and call Vanguard, I get knots in my stomach and freeze. I guess the biggest issue is that I need account stability between now and 2023 when the pension starts. At that point, the pension alone should cover my expenses until inflation (I estimated 3%) eats away at its spending power. But with SS and whatever is left in the IRA(s), my spreadsheets show that I’m good through age 95+.
Question 1:
A) Should I leave my money at Fido in the 401K?
B ) Leave it at Fido and roll into an IRA?
C) Roll the 401K into a Vanguard IRA?
Question 2:
Advice please on asset allocation and funds. I’m afraid to have too much in stocks, but maybe even more afraid to have as much as I do in bond funds with interest rates pegged to increase in the next couple of years.
Question 3:
Does my thought process make sense regarding the ROTH conversion?
Question 4:
What am I missing?
Thank you in advance, and sorry this is so long!
Zan