How are our finances doing in retirement ?

[rkser]

Please give feedback, thankyou in advance -

I am 67, DW is 62, both retired, our 2 kids have flown the nest
We live in a paid off home,
Pay credit cards at end of the month,
We spend around $200 - $225k a year including taxes, our income is solely from dividends & selling VTI, we are in 24% marginal Tax Bracket,

Both of our combined accounts are -
Taxable Accounts - $ 5,564,397
IRAs - $ 1,213,828
Roth IRAs - $ 890,548
HSAs - $ 19,531
DAF-Charity Fund - $ 16,671

Total - $ 7,704,975

Asset Allocation - 70% VTI + VXUS Stock ETFs / 30% CDs + Money Market Funds,

We spend from Taxable Funds & do Roth Conversions in IRAs

DW draws SS of $1,209/mo & I will draw my SS at age 70,

We gift $34k yearly to each kid, i.e $68k are included in our yearly spend

I am on Medicare paying IRMAA penalty on 3rd rung + Secondary , DW is on Private Health Insurance,

A DIYer with help of Bogleheads & Early-Retirement Forums, no advisors,

Presently money is spread in Fidelity (mostly) + Schwab + Vanguard

Would you do anything different, any suggestions ?

Thankyou & regards

 

[madatrub]

I would think anyone with 7.7 mil in investible net worth is doing fine. At 4% SWR, you're still living below your means by $80,000/yr.

 

[Route246]

It is a hassle to track cost basis but I am in a similar situation and I've been trying to concentrate as much as possible into a single brokerage account, in my case Vanguard but Schwab and Fidelity would work just as well. Also in my case I have Merrill Edge (sucked in when they were starting out and giving free money to move in) and E-Trade (legacy of previous company where cost basis records are the only thing holding me back now as I am too lazy to do the paper work to transfer all of this mess to Vanguard).

The main reason for this is to simplify things for my wife if I die suddenly as she is not experienced in dealing with brokerages as I am. I have a detailed runbook on what to do if I die suddenly, who to contact, who to call, where all of our assets are, etc. All assets that are not IRA/401-K are joint accounts with her name also on the title.

Do you have any positions where you have losses? I have a few small ones that I usually cash out and move to SPY/VFIAX. I have a small allocation in VTI (10%) but admire your xUS strategy as I always did well with SPY-based strategy so didn't feel much urge to diversfy outside of the US.

It sounds like your gifting strategy is sound. Is your spend including gifting or is that separate?

Please give feedback, thankyou in advance -

I am 67, DW is 62, both retired, our 2 kids have flown the nest
We live in a paid off home,
Pay credit cards at end of the month,
We spend around $200 - $225k a year including taxes, our income is solely from dividends & selling VTI, we are in 24% marginal Tax Bracket,

Both of our combined accounts are -
Taxable Accounts - $ 5564397
IRAs - $ 1213828
Roth IRAs - $ 890,548
HSAs - $ 19531
DAF-Charity Fund - $ 16671

Total - $ 7704975

Asset Allocation - 70% VTI + VXUS Stock ETFs / 30% CDs + Money Market Funds,

We spend from Taxable Funds & do Roth Conversions in IRAs

DW draws SS of $1209/mo & I will draw my SS at age 70,

We gift $34k yearly to each kid

I am on Medicare paying IRMAA penalty on 3rd rung + Secondary , DW is on Private Health Insurance,

A DIYer with help of Bogleheads & Early-Retirement Forums, no advisors,

Presently money is spread in Fidelity (mostly) + Schwab + Vanguard

Would you do anything different, any suggestions ?

Thankyou & regards

 

[Sunset]

You are doing fine.

 

[rkser]

It is a hassle to track cost basis but I am in a similar situation and I've been trying to concentrate as much as possible into a single brokerage account, in my case Vanguard but Schwab and Fidelity would work just as well. Also in my case I have Merrill Edge (sucked in when they were starting out and giving free money to move in) and E-Trade (legacy of previous company where cost basis records are the only thing holding me back now as I am too lazy to do the paper work to transfer all of this mess to Vanguard).

