what investments during retirment

[jwr62]

I think that we wait the 22 months to put husbands pension so that means that we will have to pull from our IRA. I think we could get by with taking 2.5% of the portfolio which would be 27,000.
So this is the question...... when we set up the 403b into a IRA should we have one years worth in cash or in a short term bond or where do we have it..... I know of a 70 year old that pulls money for home equity line of credit when the market has turned down.
I am in the learning stages of heading into retirement in 10 months.
hope to hear.

 

[pb4uski]

It depends on how much risk you care to take. One extreme would be to put the ~$50k in a MM fund within the IRA and invest the rest consistent with your overall AA and draw from the MM fund... no risk, but no return. The other extreme would be to just invest the whole IRA consistent with your overall AA and draw proportionally.

 

[jwr62]

This what the Vanguard adviser put us in... knowing that we needed to pull savings in the first two years of retirement

I do not know how much confidence I have in this advisor, seeing that she is only 25 years old.

1. Vanguard Total Stock Market Index Fund Admiral Shares 17%

2. Vanguard Total Stock Market Index Fund Admiral Shares 7%

3. Vanguard Total International Stock Index Fund Admiral Shares 16%

4 Vanguard Total Bond Market Index Fund Admiral Shares 17%

5 Vanguard Total Bond Market Index Fund Admiral Shares 17%

6 Vanguard Total Bond Market Index Fund Admiral Shares 8%

7 Vanguard Total International Bond Index Fund Admiral Shares 18%

8 Vanguard Prime Money Market Fund 0%

 

[MrLoco]

I think that we wait the 22 months to put husbands pension so that means that we will have to pull from our IRA. I think we could get by with taking 2.5% of the portfolio which would be 27,000.
So this is the question...... when we set up the 403b into a IRA should we have one years worth in cash or in a short term bond or where do we have it..... I know of a 70 year old that pulls money for home equity line of credit when the market has turned down.
I am in the learning stages of heading into retirement in 10 months.
hope to hear.

If I understand you correctly this is what you are asking:
"Husband has a pension coming and we have decided to wait 22 months before collecting on it. In the meantime, we will rollover his 403b into a self directed IRA. We will take 2.5% from the IRA portfolio. Should some of this money be invested conservatively in short term instruments to draw from until the pension kicks in?"

Some important information needed. First what are your ages? If you withdraw any money from a traditional IRA before 59 1/2 you will not only pay ordinary income taxes on the withdrawal but also a 10% penalty. Not good. The withdrawal rate of 2.5 % is fine but is there any money in a taxable account you could use? Perhaps do some tax loss harvesting from equity funds in taxable to minimize taxes?

I would not draw from a HELOC in retirement. Accumulating more debt with no earned income seems like a bad plan.

BAsed on your information, it looks like the value of the 403b is $1,080,000. Perhaps an asset allocation of 45/45/10 ( equities/bonds/cash) would be acceptable to you ....but again a lot depends on your ages/ risk tolerance, debt situation, taxable accounts, etc.

Another option might be to utilize the "72t rule" allowing you to make early IRA withdrawals penalty free if you are under 59 1/2 but this is a complicated process which should be discussed with a tax professional before implementing.

 

[jwr62]

If I understand you correctly this is what you are asking:
"Husband has a pension coming and we have decided to wait 22 months before collecting on it. In the meantime, we will rollover his 403b into a self directed IRA. We will take 2.5% from the IRA portfolio. Should some of this money be invested conservatively in short term instruments to draw from until the pension kicks in?"

Some important information needed. First what are your ages? If you withdraw any money from a traditional IRA before 59 1/2 you will not only pay ordinary income taxes on the withdrawal but also a 10% penalty. Not good. The withdrawal rate of 2.5 % is fine but is there any money in a taxable account you could use? Perhaps do some tax loss harvesting from equity funds in taxable to minimize taxes?

I would not draw from a HELOC in retirement. Accumulating more debt with no earned income seems like a bad plan.

BAsed on your information, it looks like the value of the 403b is $1,080,000. Perhaps an asset allocation of 45/45/10 ( equities/bonds/cash) would be acceptable to you ....but again a lot depends on your ages/ risk tolerance, debt situation, taxable accounts, etc.

Another option might be to utilize the "72t rule" allowing you to make early IRA withdrawals penalty free if you are under 59 1/2 but this is a complicated process which should be discussed with a tax professional before implementing.

we do not have that much in taxable accounts, it is all in IRA. we will be 63 at retirement age. Our moneys at retirement will be about 900,000. But unfortunately we might have to pull a little more from IRA until his pension and ssi kicks in after 22months.... so do we put a years or two year worth into cash or put it into a short term bond... If we put it in cash we will be safe but not really gaining.... our risk tolerance I would say is moderate... we have NO debt.

 

[W2R]

I think that we wait the 22 months to put husbands pension so that means that we will have to pull from our IRA. I think we could get by with taking 2.5% of the portfolio which would be 27,000.
So this is the question...... when we set up the 403b into a IRA should we have one years worth in cash or in a short term bond or where do we have it..... I know of a 70 year old that pulls money for home equity line of credit when the market has turned down.
I am in the learning stages of heading into retirement in 10 months.
hope to hear.

I think I have a much more conservative investment philosophy than most. I keep 5.5% of my portfolio in cash, in a MM or bank, earning nothing. That's OK with me, because the rest of my portfolio is earning more and my overall dividends plus interest add up to about 2.2%, more than I have need to withdraw ever except for last year (when I bought a house). That 2.2% is not including capital gains. I like having enough cash to get me through the first few years of a future bear market. Not making recommendations to others, but just saying what my choice has been. I truly appreciate the sleep-at-night qualities of my portfolio.

Other than cash, my (45:55) AA includes 49.5% bond funds and 45% equities, which includes 12.5% international.