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Retirement Account "couch potato" management question
Old 07-02-2013, 11:25 PM   #1
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Retirement Account "couch potato" management question

I just turned 58 (ER’ed Jan 2011) and have been basically in couch potato mode (“set it, quick weekly check it, but not obsesses over it”) when it comes to my 401K and Traditional IRA (Current total about $500K). I do not foresee starting to withdraw from these funds for at least 4 years. I have moved what is about $340K into only two vanguard funds in a traditional IRA account (Wellesley ~120K and Wellington ~ 220K) which according the Vanguard site provides about a 55/45 Equity/Bond Mix. I will move the remainder of my 401K (~$160K) in 2 or 3 transfers over to Vanguard between now and when I turn 59.5 years old and then plan to “manage it more actively”. The funds in my 401K or more diversified, but the fees are a bit higher, fund selection much lower (megacorp specific Blackrock funds with no ticker symbols) but all in all have been performing OK and close to my IRA. I really don’t want to spend a lot of time managing my retirement accounts at this point on time. My limited efforts and time I put into asset management is now more focused on managing/monitoring my non retirement fund assets (which are close in total value to my retirement accounts, (not all vanguard.)

Does this seem like a reasonable “couch potato” approach for the next few years (given markets don’t go too crazy)? Or should I start to diversify these two funds to a more specific/granular level even though they are already somewhat diversified (plus have some trade/activity restrictions on how often money can be move out and about. .
Actually I have not seen a significant difference in overall performance over the last 2 years between my Vanguard IRA account with just the two "core" funds and my regular Vanguard account with 8 funds (probably because they are also close to a 55/45 mix). My risk comfort zone is probably conservative/moderate.

I will remain in watch mode on the Fed/interest rate trend for possible AA tweaks to both retirement and non retirement.
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Old 07-03-2013, 06:20 AM   #2
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I think you plan is sensible. I invest in fixed income separately from equities mostly for tax efficiency (fixed income in tax deferred accounts, equities that pay qualified dividends in taxable accounts) but if I didn't have significant taxable accounts I would simplify with balanced funds in my tax-deferred accounts.

As I read your post I was thinking a one stop solution might be one of Vanguard's target date funds that is consistent with your desired AA. Have you had a session with Vanguard's financial planning professionals?
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Old 07-03-2013, 07:14 AM   #3
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Quote:
Originally Posted by pb4uski View Post
I think you plan is sensible. I invest in fixed income separately from equities mostly for tax efficiency (fixed income in tax deferred accounts, equities that pay qualified dividends in taxable accounts) but if I didn't have significant taxable accounts I would simplify with balanced funds in my tax-deferred accounts.

As I read your post I was thinking a one stop solution might be one of Vanguard's target date funds that is consistent with your desired AA. Have you had a session with Vanguard's financial planning professionals?
Thank you for the sanity check. I have not taken advantage of the "freebie" with one their financial planners that I was offered several times in the past as a Vanguard "Flagship Member" (I have always been leery of taking investment advice of a financial planner that works where a large portion of my assets are.) Good to be reminded about that.

My next 401K move later this year may put me in the next "membership level" where their planning services are free since then I will be over 500K. Just can't remember if it's 500K or one million. Oh well, easy enough to check/schedule with a simple phone call. Thanks again!

PS - I think I did take a quick look at the target date funds in both my 401K and Vanguard and their performance was so-so (JMHO), although I do have half (~$80K) of my megacorp 401K in the "currently retired" target date fund (so it's a bit bond heavy). The rest is spread across the few equity funds they have. Sometimes that phone looks pretty heavy, LOL.
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Old 07-03-2013, 07:23 AM   #4
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For more diversification, you may want to consider an international fund like Vanguard's Total Intl Index. I expect Vanguard will suggest that too.
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Old 07-03-2013, 07:30 AM   #5
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+1 My target AA includes 30% of my 60% in equities in international equities and 20% of my 40% fixed income in international fixed income.
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Old 07-03-2013, 11:38 AM   #6
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I'd consider adding a bond/cash fund to allow for near-term withdrawals for expenses. This is particularly useful when the market is in a big dip. W&W won't allow you to chose to withdraw only from bonds or only from stocks.

Also look into Roth conversions, which you didn't mention. It's like moving your taxable account money into a Roth account if you are normally going to make an IRA/401k withdrawal anyway. No taxes on your previously taxed accounts would be a boost.
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