Looking for suggestions..need 3 %+ Net (would be nice)

[aja8888]

We have sold our previous house (downsized in December) after buying another, and sale funds will be hitting our Ally account the 14th. I think net will be $188K. I plan to put this in E-Trade for supplementing our long term living expenses.

I am starting RMDs in 2014 and both DW and I are receiving SS. So we are entering into the "downslide" and taxes are going to be a concern. Plus, I still consult to industry and expect to cover a Solo 401K for a couple of years, health willing. We have no bills or significant tax deductions going forward, although the 401K provides some relief from taxes as I can deduct it from my Schedule C earnings.

For some of you who are ER'd, this moment is in your future and comes before you know it.

1. With the market where it is, and interest rates where they are, I am perplexed as to what to invest the $188K into.

Also, my IRA was to heavy in equities/ETFs/funds in 2013 (80%) and I sold some VTSAX In January and currently have $75K sitting idle. My bonds (20% of last years AA) consist of parts of Wellington, Wellsley, and a High Yield Bond Fund (OSTIX).

(Note: I did buy $50K of PenFed 3% IRA CD's in December.)

2. I am also perplexed as to how to redistribute the $75K in my Vanguard IRA given the low interest rate scenario we have.

Thoughts?

 

[haha]

We have sold our previous house (downsized in December) after buying another, and sale funds will be hitting our Ally account the 14th. I think net will be $188K. I plan to put this in E-Trade for supplementing our long term living expenses.

I am starting RMDs in 2014 and both DW and I are receiving SS. So we are entering into the "downslide" and taxes are going to be a concern. Plus, I still consult to industry and expect to cover a Solo 401K for a couple of years, health willing. We have no bills or significant tax deductions going forward, although the 401K provides some relief from taxes as I can deduct it from my Schedule C earnings.

For some of you who are ER'd, this moment is in your future and comes before you know it.

1. With the market where it is, and interest rates where they are, I am perplexed as to what to invest the $188K into.

Also, my IRA was to heavy in equities/ETFs/funds in 2013 (80%) and I sold some VTSAX In January and currently have $75K sitting idle. My bonds (20% of last years AA) consist of parts of Wellington, Wellsley, and a High Yield Bond Fund (OSTIX).

(Note: I did buy $50K of PenFed 3% IRA CD's in December.)

2. I am also perplexed as to how to redistribute the $75K in my Vanguard IRA given the low interest rate scenario we have.

Thoughts?

You put your finger on the difficulties facing us as we want to lower equity exposure. Most times in the past, there were relatively short term fixed securities or CDs with good interest rates, almost always more than the dividend income we were giving up by selling stocks.

Now, it's like picking through stuff at Goodwill.

Ha

 

[aja8888]

You put your finger on the difficulties facing us as we want to lower equity exposure. Most times in the past, there were relatively short term fixed securities or CDs with good interest rates, almost always more than the dividend income we were giving up by selling stocks.

Now, i's like picking through stuff at Goodwill.

Ha

Yes Mike, I knew this time was coming and right around the end of the year started to have bad dreams about getting nailed in a quick bloodbath. Now I could put stops on all the equities and play day trader of sorts, but that is not what I had in mind, especially since I can't watch the tape all day.

I'm raising these concerns so that maybe someone here has a gem of an idea and also to let the ER'd ones know there is more to worry about than the ACA. Actually, between Medicare, Medigap coverage and Part D for the two of us, we are paying over $8k in premiums and DW needs $5K over Part D in meds each year. Scary....

 

[Hermit]

I'll hit 70 in 6 years. Almost all my money is in tax deferred retirement accounts. My only defense is to move as much as I can to Roths in a major market downturn. Don't think I want to hope for that though. I will likely take a hit if I have to pay taxes out of retirement funds, but if I don't do it in a down market, I certainly will pay a lot of taxes with RMDs.

 

[Zathras]

I wish I were only paying 8k in premiums each year.
For us, we have no Medicare or SS for another 20 years or so (I expect the minimum age to increase over that time). No pensions either, so we are heavily into equities still.
We are earning about 3.25% on dividends. Currently dividends are tax advantaged, however that could always change.
We are very comfortable with the risk, however your own risk tolerance and expected length of retirement will help determine what is right for you.

Our risk is much less with ACA than without it, but we are haven't completely taken the risk off the table as laws can change and we could return to lifetime limits and the ability for insurance to drop you at any time.

 

[aja8888]

I wish I were only paying 8k in premiums each year.
For us, we have no Medicare or SS for another 20 years or so (I expect the minimum age to increase over that time). No pensions either, so we are heavily into equities still.
We are earning about 3.25% on dividends. Currently dividends are tax advantaged, however that could always change.
We are very comfortable with the risk, however your own risk tolerance and expected length of retirement will help determine what is right for you.

Our risk is much less with ACA than without it, but we are haven't completely taken the risk off the table as laws can change and we could return to lifetime limits and the ability for insurance to drop you at any time.

We have the "Holy Grail" of medical insurance as Medicare recipients go. The big problem is drug costs are going out of sight (say $100K per year for cancer meds in some cases - fortunately, not us though) and doctors are dropping off the map and won't take Medicare patients. I have followed the ACA progress closely as we have kids that are in that loop - what a mess.

Like other retirees that saved for years and worked hard, we face increasing taxes for income, even though it's just SS (we put in to the system for 50 years.....), and RMD withdrawals. I did not take advantage of Roth conversions due to high tax brackets at those times. So, like a lot of folks in my position, I have mostly tax deferred savings and significant taxable funds.

Maybe I should look into municipal bond funds or bonds for the taxable accounts? Even if I could get 2% that would be not bad.

 

[heeyy_joe]

Purchase annuities and build an annuity ladder.

 

[brewer12345]

Investigate merger arbitrage funds, most notably MERFX and ARBFX. Good for tax deferred accounts as they are not in the slightest tax efficient.