Q: Cash needed in a Target Retirement Portfolio?

[Shabby]

So I am quite conservative and as such I have missed out on a lot of the big gains people have enjoyed the last 10 years. I keep the majority of my retirement in Wellesley and a 2020 Target retirement fund. I also have about 14% of the retirement portfolio I live off of in Cash. I am looking to get some more money to live off of and wondered with that conservative allocation, could I just put the cash into the Target Fund and change it so instead of reinvesting the dividends, I get them in cash and use them to live off of the following year? Thoughts?

P.S. I'm 54, single and retired. I own my home completely.

 

[VanWinkle]

Cash is the safe form for spending. If you put it into Wellesley or a target date fund, you may have a reduction in principal at some time. If you overload the cash bucket by 20%, I see no reason it couldn't be invested in a balanced fund with less that 40% in equities. Just remember it is no longer as safe as cash, but it won't be victim to inflation like cash. Always a trade off of risk vs reward.

Wellesley would likely fit the description.....

Good luck to you,

VW

 

[Shabby]

Wellesley is 33% equities so wouldn’t that work?

 

[Brat]

For cash how about a short-term inflation protected ETF? I think Vanguard has one.

 

[Midpack]

So I am quite conservative and as such I have missed out on a lot of the big gains people have enjoyed the last 10 years. I keep the majority of my retirement in Wellesley and a 2020 Target retirement fund. I also have about 14% of the retirement portfolio I live off of in Cash. I am looking to get some more money to live off of and wondered with that conservative allocation, could I just put the cash into the Target Fund and change it so instead of reinvesting the dividends, I get them in cash and use them to live off of the following year? Thoughts?

P.S. I'm 54, single and retired. I own my home completely.

Yes, that's what many retirees do. Reinvest while they are working, and take dividend distributions in retirement - exactly what I did when I retired. Might as well take them as distributions since they're taxed regardless (in taxable accts). If you want more cash, I'd take dividend distributions in cash before changing my AA.