Thoughts on building a bridge to SS FRA

[Carpediem]

I'm in the process of getting things lined up for possibly hanging it up in June 2019. My plan is to carve out some of our tIRA to get us to FRA (66 and 8 mos), which would basically be a 6 year time period from today. 90% of our retirement savings is in a couple of VG 65/35 tIRAs with the remainder in Roth IRA and cash. There isn't enough in the Roth or cash to fund the gap.

In your opinion, what would be the best approach from an investment 'category' perspective of setting this up? Would it be best to keep it simple and put it all in VG MM (~2.4%) for the safety/stability? Or should I consider a CD ladder? Or something else? Given the low interest rates on CDs right now, I'm not sure if it's worth the time to do a ladder.

I know I haven't given much financial background info. I'm just looking for some feedback on the best way to invest this money to bridge the gap. What would you do?

 

[conversationalphrase]

I am in a similar situation and did a CD ladder. Its not hard, especially with secondary market CDs.

 

[Red Badger]

I also am using a CD ladder to get from retirement to north of 62 (may pull SS at 62 or later). Anemic returns are what they are, but we're pleased with the minimal risk that CD's offer. We use what I call a "lumpy ladder." None of our CD's go out beyond 18 months - we reinvest those that mature unless needed. We also have a few that are specifically for big ticket stuff that are in the plan (larger trips, a new roof this fall, etc).

Good luck with your first world problem!

 

[MichaelB]

I'm in the process of getting things lined up for possibly hanging it up in June 2019. My plan is to carve out some of our tIRA to get us to FRA (66 and 8 mos), which would basically be a 6 year time period from today. 90% of our retirement savings is in a couple of VG 65/35 tIRAs with the remainder in Roth IRA and cash. There isn't enough in the Roth or cash to fund the gap.

In your opinion, what would be the best approach from an investment 'category' perspective of setting this up? Would it be best to keep it simple and put it all in VG MM (~2.4%) for the safety/stability? Or should I consider a CD ladder? Or something else? Given the low interest rates on CDs right now, I'm not sure if it's worth the time to do a ladder.

I know I haven't given much financial background info. I'm just looking for some feedback on the best way to invest this money to bridge the gap. What would you do?

Bond or CD ladders work well for this situation. Is there any need to manage MAGI for ACA purposes?

 

[Perryinva]

Interested in the same thing. Plug gets pulled this year but paycheck stops between Sept & Dec 2020 (severance), but looking to file at 68, so roughly 5- 5 1/2 year frame. ACA not a factor, we have 70k in pensions & DW SS income which covers everything non discretionary plus & we have enough cash to do delay with, but also want to roll tIRA to Roth through 2025 to top of 22% bracket. Will be interested to see answers.

 

[eytonxav]

This inverted yield curve is a bit confusing right now, most times, it's considered a barometer for bad things ahead (recession), although not always the case. I suppose I would stay in MM for another few months and see if this rate environment changes, and if favorable longer term rates develop, then build your CD/bond ladder.

 

[pb4uski]

.... What would you do?

With 90% in tax-deferred, I presume that you will be living principally off of tax-deferred withdrawals from ER at age 60 or so to SS.... that is good as it will reduce your tax torpedo... especially if you supplement it with Roth conversions to the top of the 12% tax bracket if applicable.

On AA, it all depends on your funding and risk appetite. If your "ultimate' WR is 3.5% or less and you're not totally risk averse, I would keep a year or two in VMMXX and go 60/40 (or whatever your target AA is) with the rest. Or an easy peasy would be an AA of x% for stocks (something between 50% and 70%), 5% for cash and the rest in fixed income.