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Future Funds Asset Allocation
Old 12-08-2014, 11:48 AM   #1
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Future Funds Asset Allocation

How would you take into account some 400k that will not be available until 2018 in your current asset allocation? A pension at age 60, lump 212k or life annunity currently valued at $1261 monthly. In addition a 401k with about 178k would also be available at that time. One intreiging opition is the ability to combine both accounts and roll them into an IRA again when available in 2018. The current question regards how I take these future funds into account in setting my current asset allocation?
Thanks Tom

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Old 12-09-2014, 02:40 PM   #2
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The pension I would normally leave on the income side, reducing your portfolio withdrawals but not part of your AA. If you plan on taking the lump sum option, then it is essentially part of your fixed income/cash allocation right now. Kind of with no growth unless you discount it a bit for being in the future.

The 401k should already be part of your AA if it is invested in something. Why is it not "available" now? Just because you are under age 59.5? If it's a sure thing (you are fully vested), and you can characterize the investments it contains as equity or bond or cash (and maybe it's just some type of annuity that you might count as income?), then it is in your AA whether you include it or not.

That may not be the AA you would choose if you had full control over all the accounts, but allows you to see where you stand. Nothing wrong with going all equities in one account to balance a bunch of cash/bonds in another account you have no control over if that gets you to your desired AA. In your case, you may just have to wait until 2018 before you can implement a plan to reach the AA you want.

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Old 12-09-2014, 04:53 PM   #3
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Originally Posted by macav933 View Post
A pension at age 60, lump 212k or life annunity currently valued at $1261 monthly.
That seems like a pretty generous deal, so I would probably go for the annuity option. But you have to evaluate how well funded it is, and the likelihood of it continuing. In terms of currently available SPIAs, it looks good, but we don't know your age or location.
Use this site for ball park estimates:
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Old 12-09-2014, 05:01 PM   #4
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I think you have to first make an assumption as to whether or not you will take the annuity or the lump sum. If annuity, then include the annuity benefits and they effectively reduce your required withdrawals (all else being equal). If lump sum then it is just like an IRA.

The 401k would typically be rolled over into an IRA and then the IRA would become part of the assets on which your withdrawals are based. If your 401k offers a good stable value fund then I would consider leaving it with your former employer and using it as part of your fixed income allocation.
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Old 12-10-2014, 04:44 PM   #5
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The Pension is very well funded and looks to be as good as it gets health wise. The Supplamental Plan (401k like) also it's very healthy but not available until age 60. Both are products of The Directors Guild (DGA) and are VERY well run. The Supplanental Plan is invested very conservative and its 10 year return averages 6.0%. I am currently 56 and won't have full control of both accounts until age 60. My use the montly Annunity to bridge the gap while delaying SS to age 70. I also have another Pension which I am currently taking that pays 15k per year that offers a Retiorment Health Plan ($235 Month) untill age 65. The Pension again is VERY well funded (Graham Holdings) formally the Washington Post Co whose pension plan was put together by Warren Buffett.
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