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Old 11-23-2016, 05:40 PM   #21
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...The other thing to discuss with your CPA, is the tax torpedo when you are 70.5 and have to take out RMD's and have SS and pension, which is why these next few years could be the time to convert IRA to ROTH, or simply withdraw from IRA instead of tapping your taxable money account.
That "tax torpedo" thing ought to make your eyes glaze over. That says if your income goes over $44K for the year you will have to pay tax on 85% of your SS. If RMD is large enough, you could hit that $44k. I will never be in a situation where my taxable income is less than that so it is a non-starter for me.
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Old 11-23-2016, 07:25 PM   #22
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Thanks everyone! I appreciate the advice.
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Old 11-23-2016, 08:00 PM   #23
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This may be too simple or maybe too complicated.

On Vanguard, I was able to set up a monthly transfer to our bank for $X from the Vanguard Short Term Investment Grade Fund (VFSUX) fund. In your case, the amount could be .25% of your portfolio value at the start of the year (in case of any significant change in portfolio value you could revisit this during the year if you wanted).

In my case, to fund the above, I periodically take money from our invested accounts and put them in that fund. I do this at 2 different times by and large. First, if my AA is out of whack I rebalance and in some instances that means putting some money in that fund. The second time is I periodically do this in order to fund withdrawals as needed when I see that VFSUX is getting low in funds. When I do this in the second situation I typically figure out what I need to sell from each fund in order to maintain our AA. In our case, DH's IRA is at Vanguard and I have a 401k at Fidelity. We currently withdraw only from Vanguard. However, I consider the asset allocation of everything in determining what to sell in order to maintain our overall asset allocation.
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Old 11-25-2016, 08:33 AM   #24
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+1

Fidelity Freedom 2015 index fund is a one fund solution with low fees and current composition of 54% stocks and 46% bonds/fixed income.

Then follow LOL's instructions to set up a monthly sell and transfer orders of 3% from each account to your MM or brokerage account.

I'm sure your Fidelity rep will help you set it up free of charge


I imagine that there is a Vanguard fund similar to this, but I just haven't found it yet. Does anyone know of one like this at Vanguard?
Thanks.
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Old 11-25-2016, 08:49 AM   #25
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Perhaps the Vanguard 2015 Target Retirement fund. Google is your friend.

https://advisors.vanguard.com/VGApp/...ls?fundId=0303
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Old 11-25-2016, 09:24 AM   #26
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Doesn't Vanguard have a Managed Payout Fund? Not sure if that meets the needs. The OP or someone else can read up on that and figure it out. I don't need structured deposits and don't mind doing the math to do things differently.
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Old 11-25-2016, 09:28 AM   #27
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I am in a small minority on this Board because I use a financial advisor. Although I am not yet retired, the FA says a fair number of his clients are folks who were DIY until they approached retirement and then signed up because they (1) did not want to spend any of their valuable retirement time thinking about investments and withdrawal strategies, comparing fund performance, ensuring tax efficiency, tracking their expenses, running projections, evaluating annuities, etc. -- they prefer to spend that time with their grandchildren or in the Caribbean, etc., and (2) wanted to avoid costly mistakes. So one option -- and I realize I am swimming upstream on this -- is to find a very capable financial advisor, negotiate a fee structure that you think is fair, and just tell him or her what you want and let the advisor do all the work while you spend your time doing things you enjoy. Will this cost you some money? Sure. But making mistakes might cost you more. And anyway, you probably won't die broke.
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Old 11-25-2016, 09:29 AM   #28
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OP here:
I am now comparing the Vanguard 2015 Target Retirement fund to Vanguard Wellesley and the arranging a .25% monthly check.
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Old 11-25-2016, 09:43 AM   #29
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If it is in a tax-deferred account either, or Wellington, would be good choices. Or you could use your desired combination of Total Stock, Total International Stock, Total Bond, Total International Bond and a Short-Term fund and rebalance occasionally (which is all the target retirement funds are).

If you have both taxable and tax-deferred accounts and care about tax efficiency then it gets a bit more complicated. If you value simplicity over tax efficiency then you can just buy the balanced fund in both accounts.
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Old 11-25-2016, 09:46 AM   #30
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Yes Medved, your FA is correct, investing does feel very different now that I need to withdraw. Seems much more complex. However, I'd rather not pay 1-1.5%, plus as in mentioned in preceding posts, there's hidden fees within the managed funds they put you in.

I am intrigued by the Vanguard 2015 Target Retirement fund but it seems it's "just" index funds, which I usually preferred, but I believe they don't re-balance the AA regularly. I will research that.

And you're right, once I retire I don't want to worry about the nest egg, just draw 3% off it. All my funds are tax deferred.
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Old 11-25-2016, 10:10 AM   #31
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I am intrigued by the Vanguard 2015 Target Retirement fund but it seems it's "just" index funds, which I usually preferred, but I believe they don't re-balance the AA regularly. I will research that.
All target retirement funds adjust their AA to reduce their exposure to stocks and become increasingly conservative. The FIDO 2015 fund will end with an asset allocation of around 30% stocks and 70% bonds/fixed income between the years of 2025-2034.
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Old 11-25-2016, 10:31 AM   #32
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Yes Medved, your FA is correct, investing does feel very different now that I need to withdraw. Seems much more complex. However, I'd rather not pay 1-1.5%, plus as in mentioned in preceding posts, there's hidden fees within the managed funds they put you in.

