I'm hoping I didn't retire too soon.

[JohnDevereaux]

Ok, I did it, 60 now. I am 100% debt free, no house notes, no car notes, nothing but daily living expenses. I retired 6 months ago, job just became too physically demanding. I have rolled over my 401k to an investor I trust 6 months ago, will start drawing first dispersion this month (3%). I still work my part time job, 1-2 days a week for $2k a month. I contributed HEAVILY into my 401k and Roth over the past 35 years. 401k @ $2m, Roth @ $500k, $125k in savings. In 18 months I am eligible for $2.5k/mo for Social Security. I'll continue my part time job until I start drawing it. I am currently going to draw about $6k/month, won't really need but $5k/month to live, plan on saving excess money to buy the wife a new vehicle, in a few years, and investing in some gold, platinum, and silver (to pass on to kids). I still worry about having enough for the rest of my life, and really wish to leave a lot to my children. Does this sound adequate? Any ideas about converting the 401k to Roth? Any ideas of other avenues I should be taking?

 

[ivinsfan]

What do you mean when you say "an investor you trust"....?

 

[disneysteve]

What do you mean when you say "an investor you trust"....?

Same question. That statement jumped out as a huge red flag to me.

 

[Exchme]

OP - you are the investor. You may have hired a financial advisor. Realize that you can get better results and not pay the usually exorbitant fees advisors cost by doing it yourself. A typical advisor assets-under-management charge is 0.8-1% per year, some are even worse. Unfortunately, the safe withdrawal rate for a 30 year retirement is only about 4% per year, so a way to visualize those advisory fees is the advisor will be taking a quarter of everything you worked for. On top of that, "trusted" advisors often put you in expensive investments that mostly benefit them. Many of us here have been burned badly by these kind of folks.

Folks here mostly favor Vanguard, Fidelity or Schwab. All you need to to is decide on a stock/bond asset allocation, many retirees are in the 60/40 or 50/50 range. Then for your stock holding, just buy something simple like the Vanguard Total Stock Market ETF (that can also be bought and sold at other brokerages like Fidelity or Schwab without fees). The costs are very low, something like 0.035%. Bonds are more complicated, but a not-bad compromise is something like BIV (Vanguard intermediate term Treasuries) or VTIP (Vanguard Short Term Inflation Protected Securities). I also spice up my portfolio by holding a Total International Stock Fund, but there are good arguments why that's not really needed. Setting this up and managing it is super simple, having an advisor for this is a total waste.

From a tax efficiency standpoint, put your bonds in your tax deferred account to slow its growth and minimize your future RMDs and put your stocks in Roth.

Since you have such a large tax deferred balance, you should be making some pretty hefty Roth Conversions, especially in the next couple of years before you become subject to IRMAA surcharges on your Medicare.

On claiming Social Security, the usual optimum strategy for a married couple is for the lower earner to claim at 62 and the higher earner to wait until 70. Go to opensocialsecurity.com and enter your numbers. Make sure you scroll to the bottom and click on different points on the graph, that will show you how things change in every single monthly combination of claim ages.

 

[RetiredHappy]

Since you only have $125K in taxable account, you are fairly limited on how much ROTH conversion you can do. But it sounds like you are in very low income tax bracket now, so ROTH conversion will be advantageous