The main reason for this is to simplify things for my wife if I die suddenly as she is not experienced in dealing with brokerages as I am. I have a detailed runbook on what to do if I die suddenly, who to contact, who to call, where all of our assets are, etc. All assets that are not IRA/401-K are joint accounts with her name also on the title.

Do you have any positions where you have losses? I have a few small ones that I usually cash out and move to SPY/VFIAX. I have a small allocation in VTI (10%) but admire your xUS strategy as I always did well with SPY-based strategy so didn't feel much urge to diversfy outside of the US.

It sounds like your gifting strategy is sound. Is your spend including gifting or is that separate?

Gifting is included in the spend, after being with Vanguard for 25 yrs, recently moving to Fidelity & Schwab due to Customer Service issues. Goal is Taxable at Fidelity & Tax Deferred + Tax Free at Schwab, both have got offices in town

 

[Dash man]

Please give feedback, thankyou in advance -

I am 67, DW is 62, both retired, our 2 kids have flown the nest
We live in a paid off home,
Pay credit cards at end of the month,
We spend around $200 - $225k a year including taxes, our income is solely from dividends & selling VTI, we are in 24% marginal Tax Bracket,

Both of our combined accounts are -
Taxable Accounts - $ 5564397
IRAs - $ 1213828
Roth IRAs - $ 890,548
HSAs - $ 19531
DAF-Charity Fund - $ 16671

Total - $ 7704975

Asset Allocation - 70% VTI + VXUS Stock ETFs / 30% CDs + Money Market Funds,

We spend from Taxable Funds & do Roth Conversions in IRAs

DW draws SS of $1209/mo & I will draw my SS at age 70,

We gift $34k yearly to each kid

I am on Medicare paying IRMAA penalty on 3rd rung + Secondary , DW is on Private Health Insurance,

A DIYer with help of Bogleheads & Early-Retirement Forums, no advisors,

Presently money is spread in Fidelity (mostly) + Schwab + Vanguard

Would you do anything different, any suggestions ?

Thankyou & regards

Your situation is very similar to ours, except DW is waiting until 70 (in 3years) to collect social security. We gift our two boys $25k/year plus own the homes they live in. So the taxes and a few other costs come close to your gifts.
We use Schwab and Fidelity with a mix of individual stocks and a few ETFs, and individual bonds, treasuries and CDs, but no bond funds. We’ve been more aggressive with Roth conversions and still have $1.7M in IRAs. But we’re starting to back off to only $200k/yr in conversions to pay less IRMAA, and plan to begin using QCDs, which will eliminate our RMDs.
So far we’ve been living off of dividends, interest, a small pension (non cola), SS and some stock sales in our taxable account.
We spend a bit more than you, but only because of our charitable giving which can be cut back if needed, and we have two beach homes in Florida and New Jersey that we can easily sell if needed.
We keep about a 75/25 asset allocation for investable assets, but I’m considering pulling back the equities a little.

 

[RunningBum]

I think the usual answer is, what does FireCalc say? I'm gonna bet it says you are golden.

Couple of questions/comments though:

First, use of commas in large numbers makes them easier to read!

Second, don't include the DAF as part of your total. That money may be under your control, but not to bring it back to you. It's small though (I think...use commas!) so that's negligible.

Third, is the gifting part of your budget? If not, you are really withdrawing over 3.8%. You're still ok as long as you'd be willing to stop that gifting or cut other fat if things do get bad.

 

[rkser]

I think the usual answer is, what does FireCalc say? I'm gonna bet it says you are golden.

Couple of questions/comments though:

First, use of commas in large numbers makes them easier to read!

Second, don't include the DAF as part of your total. That money may be under your control, but not to bring it back to you. It's small though (I think...use commas!) so that's negligible.

Third, is the gifting part of your budget? If not, you are really withdrawing over 3.8%. You're still ok as long as you'd be willing to stop that gifting or cut other fat if things do get bad.

Thanks RunningBum,
Your points are well taken, I went back & added the commas, the $68k gifts to kids are included in our yearly spend,

I do want to mention that I learn & benefit from your & pb4uski's insightful posts & comments among others, thanks

 

[RunningBum]

Thanks RunningBum,
Your points are well taken, I went back & added the commas, the $68k gifts to kids are included in our yearly spend,

I do want to mention that I learn & benefit from your & pb4uski's insightful posts & comments among others, thanks

Thank you. Those gifts being included in your spend puts you under 3%, which is pretty much bullet proof. Congrats!