I am intrigued by the Vanguard 2015 Target Retirement fund but it seems it's "just" index funds, which I usually preferred, but I believe they don't re-balance the AA regularly. I will research that.

And you're right, once I retire I don't want to worry about the nest egg, just draw 3% off it. All my funds are tax deferred.
Depending on your asset level, you could probably negotiate a fee that is lower than 1% to 1.5%, or at least at the lowest end of that range. (I pay less than that). And a FA who is putting you in high-cost managed funds without a compelling reason for doing so is not doing his job. Even so, a financial advisor is never going to be the "lowest cost" option. But if you get someone good, and who you trust, it could help you avoid mistakes that might cost more than the FA's fee, and it could potentially reduce your worry level and free up your time to do other things. (On the other hand, most of my friends do their investing DIY and seem perfectly happy with that decision, so there's no single "right answer.")
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Old 11-25-2016, 01:22 PM   #33
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Vanguard Target Retirement Income VTINX, The Target Retirement Income Fund is designed for investors already in retirement. The fund seeks to provide current income and some capital appreciation by investing in five Vanguard index funds. The fund holds approximately 30% of assets in equities and 70% in bonds. This is also the allocation that all Target Retirement Funds are expected to assume within seven years after their designated retirement dates. Investors in this fund should be willing to accept modest movement in share price and be able to tolerate the market risk that comes from the volatility of the stock and bond markets. Expense ratio .14%
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Old 11-25-2016, 01:38 PM   #34
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... folks who were DIY until they approached retirement and then signed up because they…. and (2) wanted to avoid costly mistakes.
For many people, avoiding a financial advisor is the same as avoiding a costly mistake.
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Old 11-25-2016, 02:56 PM   #35
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Hello All,



However…in June of 2017 both of us will be 59.5 years old (I'm 63) and we want to start withdrawing 3% monthly from the nest egg, which is mainly at Fidelity. My eyes glaze over at doing this because we are scattered over many accounts: 401K, IRAs, 403Bs, etc. and I don’t understand the tax implications nor am I smart enough to learn.



Thanks
OP, I hope you were given great advice. I am a little embarrassed to ask this question, as I seem to be the only one here who does not know this, but here goes: I am 63 also and would like to use your plan to go back to 59.5 in 7 months. Also, my Wife is 35 and would like to be 21 again if at all possible.
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Old 11-25-2016, 05:51 PM   #36
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...........(1) did not want to spend any of their valuable retirement time thinking about investments and withdrawal strategies, comparing fund performance, ensuring tax efficiency, tracking their expenses, running projections, evaluating annuities, etc. -- they prefer to spend that time with their grandchildren or in the Caribbean, etc.,..........
I spend an hour a year adjusting my portfolio's allocation, though I did cheat and write a spread sheet to calculate the required adjustments faster. I try to do it while my grandson is sleeping so I don't miss too much quality time.
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Old 11-25-2016, 06:08 PM   #37
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I spend an hour a year adjusting my portfolio's allocation, though I did cheat and write a spread sheet to calculate the required adjustments faster. I try to do it while my grandson is sleeping so I don't miss too much quality time.
Well, wake him up and take him to the Caribbean! That's gotta be worth 1% of your portfolio!
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Old 11-25-2016, 06:11 PM   #38
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I spend an hour a year adjusting my portfolio's allocation, though I did cheat and write a spread sheet to calculate the required adjustments faster. I try to do it while my grandson is sleeping so I don't miss too much quality time.
I suspect that, for many people with significant assets, the amount of time necessary to optimize their withdrawal strategy in retirement (including maximizing tax efficiency in withdrawals and re-allocations) would be much more than an hour a year. Indeed, I suspect many people with significant assets and both taxable and non taxable accounts would get it wrong even if they were willing to spend dozens of hours. And that is without things like weighing the benefits of annuities (and comparing them), making rational estate planning and gifting decisions, optimizing tax efficiency in charitable contributions, being thoughtful about the merits of various asset allocations, avoiding emotional investment decisions, etc. And to do all of this as we age and potentially have diminished cognition can be even tougher. If I thought that I could get all this right, and do it in an hour a year, then for sure there would be no reason to pay anyone.
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Old 11-25-2016, 06:45 PM   #39
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Old 11-25-2016, 06:50 PM   #40
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I suspect that, for many people with significant assets, the amount of time necessary to optimize their withdrawal strategy in retirement (including maximizing tax efficiency in withdrawals and re-allocations) would be much more than an hour a year. Indeed, I suspect many people with significant assets and both taxable and non taxable accounts would get it wrong even if they were willing to spend dozens of hours. And that is without things like weighing the benefits of annuities (and comparing them), making rational estate planning and gifting decisions, optimizing tax efficiency in charitable contributions, being thoughtful about the merits of various asset allocations, avoiding emotional investment decisions, etc. And to do all of this as we age and potentially have diminished cognition can be even tougher. If I thought that I could get all this right, and do it in an hour a year, then for sure there would be no reason to pay anyone.
If you really believe that, then pay away. If I get too dotty to run my spread sheet, I'll hire a Vanguard advisor for 0.3%. In the meantime, ka-ching!
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