So if I want to reduce my allocation from 100% stocks, what do you think if its the IRA portion that I take out of the market?

[Digger1000]

I'm 60 and single, retired 9 years with no pension. Plan on taking SS at 70 but that could always chance.

I'm around 57% taxable, 23% roth IRA, 20% tIRA.

I'm 99-100% stock mutual funds, almost entirely s&p 500.

So I'm finally to the point that I would like to move some money out of the market. I dont want to move any taxable money for ACA, fed, and state income reasons (I pay $0 in taxes every year and my aca premium is $0). Selling the taxable mutual funds is something I really wont even consider at this point. To be honest if I could I would give strong consideration to moving all my money out of the market were it not for ACA and taxes.

So how bad/dumb is it do you think to move the IRA portion out of the market (I would move both roth and tIRA out)? Its really what I want to do and plan to do, but obviously I wish it was the ira portion I could leave in the market.

I dont understand bonds or bond funds at all plus it sounds like most people feel bonds isnt a good place to be anymore. So money market funds or CDs is where I would go. Any recommendations for vanguard MM funds would be greatly appreciated. I've been looking at them. I know MM funds were below 1% for years. 6 months ago I saw they were at like 4.2 or 4.4% and now they are like 3.3-3.6. Even if/when they go back down under 1% I'll be fine. My IRAs are at fidelity (other than a tiny inherited IRA at Vanguard) but it looks like vanguard MM returns are always better? I've always been in stocks only. My taxable account is at vanguard.

Another question, I moved a 403b at TIAA into a fidelity rollover ira around 8 months ago. If I wanted, can I rollover that money at any time to a vanguard ira? Dont have to wait?

Also, can you change investments within an ira as often as you like? Like if I have the IRAs at vanguard, and I want to switch between MM's and stock mutual funds at vanguard, can you do that as often as you want?

 

[SnowballCamper]

Yes you can change investments within a self directed IRA as often as you want. Use the search function to read the other threads about using vanguard as your brokerage. Not everyone is satisfied.

It is more tax efficient to have income producing assets like bonds and CDs in the IRA.

What stock allocation are you going to target? If 100% stocks got you to this success, why change now?

 

[sakowitzm]

I don't have any problem at all with this. Kinda sorta what I did a few years back. Here's the "yes" portion - your TIRA will grow more slowly, and so your RMDs will be lower. Here's the "no" portion - I would recommend the opposite for your Roth. Since it's never going to be taxed, let 'er rip! That's where I have my riskiest investments. Now, if you were much older, maybe your wouldn't take such risk in the Roth. But at age 60? With potentially 20-30 years or more left on this earth? No brainer, to me, to let the Roth run.

 

[Al18]

In addition to CD's, you should look at MYGA's inside your IRA. They work very similar to CD's and most are for 3-7 years and you never pay a commission. The advantage to most MYGA's is you can withdraw up to 10% penalty free each year. These are guaranteed by the ability of the insurance company writing the MYGA, so there is some risk. I would focus on those rated A or higher.

 

[Digger1000]

Yes you can change investments within a self directed IRA as often as you want. Use the search function to read the other threads about using vanguard as your brokerage. Not everyone is satisfied.

It is more tax efficient to have income producing assets like bonds and CDs in the IRA.

What stock allocation are you going to target? If 100% stocks got you to this success, why change now?

The reason for the change.

(I know I'm a poor compared to most).

I went from 625k nine years ago at retirement to 1.824m yesterday (was 1.897m at high). My yearly living expenses have been less than 1% of my current portfolio (will probably increase to 2-3% going forward). By my standards as a poor blue collar worker I went from being poor at retirement to well off today (by my standards). And btw I loved working but the work enviroment was so toxic I had to get out. But from reading this board I knew I would be fine retiring if I continued being frugal like I have everyday of my life and I thoroughly enjoy being frugal.

In the dotcom crash I was all internet stocks and went from 276k down to 15k. Fifteen years after the bottom I retired at 51 by just being in the s&p 500.

