Here It Comes, Ready or Not!

[JimW]

OK, I'm new at this but here goes:

I am a 61 years old male who will be retiring within the next few months. As of June 30 my investment portfolio stood at $875,023. My current asset allocation is 30% mid-term bond funds, 5% high yield bond funds, 44% large/mid cap funds, 15% small cap funds, and 6% international funds. Except for 830 shares of IBM, all assets are invested in mutual funds. Approximately $ 650,000 of the $875, 023 is invested in 401K, 457, IRAs, or annuities. In addition to what I consider investment assets, I also have $27,504 in money market funds, short term bond funds, passbook savings, etc. In addition, I recently inherited @ $200,000 from my Mom's estate. I plan to put this money in a money market account for at least the next year.

My pre-tax retirement income will be @ $4435 monthly. My wife, age 60, has a pre-tax retirement income of @ $650 monthly. At this time, in November of this year I plan to start drawing social security at age 62, approximately 1100 monthly. Our home is paid for and my only debt is a home equity loan for @ $35,000 and a loan for a recreational vehicle of @ $28,000. I plan to sell the RV when I retire. My retirement package also includes medical, dental, and pharmacy coverage. I will need to purchase another vehicle in the near future.

I read this forum and listen to other financial experts. However, I still end up with many questions. For example, I recently heard one needs to keep 2 years living expenses in a money market account. Most advisers recommend an annual withdrawal rate of no more than 5% of a portfolio. I guess my specific questions are: 1) Do I need to adjust my asset allocation? 2) Should I keep 2 years living expenses in a money market fund? 3) At what rate may I safely withdraw money from our portfolio? 4) How should I plan to withdraw from my portfolio? For example, should I withdraw from one fund or from several?

I guess my real question is: I have done the best I could putting money in, how do I now take it out so we can "smell the roses" while we are still physically and mentally fit

 

[Telly]

Wow Jim, have you seriously considered adopting a needy child?  I'm available  

Lets see here, the non-investment income stream is:
$4435 + 650 + 1100 + 550 = 6735 x 12 = 80820 annually, of which 75.5 % is non-inflation indexed.

I added the $ 550 a month as SS for your wife when she reaches 62, as she can get 50 % of what you receive, in addition to the 100 % that you receive.  That assumes that her own SS monthly would have been less than 1/2 of yours.

All of this is without touching any of your invested fund, or cash!  Even though 75 % of the income is fixed, due to the high $ value, and your being 61 (I almost typed "already", uh, you know what I mean   ) it's not a big deal like it would for someone considerably younger.

You could run FireCalc to look at withdrawal rates, but unless your income needs GREATLY EXCEED your income stream I listed above, you're in gravy no matter!

And medical, dental, and pharmacy included too!  Jeez Jim, I'm feeling a bit ill now... but wait, I'm a lot younger and I have the time NOW... that makes it all ok... I'll just keep repeating that to myself... I have the time now, I have the time now....

 

[Mr._johngalt]

I hate to discover I've repeated myself, but here I will
do it deliberately. I am amazed continuously at the
people who appear to be sitting on huge piles
of money (and/or a very large and secure income stream), and still worry if and when they can retire.
This must be a product of being told by the "experts"
that you need a base of "X" bazillion dollars before
you can even think about it. And, of course these
same experts want to tell you where to invest all
that money. It ain't true and I am living proof.
I semiretired in 1993 with a TOTAL net worth of under
$200,000. That includes everything. I built that up a bit
and then divorced my wife and gave her half of it.
Then I paid child support for 3 years. In spite of all this
I retired for good in 1998. What is my life like?
Fishing, boating, motorcycles, traveling, visiting friends,
and just loafing. I live in a beautiful spot on a nice body of water and am building a ranchette so we can move south soon. We own 3 vehicles, 2 boats, a house, the
ranch, and adequate personal property for living. No debt other than arbitrage situations.
I do pretty much what I want when I want to do it.
Soooooooooo, I lost nothing by retiiring except stress and my high consumption lifestyle. I gained
everything in terms of capturing control over my life.
Thus, when your broker or CFP says, "Mr. Smith, you
need to save 40% of your income for the next 20 years
to have a comfortable retirement"', you can ignore him.
You know someone who did it with practically nothing.