A Retiree's Portfolio Review,

[rkser]

I want second opinions/critiques & holes through our investments, Asset Allocation, any changes suggested, etc ...

We are retired, I am 65, DW is 60, our living expenses are all from our investments of $ 8 mil +,

Both kids launched, yearly conservative spend including taxes & gifts $175k, contribute to a DAF, file MFJ in 24% Tax Bracket, converted $150k in 2021, plan to do more yearly conversions till age 72, I will file for SS at age 70 & DW at 67.

No debt, a paid off $500k house.

Flagship Select at Vanguard, also some with Fidelity & Schwab, Self managed Portfolio

AA 63/37

TAX DEFERRED Both Combined - $ 2.243 k
IRA $ 1.610 k BND Total Bond Index
Roth IRA '' '' $ 545 k VTI Total Stock Market Index
IRA $ 35 k VTI Total Stock Market Index
HSA "" "" "" $ 18 k FSKAX Total Market Index


TAXABLE - Both Combined - $ 5.939 k
$ 3138 k VTI Total Stock Market Index
$ 1430 k VXUS
$ 1045 k VWIUX Tax Exempt Interm Term Bonds
$ 140 k VBIRX Short Term Bond Index

Emergency Fund - $ 186 k (I Bonds + Bank Savings)

What do you think ? any feedback is welcome, thankyou in advance.

 

[Out-to-Lunch]

You are golden. I wouldn't change a thing. Nicely done.

 

[clifp]

I want second opinions/critiques & holes through our investments, Asset Allocation, any changes suggested, etc ...

We are retired, I am 65, DW is 60, our living expenses are all from our investments of $ 8 mil +,

Both kids launched, yearly conservative spend including taxes & gifts $175k, contribute to a DAF, file MFJ in 24% Tax Bracket, converted $150k in 2021, plan to do more yearly conversions till age 72, I will file for SS at age 70 & DW at 67.

No debt, a paid off $500k house.

Flagship Select at Vanguard, also some with Fidelity & Schwab, Self managed Portfolio

AA 63/37

TAX DEFERRED Both Combined - $ 2.243 k
IRA $ 1.610 k BND Total Bond Index
Roth IRA '' '' $ 545 k VTI Total Stock Market Index
IRA $ 35 k VTI Total Stock Market Index
HSA "" "" "" $ 18 k FSKAX Total Market Index


TAXABLE - Both Combined - $ 5.939 k
$ 3138 k VTI Total Stock Market Index
$ 1430 k VXUS
$ 1045 k VWIUX Tax Exempt Interm Term Bonds
$ 140 k VBIRX Short Term Bond Index

Emergency Fund - $ 186 k (I Bonds + Bank Savings)

What do you think ? any feedback is welcome, thankyou in advance.

Seem like a quite a good mix.
I'm your age with a similar net worth, but no wife.

You have 326K in true short-term asset, which will get you through a short bear market like 2008/2009. The only question I have is what will happen to your million dollars intermediate bond fund, in the event of say runaway 10%+ inflation a market crash, and cities and states getting into a financial crunch like in the great recession. If VWIUX has held up turn rough periods then you'll be fine. Personally, I've diversified outside of financial instruments

 

[Samsung4321]

0.003686946

I am 65 ... investments of $ 8 mil ... yearly conservative spend including taxes & gifts $175k

You don't state retirement phase end goal. I'll assume $2M to finance dying phase commencing age 85 and 3% inflation.

The nominal minimum rate of return required is:

= (1 + RATE((85-65), 175000, -8000000, 2000000, 0)) * ( 1 + 3%) - 1
= 0.37%

ie: you could bung it all in a few guaranteed bank deposits and forget about any other type of investment. Normalised bank deposit rates would yield 'money you would never spend'.

 

[chassis]

You’re good, congratulations.

 

[Luvtoride]

I agree with clifp. I would recommend a bit more in liquid funds to get you thru a bear market until you reach 70 your SS draw age.
Otherwise, great job!

 

[Closet_Gamer]

Does $175K include taxes?

If so, 2% withdrawal rate at age 65?

Should be more than fine.

 

[Exchme]

Good job on accumulating a nice stash, allocating it well and being generous with it.

I don't agree with the folks calling for holding more cash; cash is expensive to hold in the long run and you have such a big portfolio you aren't going to run out. You can afford to be long term in your thinking and not worry about market moves.

I really like the portfolio simplicity. I have a mess of factor funds in taxable that I don't know how I will manage as skills decline, but I don't want to pay the taxes to fix it.

 

[target2019]

I would not go much more in cash. I see the following as your 2nd line of emergency cash, and it's way good in my opinion.

$ 1045 k VWIUX Tax Exempt Interm Term Bonds
$ 140 k VBIRX Short Term Bond Index

 

[CincyDave]

Nice job. Now get off the internet and go have fun! HA HA

 

[VanWinkle]

You are good to go with a simple portfolio that should work fine!!

Could I be your spoiled rotten son with a new corvette and condo in Naples?

 

[MrLoco]

You have done well saving....BUT...you have a huge tax bomb in future years.

