Ret. in 7 to20 months.

[Birchwood]

Hi I am 62 yrs old. and is scheduled to retire in 7 to 20 months depending on my own decision.
I am asking advice on options regarding investing my pension and assets to support me thru my ret.
I have about $900,000 pension(Sep-ira) in Vanguard MF
another $300,000 pension (sep) in Neuberger-Berman MF
About $345,000 inTreasury Direct which is maturing in months.
About $350,000 in different stocks, bluechip thru DRIPS
About $2,000,000 in Mutual funds(Vanguard, Fidelity, T. Rowe)
About $500,000 in CD.

Any suggestion on options to have a cash flow of about $60,000/yr.
I will also get about $26,000 SSS. Wife I think will get half.
House and vehicles all fully paid.

 

[pb4uski]

I've got good news and bad news.

The good news: I think you're all set. Any interest in adopting a retired 56 year old?

The bad news: You probably could have retired long ago if you chose to.

I would suggest that you go through Vanguard's financial planning process (it should be free given your level of assets). If it were me, I would delay SS until 70 unless you and DW are in poor health.

 

[Shanky]

I am not sure I understand the question. If you cash out and stuff all of the proceeds into a matress, (about $4.4 million) and you only need 60K a year in addition to SS., you can pull the 60K out of that matress every year until you are 135 years old. Inflation might cut 2 or 3 decades off of that. I agree with the other poster, you could have retired a few years ago unless your current assets represent a recent winfall.

 

[Spanky]

Congrats! Your withdrawal rate is way below 2% (even without SS). The chance of running out of money is almost zero.

Here are a couple of links on withdrawal strategy:
https://www.fidelity.com/viewpoints/tax-savvy-strategies
http://www.fivecentnickel.com/2009/10/19/retirement-withdrawal-strategies/

 

[Birchwood]

Thanks

I guess I need some reassurance that I have enough, and would love to have some comments on my allocation.
The 60K/ year is just a bare bones number and I realize that in the early part of ret. when we plan to do a lot of travel, 75K/yr is prob. more reasonable.

I may postpone getting the SS until 65.
I also understand that health is unpredictable and I like to be able to get the usual medicare.
I'll look into Fidelity and Vanguard assistance in asset allocation.
Thanks for comments.

 

[pb4uski]

You should have plenty. I'm a bit younger than you (57), have a smaller nestegg and about the same expenses, a 58 stock/38 bond/4 cash AA and I sleep very well at night.

There is insufficient data to comment on your AA. One thing you could do is get online on Vanguard and then add in all your other investments (either via a link or manually) and then run a Portfolio Watch report. The report will do an comprehensive analysis of your investment portfolio and how it compares to a model portfolio that you chose.

 

[Sun456]

Do you know how much your pensions will provide in income? That will determine to a certain extent what you should do with the rest of your assets.

Also did you accumulate these assets or inherit them? That will also affect what you do because your level of experience matters when handling this much money.

 

[obgyn65]

I agree with the posters above : you are all set. Congratulations.

 

[Bikerdude]

If your portfolio kicks off just 3% in interest and dividends that's 132K per yr. You would never have to sell anything in a down market. Nice place to be.

 

[Meadbh]

You have almost $4.4m in net worth, and you are worried about taking $75K a year??

 

[sheehs1]

You have almost $4.4m in net worth, and you are worried about taking $75K a year??

+1 particularly since compared to just your financial net worth, your spending is relatively low.

All you need is something that gives you a tax free income at 3% and you will MAKE $132,000 a year without invading principle. At 2% it is $88,000. Non tax free assets should net you $220,000 a year.

Diversify across a spectrum of income producing assets and you won't have a problem at all.

Is your question a serious one?

 

[Helen]

If you ask on the Bogleheads forum you will probably be told to keep working a few more years...

 

[pb4uski]

Just curious - if you tally up dividends and interest and capital gain distributions across all these investments in 2011 and 2010, how do those compare to your $60k annual living expenses?

 

[Birchwood]

My guess is if I tally all the earnings and capital gains in an average year it will surpass the 65K I put as bare bones expenses. At 2%, it should make
88K , at 2.5% it is 110K. All this varies dep. on the year.
I have to maximize the earning at the same time not to put too much risk.
I will prob. spend about 75K/year, and adjust accordingly dep. on the earning.
Will go down to 65K when market go down and spend about 85K in an up market.

