So I have spent some time reading about different AAs of those both close too and those in RE and realize that this is not a one size fits all decision. Yes, it "depends" on risk tolerance, assets, RE timeline, spending goals, etc. My question revolves more around best AA strategies for those who have more aggressive RE spending goals with only their own assets to rely on (i.e. no pension other than SS if you really include that). To get more specific in my case, here is where I am and what I would like to do...
- 52, self employed, no income from DW, will have last 2 kids (out of 4) out of college in 3 yrs... heavy lifting should be done then.
- On paper, using the 4% rule, I should be able to potentially launce RE at 55, however, I think a combination of OMY and not knowing what I will be RE too yet, may keep me in the saddle potentially to age 60... who knows.
- RE spending goals +/- $200K after tax growing with inflation.
- Assets are weighted in order include 401K, brokerage accts, income producing real estate. Only debt is my home and the only reason I don't pay it off is because the interest rate is so low.
- Current AA (in approximate terms excluding real estate) is +/- 70/30, ratcheted down about 2 yrs ago from about 80/20.
Questions/Comments...
- I am a Schwab guy and use their AA models as a guideline to set my AA portfolio strategy. What I find interesting is the historical returns between a moderate portfolio (40/60) and aggressive (95/5) are 9.0% vs 10.3%, but with significant differences in volatility. This begs the question as why take the extra risk??
- A combination of higher post RE higher income/spending objectives and pulling significantly from 401K $ creates a more tricky tax situation. My income is too high right now to consider Roth conversions. One reason to keep my business going in some capacity past 55 is for potential additional tax deductions to help minimize taxes. What strategies are you higher RE income folks using to minimize taxes??
- Knowing the above, what would you suggest I consider changing (i.e. AA, other) to maximize my after tax income goals?
- 52, self employed, no income from DW, will have last 2 kids (out of 4) out of college in 3 yrs... heavy lifting should be done then.
- On paper, using the 4% rule, I should be able to potentially launce RE at 55, however, I think a combination of OMY and not knowing what I will be RE too yet, may keep me in the saddle potentially to age 60... who knows.
- RE spending goals +/- $200K after tax growing with inflation.
- Assets are weighted in order include 401K, brokerage accts, income producing real estate. Only debt is my home and the only reason I don't pay it off is because the interest rate is so low.
- Current AA (in approximate terms excluding real estate) is +/- 70/30, ratcheted down about 2 yrs ago from about 80/20.
Questions/Comments...
- I am a Schwab guy and use their AA models as a guideline to set my AA portfolio strategy. What I find interesting is the historical returns between a moderate portfolio (40/60) and aggressive (95/5) are 9.0% vs 10.3%, but with significant differences in volatility. This begs the question as why take the extra risk??
- A combination of higher post RE higher income/spending objectives and pulling significantly from 401K $ creates a more tricky tax situation. My income is too high right now to consider Roth conversions. One reason to keep my business going in some capacity past 55 is for potential additional tax deductions to help minimize taxes. What strategies are you higher RE income folks using to minimize taxes??
- Knowing the above, what would you suggest I consider changing (i.e. AA, other) to maximize my after tax income goals?