Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Early retirement spending plan and glide path
Old 07-11-2016, 08:04 PM   #1
Dryer sheet aficionado
Join Date: Jan 2016
Posts: 40
Early retirement spending plan and glide path

Hi. I also posted this in bogleheads but I want to give my friends at e-r a voice as well!

So my wife and I are gonna be retiring in a little over 6 months at age 53 (50 for her). Very very excited. A little scared but not very much. Around $2.5M total so I'm feeling confident. Here's my plan; I'd love your feedback.

Asset allocation right now 85/15/5. More aggressive than I'd like this close to retirement but I have no problem sleeping at night.

Taxable accounts at 1.4M, 401K at $800K, Roths at $300K.

Upon retirement, I'll rollover my 401K to an 3-fund IRA: 40% VCIT (Intermediate Corp Bond), 50% BSV (Short Term Bond), 10% VTI. Or something close. That will immediately put me at a 60/40 AA which I feel comfortable with. I plan to have about 100K in cash.

I'm confident I can make my taxable accounts (75% equities) last until I take SS at age 70. I'll sell equities as I need cash, which will glide me to a more bond-heavy AA as time goes by. Lots of LTCG which I will be careful with.

On top of that, I plan to do partial conversions of my rollover IRA into a Roth up to the maximum my 15% tax rate allows to minimize RMDs.

My back of the envelope math says that, on top of qualified dividends, I should be able to convert 40-50K to a Roth annually along with about 30K of LTCG and still stay within the 15% tax bracket. If I've done my math right, I should also qualify for some sort of ACA subsidy.

What do you think? Am I leaving something out?

duckcalldan is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 07-12-2016, 12:25 PM   #2
Recycles dryer sheets
Join Date: Jul 2014
Location: Undisclosed
Posts: 305
Unless you have children, the maximum 2 people can have as income and still qualify for ACA subsidies is less than $64K.

N02L84ER is online now   Reply With Quote
Old 07-12-2016, 01:16 PM   #3
gone traveling
Join Date: Feb 2016
Posts: 34
What are your annual expenses? Did you account for new cars, home repairs, vacations, gifts, insurance, food, inflation, unplanned events etc etc?

Sent from my iPhone using Early Retirement Forum
Frankie1926 is offline   Reply With Quote
Old 07-13-2016, 07:16 AM   #4
Dryer sheet aficionado
Join Date: Jan 2016
Posts: 40
I have two kids, aged 15 and 19. College is paid for and not included in my assets. So an ACA subsidy is possible until my oldest turns 26.

Planned expenses are around 70K. No mortgage. I plan to keep SWR at 3% or a bit lower.

Sent from my iPad using Early Retirement Forum
duckcalldan is offline   Reply With Quote
Old 07-13-2016, 08:32 AM   #5
MBAustin's Avatar
Join Date: Jul 2010
Posts: 6,156
Have you run this through FIREcalc? You might also want to look at iORP to model your Roth conversions. Personally, I didn't follow what it said to do, but it was good to look at as part of the thought process.
"One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute." William Feather
ER'd Oct. 2010 at 53. Life is good.
MBAustin is offline   Reply With Quote
Old 07-13-2016, 02:37 PM   #6
Thinks s/he gets paid by the post
SecondCor521's Avatar
Join Date: Jun 2006
Location: Boise
Posts: 4,251
Originally Posted by duckcalldan View Post
I have two kids, aged 15 and 19. College is paid for and not included in my assets. So an ACA subsidy is possible until my oldest turns 26.
Hopefully your plan doesn't hinge too heavily on the above bolded part; I think it is inaccurate.

As I understand it, ACA subsidies are based on (among other things) your taxable household size - basically the number of exemptions that you claim on line 6d of your 1040. Once your kids graduate from college, hopefully before 26, they are likely not to be your dependent, and thus not end up on line 6d, and thus adversely affect your ability to qualify for ACA subsidies.

To use my own family as an example, I have three kids, so originally I thought that my target ACA income was $47,700 - 200% of the FPL for a family size of 4. However, since my oldest son age 21 no longer qualifies as my dependent, my target ACA income is in fact $39,580 - 200% of the FPL for a family size of 3.

There is another part of the ACA which requires insurance companies to let kids stay on their parents' insurance until they turn 26, but I believe that rule is distinct from the ACA subsidy rules.
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
SecondCor521 is offline   Reply With Quote
Old 07-13-2016, 03:22 PM   #7
Thinks s/he gets paid by the post
walkinwood's Avatar
Join Date: Jul 2006
Location: Denver
Posts: 3,092
If it were me... With ER looming in 6 months and stock indexes hitting all time highs, I would move my allocation close to the final one right now.

What do you stand to gain? How much could you lose? Would that affect your ER timing?

Edit: It may not matter that much. Say you have 85 stock now, target is 60, so you're overweighted 25. If the stock market goes +10% or -10% your portfolio gain/loss on the overweighted portion is +2.5 or -2.5.. not that much in the big scheme of things. (Assuming the cash/bond portion holds steady, of course) Hope I got that math correct.
walkinwood is offline   Reply With Quote
Old 07-17-2016, 07:28 PM   #8
Dryer sheet aficionado
Join Date: Jan 2016
Posts: 40
Moved 90% of my 401k to bonds late last week. I'm not worried about a consistent AA across all accounts. Doing this changed my total AA to 56/39/5. Probably a overdue move but I'm glad I did it!

Sent from my iPad using Early Retirement Forum

duckcalldan is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
OMY "Glide Path" plans jollystomper FIRE and Money 56 06-29-2018 02:27 PM
Beginning the Glide Path for 2015 2B FIRE and Money 8 07-31-2014 04:50 PM
How long was your glide path? Al in Ohio Life after FIRE 61 01-24-2014 01:09 PM
Hi - taking the 'package' and on the glide path lindal00l00 Hi, I am... 26 12-21-2013 09:25 PM
entering glide path - how to determine proper AA? mrfeh FIRE and Money 15 07-25-2013 08:25 PM

» Quick Links

All times are GMT -6. The time now is 10:41 PM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2020, vBulletin Solutions, Inc.