Lincoln Stable Value?

[GreenER]

We are now just 15 months from FIRE! I have been working on changing my asset allocation and I am now at 70/30 down from the 100% stocks that I maintained through accumulation. I am still having a hard time getting excited about bonds, though I have appreciated the relative stability they brought through these recent swings.

Does any one have experience with the Lincoln Financial Stable Value Fund? I have access to this fund and a year ago I put 30% of the money I had invested with Lincoln into the Stable value. The rest of my funds at Lincoln are in an index fund with an ER of 0.3% which is higher than for the Vanguard funds I have at Fidelity. I have most of my 403b in Vanguard index at Fidelity with 70% stocks index- large (25%), medium (20%), small(10%), international (15%) and 30% Vanguard bond index.

I was thinking perhaps that I would sell the remaining index at Lincoln and invest the proceeds in the Value fund. This would bring my "bond like" investments to nearly 50%. The fund has a minimum 3% return. Their website is terrible and I will likely have to call to get to the bottom of fees and insure that I will be able to get monthly or yearly withdrawals from this after FIRE. I will be leaving at 55 and so I should be able to draw off of this without penalty. I thought that having this money to draw from to supplement my pension would make me feel less anxious if I end up FIRING in a down market. I plan on transferring the Fidelity work account to a Fidelity brokerage account. I also have an ING account that I will convert to Roth and transfer to Vanguard and a Plan Member account with Wellesley, Wellington and Total stock that I will transfer to Vanguard.

In addition to the Lincoln Value account we would have after tax accounts and Roth with which to supplement pension until age 70 when we will take SS. I hope to be able to manage our income in order to get ACA subsidy and hope to leave the rest of the IRA accounts from work to grow undisturbed other than strategic Roth conversions.

I'd welcome any thoughts on the planning and thought process as well as any insights into using Stable Value as a stand in for some bond investment. Also any specific experience with Lincoln would be helpful!

 

[GreenER]

Well, I called Lincoln today and was told that there is no fee or ER associated with their Stable Value Fund. It returns a minimum of 3% compounded daily. This is sounding more attractive as a safer harbor than bonds in the near term. Since this is also money I intend to access sooner than any of my other tax sheltered investments, it seems that the inflation risk is somewhat diminished. I also found that they do allow for scheduled yearly or monthly withdrawals when I ER at 55 and you aren't tied into a set distribution so I can change it if I find we are getting too much from dividends on after tax accounts. Or if, somehow, one or the other or both of us ends up with some sort of income post fire. We had toyed with some ideas for a small business venture to help offset health care expenses. And we both have ideas for dabbling at some work. On the other hand if it turns out we are having too much fun we may say nix on the whole w*rk thing.

So what do people think? My Roth accounts are invested entirely in equities and include some indexed Vanguard REIT and small cap as well as healthcare index fund and SP 500. In other words the Roth is all risk. Is it reasonable to put 20% of my non Roth tax sheltered money into this stable value fund and then have about 10% split between Wellington and Wellesley and another 30% in a Vanguard bond fund with the remainder indexed in equities for my tax sheltered? My after tax is mostly coming from house sale when we downsize. We could pay off our downsized house but would prefer not to for the time being. My plan is to invest that money in Vanguard Large cap to take advantage of 100% qualified dividends in 15% bracket and in Fidelity Tax Free Bond Fund. This should shelter the after tax investments from at least federal tax.

 

[rodi]

3% is a good payout. I kept my former employer 401k for a while just for the stable value fund. But the payout had dropped to 1.7% and I rollled the money out.

 

[GreenER]

3% is a good payout. I kept my former employer 401k for a while just for the stable value fund. But the payout had dropped to 1.7% and I rollled the money out.

Was your stable fund also with Lincoln? I guess they can change the payout at any point. I hadn't really considered that. I would be tied to leaving it in there until I reach 59.5 as it would be my only accessible IRA until then. I will have the principle from Roth accounts but would rather not have to dip into those in the near term. Hoping to mostly use the after tax investments and this stable value to supplement a pension for the first 4.5 years of freedom.

 

[travelover]

I would be tied to leaving it in there until I reach 59.5 as it would be my only accessible IRA until then.

Many, but not all 401(k) plans will allow withdrawals with no penalty at age 55 if you are retired.

 

[rodi]

Our stable value fund was Prudential. They updated the interest guaranteed amount each year. In this perpetual low interest environment... over time it moved down.

 

[GreenER]

Maybe I will get lucky and the 3% rate will hold steady then, since we are no longer in the absolute interest rate doldrums. I am a little optimistic since there has been some upward movement in CD rates. That would be nice since my projected pension payout took a downward turn because of the interest rate increase. I don't quite understand that one and I'm hoping it perks back up next year before I claim it.