I'm working on calculating my "number" and doing so from the bottom up using buckets & time periods.
Here are the buckets.
Here are the time periods (we are 47/49).
::: numbers adjusted for ease of explanation :::
For our ELE bucket we need 2.415M based on the following.
For our DLE bucket we need 1.125M based on the following.
From this our number 3.54M (plus social security) to cover a 51 year retirement with very conservative investments (matching inflation on essentials and return 2% real for non-essentials.) Money over and above the 3.54M can go into a LL portfolio and withdrawn as desired.
Regarding the account types, the first 10.5 years is being withdrawn from a taxable account. From there on out the money comes from 90% ROTH and 10% IRA.
Now for the portfolios.
ELE - Goal: Keep Pace with Inflation - Low Risk
DLE - Goal: 2% Real Return - Moderate Risk
Aggregating the two portfolios gives the following.
These portfolios came from Vanguard. I created a portfolio for each time period and aggregated them by goal and then again overall using this tool.
https://personal.vanguard.com/us/funds/tools/recommendation
I could really use some help / suggestions here since I have limited experience.
Here are the buckets.
- ELE - Essential Living Expenses - portfolio goal is a very low risk 0% real return (no risk, keep pace with inflation.)
- DLE - Desired Living Expenses - portfolio goal is conservative 2% real return (low to moderate risk beat inflation by 2%.)
- LL - Legacy & Luxury - portfolio goal is aggressive growth using various strategies to maximize total return.
Here are the time periods (we are 47/49).
- ER - Early Retirement (10.5 years) - Covers period from now until DW can access her IRAs (DW 49 to 59.5).
- RR - Regular Retirement (12 years) - Covers period after Early Retirement until Social Security can be accessed (DW 59.5 to 71.5).
- SR - Subsidized Retirement (16.5 years) - Covers period after Regular Retirement until old age (DW 71.5 to 88).
- OA - Old age (12 years) - Covers period of reduced income need until departure. (DW 88 to 100)
::: numbers adjusted for ease of explanation :::
For our ELE bucket we need 2.415M based on the following.
- ER - 80k * 10.5 years = 840k
- RR - 70k * 12.0 years = 840k
- SR - 30k * 16.5 years = 495k
- OA - 20k * 12.0 years = 240k
For our DLE bucket we need 1.125M based on the following.
- ER - 30k * 10.5 years = 315k
- RR - 30k * 12.0 years = 360k
- SR - 20k * 16.5 years = 330k
- OA - 10k * 12.0 years = 120k
From this our number 3.54M (plus social security) to cover a 51 year retirement with very conservative investments (matching inflation on essentials and return 2% real for non-essentials.) Money over and above the 3.54M can go into a LL portfolio and withdrawn as desired.
Regarding the account types, the first 10.5 years is being withdrawn from a taxable account. From there on out the money comes from 90% ROTH and 10% IRA.
Now for the portfolios.
ELE - Goal: Keep Pace with Inflation - Low Risk
- VTSMX - Total Stock Market - 13.70% - $330.75k
- VGTSX - Total International Stock - 5.87% - $141.75k
- VBMFX - Total Bond Market - 64.35% - $1,554.00k
- VTIBX - Total International Bond - 16.09% - $388.5k
DLE - Goal: 2% Real Return - Moderate Risk
- VTSMX - Total Stock Market - 40.88% - $459.90k
- VGTSX - Total International Stock - 17.52% - $197.10k
- VBMFX - Total Bond Market - 33.28% - $374.40k
- VTIBX - Total International Bond - 8.32% - $93.60.
Aggregating the two portfolios gives the following.
- VTSMX - Total Stock Market - 22.33% - $790.65k
- VGTSX - Total International Stock - 9.57% - $338.85k
- VBMFX - Total Bond Market - 54.47% - $1,928.40k
- VTIBX - Total International Bond - 13.62% - $482.10k
These portfolios came from Vanguard. I created a portfolio for each time period and aggregated them by goal and then again overall using this tool.
https://personal.vanguard.com/us/funds/tools/recommendation
I could really use some help / suggestions here since I have limited experience.