You currently have close to $ 4 million between the tax deffered account and the two Trad. IRA's.

In a few years you will need to take RMD's from these accounts and the taxes due will be significant.

In addition, you will most likely need to pay more for MEdicare premiums because of
IRMAA.

Doing significant Roth COnversions before then will somewhat reduce this tax burden.

 

[OldShooter]

Looks good. If it were lazy me I would try to concentrate everything at one brokerage. We have done this, everything at Schwab including my checking and debit card. DW has her checking at her old megabank and a debit card there. The two debit cards are primarily for redundancy when traveling internationally. Separate checking is primarily for marital peace.

 

[rkser]

You have done well saving....BUT...you have a huge tax bomb in future years.

You currently have close to $ 4 million between the tax deffered account and the two Trad. IRA's.

In a few years you will need to take RMD's from these accounts and the taxes due will be significant.

In addition, you will most likely need to pay more for MEdicare premiums because of
IRMAA.

Doing significant Roth COnversions before then will somewhat reduce this tax burden.

I am doing yearly Roth Conversions from my IRA, we have $2 not $4 m in IRAs, some of that IRA will be left for charity starting age 70.5, thanks

 

[rkser]

Looks good. If it were lazy me I would try to concentrate everything at one brokerage. We have done this, everything at Schwab including my checking and debit card. DW has her checking at her old megabank and a debit card there. The two debit cards are primarily for redundancy when traveling internationally. Separate checking is primarily for marital peace.

Thanks Oldshooter, have learnt from & am thankful for your posts on other threads.

Yes agree, getting to one brokerage is the goal. After starting at Vanguard & being with them for a long time, presently testing waters at local offices of Schwab & Fidelity.

 

[rkser]

I would not go much more in cash. I see the following as your 2nd line of emergency cash, and it's way good in my opinion.

$ 1045 k VWIUX Tax Exempt Interm Term Bonds
$ 140 k VBIRX Short Term Bond Index

Thanks, point well taken

 

[rkser]

Seem like a quite a good mix.
I'm your age with a similar net worth, but no wife.

You have 326K in true short-term asset, which will get you through a short bear market like 2008/2009. The only question I have is what will happen to your million dollars intermediate bond fund, in the event of say runaway 10%+ inflation a market crash, and cities and states getting into a financial crunch like in the great recession. If VWIUX has held up turn rough periods then you'll be fine. Personally, I've diversified outside of financial instruments

Thanks Clifp, at this age I would rather not start with "Outside of financial instruments".
I would think this kitty of ours has a good chance of seeing us through.

 

[pb4uski]

At such a low 2.2% withdrawal rate, there is no wrong answer... even putting it all in FDIC insured savings would be survivable (not recommending that though). You've done as much as you can reasonably do with tax effiiciency.

Do you have estate planning (wills, beneficiary designations, possible use of trusts, etc) covered off? Also, do you have any legacy wishes like a scholarship fund for any of you alma maters?

Any plans to spend more to be considered? Second homes? Class A motor home? etc?

 

[rkser]

At such a low 2.2% withdrawal rate, there is no wrong answer... even putting it all in FDIC insured savings would be survivable (not recommending that though). You've done as much as you can reasonably do with tax effiiciency.

Do you have estate planning (wills, beneficiary designations, possible use of trusts, etc) covered off? Also, do you have any legacy wishes like a scholarship fund for any of you alma maters?

Any plans to spend more to be considered? Second homes? Class A motor home? etc?

Yes, a local attorney takes care of the wills, trusts etc... every 5 yrs or so... the 3 Brokerages have the beneficiaries listed.

Yes, started a small Endowed Scholarship at a close by Community College & supported another scholarship at the state university, apart from local church all these through the Fidelity DAF.

Toured the country & then sold a pull behind camper, in our case the Trailer was more in the indoor storage rental other than 2 or 3 camping trips/yr.

Pb4uski, I learn from your knowledge & posts on the forum & appreciate you chiming on this thread.

 

[sengsational]

At such a low 2.2% withdrawal rate, there is no wrong answer... even putting it all in FDIC insured savings would be survivable (not recommending that though). You've done as much as you can reasonably do with tax effiiciency. ...

I agree that concentrating on finance might make a bit larger pile for your beneficiaries, but they likely won't notice that too much, if at all. So you're done there.

If you haven't read "Die With Zero (Perkins)", I'd recommend it for you. I don't agree with everything in the book, but it really got me thinking. You mentioned gifting, and I'm not sure how much you give NOW to those who are your beneficiaries. The book suggests, and I agree, that waiting for an arbitrary time in the future (i.e. your death) to give a huge sum isn't very logical. You might as well give it now, while they're younger and can do something with it. I wouldn't trickle-out money (creating a dependency that's covered in the book "Millionaire Next Door"), but rather say "this is a one-time thing" and drop a Really Big Amount to those that are your beneficiaries. If you set the expectation that they need to be responsible and not to come, hat in hand, for more, I don't think there's a risk of dependency, but of course that depends on the disposition of the recipient.

