Originally Posted by aaronc879
I don't see anything wrong with having that much in Cds. He's getting $140K/yr to live off of without touching principle. Sounds like a great retirement to me and he doesn't have to worry about losing 40% with the next market crash. Sure, over 20+ years he'd probably be better off with a balanced portfolio of stocks and bonds but it's not necessary. He may lose a small amount of purchasing power over the years due to inflation but if he invests in 5 years or longer CDs then they should stay close to the inflation rate so shouldn't be a big deal.
+1. I like the idea of CD ladders myself for those reasons. I know my grandfather did quite well with CD ladders during high inflation years. I also agree with Marko. With that much in CDs, if it were me I'd diversify (if you are not already), get help from a fee only planner and pay for expert tax help and possibly a custom retirement plan for your business.
Here is an article from Forbes on a household with $200K in income and no federal income taxes for some ideas:
"Our model portfolio for the Bostonians includes $2.5 million in U.S. stocks yielding 2%, $1 million in foreign stocks yielding 3.3% in cash plus 0.33% in foreign tax credits, $1.25 million in Massachusetts bonds, $1 million in tax-exempt bonds from other states, $750,000 in 20-year Treasurys yielding 2.8% and $500,000 in partnerships yielding 5%."
Sorry to hear about the loss of your son, pletal.