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Return of: I'll show you mine and you show me yours!!
Old 05-20-2011, 08:22 AM   #1
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Return of: I'll show you mine and you show me yours!!

Most of the following information came from my previous thread. What I am trying to do is illustrate how I am planning to set up my portfolio for drawdown. I've added some notes as well as some options. I would be very interested to see what other people are living on (total $$) how their portfolios are structured, how long they have been retired (I'm working part time right now, but could pull the trigger at any time and want the portfolio ready to go), how old you were when you retired, and any other information that might be relevant such as changes in withdrawal amounts, kids, rent vs own, etc.

That being said, here's mine

I'm 41 years old
Still working part time and setting things up
Not married (tried it once, lol)
I've lived on this amount of $$ for 16 months and it was easy!
No kids

Assume a 750k portfolio and a 50 year payout
70/30 stock/bonds&cash mix
750 * 0.3 = 225k in cash/bonds
750k - 225k = 525k stock funds
475k in S&P 500/total stock market fund
50k in global/emerging markets high risk own picks etc. (appx 10%)
assume 30k/year for living expenses
(with changes could get as low as 20k living expenses pretty comfortably)
5 years living expenses in a ladder or decent interest bearing cash vehicle
5 * 30k = 150k for 5 years living expenses in some laddered investments or anything with decent interest rate
225k - 150k(from 5 yr ladder) = 75k to be put into bond fund

Other information:
Firecalc gives me 100% survival rating even when no SS is assumed and interest rate is at 4%
I have a paid off house that I rent out which nets me about $6000/yr, house value is about 130k.
This will eventually be sold and proceeds added to portfolio.
I own half of a 2 family which flows cash but all monies are currently reinvested to fix it up.
Current value of 2 family is about 160k. Balance of loan is 140k and loan matures in 25 yrs.
This would either be sold eventually and proceeds added to the portfolio, or once paid off use
the rents to lower withdrawals from portfolio

The house I live in I owe 130k on and is worth about 250-270k. I could sell this house
and buy a nice house for about 150-170k loan free with lower taxes.
I will likely do this if my work dries up.
In my current house, I would need to withdraw 26k annually, so I have 4k wiggle room
If I were to sell this house and buy the cheaper one, I would have to withdraw about 20k/annually so I would have
about 10k wiggle room
I plan on adding modestly to my portfolio while I contract part time, and not withdrawing anything from it unless work dries up.
Questions:
Is this a reasonable allocation for the cash portion given the real estate holdings?
Is this in general how some people are structuring their portfolios during deaccumulation phase?
Is the portfolio diversified enough or should I add more small cap/foreign exposure?
Where do I park the 150k living expenses where i get a decent interest rate? CDs are terrible now?
Any other comments?
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Old 05-20-2011, 01:33 PM   #2
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I am 62, live alone in my paid off home, and have been retired for 18 months. I am NOT a financial wizard and I am posting as just another member who happens to be retired already.

Quote:
Originally Posted by panhead View Post
Questions:
Is this a reasonable allocation for the cash portion given the real estate holdings?

Depends on your risk tolerance.

Is this in general how some people are structuring their portfolios during deaccumulation phase?

I have no idea. Personally I don't hold any real estate except for my own home. I probably should but I have no desire to be a landlord. My asset allocation is 45:55 (equities:fixed). I have a small pension, and I am 63 so I can claim SS whenever I decide to make that leap.

Is the portfolio diversified enough or should I add more small cap/foreign exposure?

Personally I don't have any specifically small cap funds, but I have 13% VFWIX (Vanguard FTSE All-World Ex-US Index Fund). That is pretty comparable to your present international holding percentage. So, I think you are fine.

Where do I park the 150k living expenses where i get a decent interest rate? CDs are terrible now?

Good question, one to which I have no good answer. I leave mine in money market - - I get essentially no interest there but like the liquidity.
My expenses are pretty low due to living in a part of the country where cost of living is low. These expenses are more than met by relying on my tiny pension and either my dividends (now), or SS once I claim it. I am trying to expand my lifestyle to spend more, since I can afford it, but old habits die hard.

Personally, I would go for a more conservative asset allocation despite your rental house because of your plans to sell it. Plus, I am unsure of the risks entailed regarding tenants that don't pay, repairs, and so on. Bear in mind that I don't have much risk tolerance.
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Old 05-20-2011, 02:01 PM   #3
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"Where do I park the 150k living expenses where i get a decent interest rate? CDs are terrible now? "

I get 4% in a savings account that is capped at $50,000 at a local credit union. That is the best I can come up with and it is bundled with checking and a debit/credit card.
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Old 05-20-2011, 04:39 PM   #4
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Quote:
Originally Posted by devans0 View Post
"Where do I park the 150k living expenses where i get a decent interest rate? CDs are terrible now? "

I get 4% in a savings account that is capped at $50,000 at a local credit union. That is the best I can come up with and it is bundled with checking and a debit/credit card.
Pretty please, the name?

Ha
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Old 05-20-2011, 05:33 PM   #5
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Quote:
Originally Posted by haha View Post
Pretty please, the name?

Ha
+1

4% guaranteed is golden in these times.
Is there a catch, such as 4% on the first $500, and a lot less on the rest of the balance?
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Old 05-20-2011, 07:16 PM   #6
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Quote:
Originally Posted by panhead View Post
Questions:
Is this a reasonable allocation for the cash portion given the real estate holdings?
Is this in general how some people are structuring their portfolios during deaccumulation phase?
Is the portfolio diversified enough or should I add more small cap/foreign exposure?
Where do I park the 150k living expenses where i get a decent interest rate? CDs are terrible now?
Any other comments?
You have a long semi-retirement and I hate bonds right now so a 70/30 mix is reasonable.
I have more assets but my 3-4 year CD ladder is similar to what you propose. The cash flow from your rental helps a lot in providing lower volatility for your income.
6% for foreign stocks is a bit on the low side. 5-10% in something like VEU or VFWIX is probably a good idea.
Where savers are suppose to get decent returns with low risk is certainly the toughest question. You may try this fat wallet thread
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Old 05-20-2011, 08:31 PM   #7
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Quote:
Originally Posted by haha View Post
Pretty please, the name?

Ha

+1 also.


Looking for good place to park some money for 5 years.
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First Community Credit Union, St. Louis
Old 05-21-2011, 05:48 AM   #8
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First Community Credit Union, St. Louis

I have checking account with First Community Credit Union. It pays 2.5% interest up to $25,000. I have to use their debit card 12times every month in order to qualify.

Can you please tell me the name of the bank that pays 4% interest?
Thanks
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Old 05-21-2011, 07:17 AM   #9
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My credit union is Linn Area Credit Union. I was sloppy on the details and wrong when I posted that it was a SAVINGS account. It is a "Mega" CHECKING account. Likewise on the cap. I have TWO accounts at $25000 each to reach the stated $50000 cap. It has fine-print hoops such as using their credit card 12 times a month. I don't expect the rates to remain in the 4% stratosphere for long either, but who knows. Many economic trends seem to start on the coasts and roll into the heartlands several months or even years later.
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