The other thing I'd recommend is learning about "effective altruism", which is the idea that you give money not to a charity that maximizes the good feeling you get from giving, but that does the most good, measured analytically, in quality adjusted life years. Just a warning: the most effective giving measured in this way requires giving outside the US. Why, because if you don't contribute to a US-based thing, those people not getting the benefit of your generosity are going to be just fine without it compared to really desperate people in other parts of the world. I know that's a hard sell, but something to think about. Search Sam Bankman-Fried to explore further.

 

[qwerty3656]

fyi, I think you want the "." in the numbers to be ","

 

[clifp]

Yes, a local attorney takes care of the wills, trusts etc... every 5 yrs or so... the 3 Brokerages have the beneficiaries listed.

Yes, started a small Endowed Scholarship at a close by Community College & supported another scholarship at the state university, apart from local church all these through the Fidelity DAF.

I'm actually having an conversation with my ala matter about doing something similar this week. I was pleasantly surprised, it looks like I have enough for an endowed assistant professor or something.

I'm curious are you funding this before you die or in your wills?

 

[rkser]

I agree that concentrating on finance might make a bit larger pile for your beneficiaries, but they likely won't notice that too much, if at all. So you're done there.

If you haven't read "Die With Zero (Perkins)", I'd recommend it for you. I don't agree with everything in the book, but it really got me thinking. You mentioned gifting, and I'm not sure how much you give NOW to those who are your beneficiaries. The book suggests, and I agree, that waiting for an arbitrary time in the future (i.e. your death) to give a huge sum isn't very logical. You might as well give it now, while they're younger and can do something with it. I wouldn't trickle-out money (creating a dependency that's covered in the book "Millionaire Next Door"), but rather say "this is a one-time thing" and drop a Really Big Amount to those that are your beneficiaries. If you set the expectation that they need to be responsible and not to come, hat in hand, for more, I don't think there's a risk of dependency, but of course that depends on the disposition of the recipient.

The other thing I'd recommend is learning about "effective altruism", which is the idea that you give money not to a charity that maximizes the good feeling you get from giving, but that does the most good, measured analytically, in quality adjusted life years. Just a warning: the most effective giving measured in this way requires giving outside the US. Why, because if you don't contribute to a US-based thing, those people not getting the benefit of your generosity are going to be just fine without it compared to really desperate people in other parts of the world. I know that's a hard sell, but something to think about. Search Sam Bankman-Fried to explore further.

Thanks for your input, have learnt from your prior posts.

Gifting at present each year -
-$30k from our taxable to our unmarried 29 yr old son (MBA), transfer some to his Vanguard Account & some to him in cash
-$30k to our daughter (She & her husband are MDs) some in cash, but mostly to her kids (our grandkid's) 529 plans.

We paid for our kids education & they did not have any students loan. So far they have not asked us for any money, although they do know we have millions worth in investments. Hopefully they do not start expecting or depending on us. We will leave the kitty to them when we pass

Making baby steps from the Fidelity Donor Advised Fund -
1)Last yr to a Scholarship at the State Uni., our kids graduated from
2)Started a pledged Endowed Scholarship at a local Community College
3)Local Temple, few other causes here & education of poor (501c) in India.

Will look up Perkins "Die with Zero",

Thankyou

 

[rkser]

I'm actually having an conversation with my ala matter about doing something similar this week. I was pleasantly surprised, it looks like I have enough for an endowed assistant professor or something.

I'm curious are you funding this before you die or in your wills?

We started funding the endowed scholarship at the community college last year.

 

[DawgMan]

Thanks for your input, have learnt from your prior posts.

Gifting at present each year -
-$30k from our taxable to our unmarried 29 yr old son (MBA), transfer some to his Vanguard Account & some to him in cash
-$30k to our daughter (She & her husband are MDs) some in cash, but mostly to her kids (our grandkid's) 529 plans.

We paid for our kids education & they did not have any students loan. So far they have not asked us for any money, although they do know we have millions worth in investments. Hopefully they do not start expecting or depending on us. We will leave the kitty to them when we pass

Making baby steps from the Fidelity Donor Advised Fund -
1)Last yr to a Scholarship at the State Uni., our kids graduated from
2)Started a pledged Endowed Scholarship at a local Community College
3)Local Temple, few other causes here & education of poor (501c) in India.

Will look up Perkins "Die with Zero",

Thankyou

Ahh... first world "problems", but often, challenges none the less, especially the more you recognize your fortunate state. I sort of look at at it in tiers. First tier is I want to make sure DW and I can live a lifestyle we choose and hopefully, NEVER be a burden on my kids (for me, that was always my num 1 goal... check). Tier 2: Enjoy our (DW & me) lives with our kids/G-Kids "experiencing" (i.e. dinners, vacations, general entertainment being together)... creating memories, often extravagant at times. Tier 3: Strategic gifting (i.e. first house, one time bigger expenses). Not reoccurring, but situation specific. Of course, this is where entitlement can start to play in so a slippery slope. Tier 4: Kids are more mature, family finances may be more disclosed and annual gifting occurs. Tier 5 (4.1): Larger charity/endowment gifting.

Food for thought!