The savings is not inherited. It is a result of 30 yrs of work and living a frugal simple life, despite some good earning years.

 

[eytonxav]

Given your age and portfolio, unless you have no insurance and serious medical issues, you shouldn't have a care in the world and probably could have RE years ago, so don't worry, be happy. The job you have done in accumulating a port of that size is to be envied.

 

[Sun456]

My guess is if I tally all the earnings and capital gains in an average year it will surpass the 65K I put as bare bones expenses. At 2%, it should make
88K , at 2.5% it is 110K. All this varies dep. on the year.
I have to maximize the earning at the same time not to put too much risk.
I will prob. spend about 75K/year, and adjust accordingly dep. on the earning.
Will go down to 65K when market go down and spend about 85K in an up market.

The savings is not inherited. It is a result of 30 yrs of work and living a frugal simple life, despite some good earning years.

You've done very well! I guess I'm still not clear on what you have in the way of guaranteed income and what part you need to organize for principal protection, growth and income. Have you done the exercise yet?

I've recently gone through the exercise myself but I have to get my little pot to last longer as I am only 45. As a result I'm probably a bit more conservative than you. In addition I've been a bit of a risky investor in the past and have now swung toward being the most conservative. I'm trying to find ways to diversify within the conservative realm. So far I've done lifetime guaranteed income with annuities, laddered individual bonds, conservative mutual funds and preferred stocks. Since one does not know what one does not know I'm casting around for other ways to diversify in the conservative realm.

 

[Bikerdude]

My guess is if I tally all the earnings and capital gains in an average year it will surpass the 65K I put as bare bones expenses. At 2%, it should make
88K , at 2.5% it is 110K. All this varies dep. on the year.
I have to maximize the earning at the same time not to put too much risk.
I will prob. spend about 75K/year, and adjust accordingly dep. on the earning.
Will go down to 65K when market go down and spend about 85K in an up market.

The savings is not inherited. It is a result of 30 yrs of work and living a frugal simple life, despite some good earning years.

If you just put it all in Wellesley you would reap $144,320 yr. I don't know if a 60% bond allocation is particularly wise at the moment however, Wellesley has a fine track record of managing risk over the years. Check it out.
Vanguard Wellesley Income Fund (VWINX) | US News Best Mutual Funds

 

[Birchwood]

Bikerdude,
Funny you mention, Wellesley! That and Wellington are my bigger holdings at
Vanguard.

I'm thinking putting more cash into T. Rowe Strategic Income and Ret. Income which is about 40%stock and 40% bonds with foreign bond and stocks in the remaining %.

 

[Bikerdude]

Bikerdude,
Funny you mention, Wellesley! That and Wellington are my bigger holdings at
Vanguard.

I'm thinking putting more cash into T. Rowe Strategic Income and Ret. Income which is about 40%stock and 40% bonds with foreign bond and stocks in the remaining %.

And you're worried about 60K income......why?

 

[Shanky]

"The savings is not inherited. It is a result of 30 yrs of work and living a frugal simple life, despite some good earning years."


Amassing $4.4 Million while working for someone else in 30 years, all while earning less then the social security max, with no inheritance is quite an accomplishment. Did you have a really amazing investment strategy or did you have some stock options really work out for you? I cannot begin to fathom the returns you must have had. (I assume you avoided getting hurt in 2000 and 2008 market somehow.)

 

[Birchwood]

Without revealing much , I am self employed, and work in a very lucratic
professional occupation, and socked away the maximum in Retirement plan every year for about 31 years. I also live an equiv. of 65K/yr despite a higher income. My main goal is to retire when I wanted to.

I started investing in solid blue chip stocks, mutual funds, treasuries from the very beginning and. stayed with it. Nothing esoteric. Just kept at it.

BTW the SSS estimate is just s lousy guess, I prob. will get more than that. Sorry!

The key to accumulating wealth is living very low beyond one's means.
For many years I lived in a 74K condo and drove a 10 yr old Subaru, while other folks at my level lived in a 500K mansion and drove BMWs. Eating out is going to Pizza ranch or burgers, fries and root beer. Fun- going to libraries and reading!.