How should I invest my PT Retirement Paycheck?

[Fleur58]

I returned to work after retiring early. I now have a part time job and am 63 years old and single. No major bills. Home paid off.

I contribute 16% of the gross pay to a Roth 403B. I bring home average net $1400 every 2 weeks.

To date, I have 2 million saved for retirement, and of which 1.3 million is a taxable rollover IRA invested in mutual funds. $100K in Roth, and 500K in taxable Mutual Funds and 100K in Cash. In 2 years at age 65 I'll get a pension of $465 iper month. In 4 years at age 67 I'll get $2700 month in SS.

Each take home pay every 2 weeks, after approx $400 in Roth 403B money is taken out. I have $1400 left:
- I save $300 in taxable Mutual Funds
-$100 in grandchildren's 529 plan
-$600 in household bills, food, gas, discretionary spending
-$400 left in my checking account

Regarding the Roth 403B Plan, I'll be vested in the matching in Dec 2022. They don't match that much but its something. This money is 100% in Vanguard Retirement 2030.

How would you breakdown savings in my pay? If I had to specifically save for something else, it would be to fund retirement vacations.

 

[Midpack]

I assume "taxable rollover IRA" is a traditional IRA where distributions are taxable.

I assume "mutual funds" are equity/stock funds. Beyond that we have no clue what your AA is.

But it's entirely up to you to decide what AA is appropriate for your risk tolerance and what WR you'll need to support your retirement spending, another variable we have no info on. Some examples below. Once you choose a target AA, which holdings you place where is pretty straightforward.

Sorry I couldn't be more helpful.

 

[Sojourner]

If I'm reading your post correctly, you are asking about what to do with (how to invest) $400/month for the next several years until you reach 67. The first thing that comes to mind is simply increasing your Roth 403B contribution by $400/month. Is that doable?

 

[Fleur58]

Midpack: Thanks for your response. Right now my AA is Growth with Income but am making changes to move to Balanced. I need about 35K a year in retirement, my expenses are low.


Sojourner: I can increase my 403B money by $200 but I am hesitant to bump it up more than that in case I have to cash flow other expenses that come up. Like a mad Amazon spending spree.

 

[Sojourner]

I can increase my 403B money by $200 but I am hesitant to bump it up more than that in case I have to cash flow other expenses that come up. Like a mad Amazon spending spree.

In that case, definitely max out the 403B. You have $500k in taxable mutual funds and $100k in cash. That will finance any spending sprees you feel the need to indulge in. And the fact that you have $2MM+ saved for retirement implies that you don't often indulge in spending sprees, so not much to worry about there.

 

[freedomatlast]

Your allocation looks fine to me for your purposes.

I just take all of mine and dump it into the checking account. When I want something that I might not ordinarily buy, i go ahead and get it because all the money I've made doing consulting since I retired, is money I wasn't counting on, and for the first time I'm enjoying blowing it on "wants", not "needs" .

The rest will be spent on everyday expenses, and will increase the length of time before I have to dig into retirement savings.

 

[OldShooter]

@Fleur58, the answer to your question depends on your objectives for your stash. For example, if your goal is to have your last check bounce there is not a big need for growth. You have plenty already. OTOH if you'd like to leave an estate, a growth-oriented portfolio is more likely to accomplish that without risking your lifestyle in the mean time. (Our goal is the latter and our AA at 73YO is 75/25.)

One common error (IMO) is to confuse volatility with risk. At your age and with your pension and SS assets, I don't think you have to worry about volatility, hence equities are not as risky as the folklore would have you believe. Every single market dip in the past 100 years has been followed by a recovery, usually within a few years or less.

As you consider your AA, be sure to look carefully at that VG target 2030 fund. Does their idea of a desirable AA match yours? Personally, I would not use this kind of autopilot as other accounts must be managed to work around an AA that you can't control directly. I would have an equity fund and fixed income investments separately controllable.