 

[Phroig]

You might already be doing this, but you could gift appreciated stock to your children rather than cash.

 

[rkser]

You might already be doing this, but you could gift appreciated stock to your children rather than cash.

Yes, we do transfer ETFs to children with Change of Ownership at Vanguard

 

[SevenUp]

You might already be doing this, but you could gift appreciated stock to your children rather than cash.

The recipients would probably prefer the cash, which incurs no tax to spend.

Gifted stock retains the cost basis of the giver, so a recipient would incur taxable income if selling appreciated shares in order to spend.

Inherited stock, however, gets a cost basis step-up to the value on date of death.

 

[Sunset]

The recipients would probably prefer the cash, which incurs no tax to spend.

Gifted stock retains the cost basis of the giver, so a recipient would incur taxable income if selling appreciated shares in order to spend.

Inherited stock, however, gets a cost basis step-up to the value on date of death.

The kids may be in a low tax bracket, so from a family total asset view it would make sense to gift stock.

May be other reason's such as putting a natural dampener (taxation) on the spending of the money given, so that it is saved.

 

[SevenUp]

The recipients would probably....

The kids may be....

Speculation is a wonderful thing.

 

[levindb]

I would encourage gifting to the grandchildren...especially appreciated stock in kind. They can slowly harvest the gains at their minimal tax bracket until they get to the ages where their income may impact the parents' tax bracket.

Also, helping the kids understand how to manage their funds so their retirement will be as rewarding as yours could be a goal for you...then consider having your future inheritances skip a generation (or maybe two) so those funds could go where/when they are needed most.

 

[DrRoy]

You might consider combining your $ into Fidelity for ease of handling.

 

[NgineER]

You might consider combining your $ into Fidelity for ease of handling.

+1 Simplify further, probably get better support in return.

 

[pacergal]

Looks like you are doing wonderfully, and your kids are receiving benefits now, also, when you can see and enjoy how they use it.
Congratulations on a well planned retirement. Enjoy!

 

[LateToFIRE]

Looks to me like you're doing great. I'm at a similar level of assets, but nowhere near as liquid, so I am rather quite envious of your proportion of Taxable & Roth accounts! Over next few years will be making major adjustments to asset mix (asset sales, Roth conversions, RSU's, etc.) and writing big checks to Uncle Sam.

Would echo what some others have indicated, which is that you are sure to have a pile leftover at end of the day, so I think worth it to get professional advice on best ways to pass it along to multiple next generations in terms of both tax efficiency, as well as making sure it's done in a way that creates the least potential for friction. Have unfortunately seen families torn apart when there is a lot (or even not much) to fight over. In your case there will be millions at stake.

 

[aaronc879]

Looks like everything is great. Only thing I would change is to adopt me and give me $34K/yr. You can easily afford it. Seriously though, you could up your spending 10's of thousands per year and still be good for life. Your kids will likely inherit millions each.

 

[rkser]

You might consider combining your $ into Fidelity for ease of handling.

We are ending up with Taxable accounts with Fidelity & IRAs + Roths at Schwab for now, both have offices in town.

 

[rkser]

Looks to me like you're doing great. I'm at a similar level of assets, but nowhere near as liquid, so I am rather quite envious of your proportion of Taxable & Roth accounts! Over next few years will be making major adjustments to asset mix (asset sales, Roth conversions, RSU's, etc.) and writing big checks to Uncle Sam.

Would echo what some others have indicated, which is that you are sure to have a pile leftover at end of the day, so I think worth it to get professional advice on best ways to pass it along to multiple next generations in terms of both tax efficiency, as well as making sure it's done in a way that creates the least potential for friction. Have unfortunately seen families torn apart when there is a lot (or even not much) to fight over. In your case there will be millions at stake.

We got the estate planning papers made by a local attorney, both me & DW have Revocable Trusts, we got the Will & medical power of attorney papers done,

Thanks