The covid bear market was pretty severe (temporary) but I was poor before 2020 and didnt think of getting out.

A year ago my portfolio went down like 500k due to tariffs but recovered and went higher than before.

Being 100% stocks I've always considered my net worth to be half of what it is because I know the market could drop 50% or more at anytime. For me, I have enough money. Do I wish I had more? Of course. Do I have enough? Yes. My SS at 70 looks pretty nice to me too since I'm a low spender.

Whenever the market is high I had this old cnbc story that I would always look at that had all the numbers of all the bear markets in history and 2008 or one of those was down 56% at one point.

So I would prefer not to feel like I could lose 50% of my money at anytime since I basically have tripled my money since I retired. Yes I know, inflation and trying to keep with that.

 

[PaunchyPirate]

I would agree that you should sell the desired amount of stocks in your Traditional IRA. Buy some form of bonds... Bond fund (simplest), T-Bills directly from your broker, a CD ladder, etc. Leave your Roth 100% in stocks -- you want maximum potential growth there.

My Traditional IRA is 100% bonds - (T-Bills, TIPS, and CDs). It is 1/3 of my portfolio. My Roth is tiny, but 100% stocks. My taxable account (about 2/3 of my portfolio) is 100% stock funds and a few individual stocks that I also won't sell until I'm clear of ACA stuff.

 

[RetiredHappy]

In addition to CD's, you should look at MYGA's inside your IRA. They work very similar to CD's and most are for 3-7 years and you never pay a commission. The advantage to most MYGA's is you can withdraw up to 10% penalty free each year. These are guaranteed by the ability of the insurance company writing the MYGA, so there is some risk. I would focus on those rated A or higher.

+1. I like MYGAs, they pay higher than CDs and government bonds and are easy to understand like CDs. Note that once you care committed to the MYGAs while with most of them you can withdraw up to 10% a year, you really cannot "surrender" them until they are at maturity. You can buy 3-year, 5-year, 6-year etc MYGAs.

 

[JBTX]

What you are contemplating totally makes sense. Moving all of your tax advantaged to money market or bonds. You could move it all to MM now and take your time to see if there are any bonds funds you like. It takes the urgency out of the timing.

Personally I’d consider a short term TIPS etf, but again, go to MM first then figure it out

 

[SnowballCamper]

The reason for the change.

(I know I'm a poor compared to most).

I went from 625k nine years ago at retirement to 1.824m yesterday (was 1.897m at high). My yearly living expenses have been less than 1% of my current portfolio (will probably increase to 2-3% going forward). By my standards as a poor blue collar worker I went from being poor at retirement to well off today (by my standards). And btw I loved working but the work enviroment was so toxic I had to get out. But from reading this board I knew I would be fine retiring if I continued being frugal like I have everyday of my life and I thoroughly enjoy being frugal.

In the dotcom crash I was all internet stocks and went from 276k down to 15k. Fifteen years after the bottom I retired at 51 by just being in the s&p 500.

The covid bear market was pretty severe (temporary) but I was poor before 2020 and didnt think of getting out.

A year ago my portfolio went down like 500k due to tariffs but recovered and went higher than before.

Being 100% stocks I've always considered my net worth to be half of what it is because I know the market could drop 50% or more at anytime. For me, I have enough money. Do I wish I had more? Of course. Do I have enough? Yes. My SS at 70 looks pretty nice to me too since I'm a low spender.

Whenever the market is high I had this old cnbc story that I would always look at that had all the numbers of all the bear markets in history and 2008 or one of those was down 56% at one point.

So I would prefer not to feel like I could lose 50% of my money at anytime since I basically have tripled my money since I retired. Yes I know, inflation and trying to keep with that.

Given your kinda newly found risk aversion, and low spending, maybe take the time to learn about a tips ladder. The advantage is guaranteed preservation of spending power. The disadvantages are the learning curve (not that bad really) and the ghost income. The ghost income is that the TIPS principal increases with inflation, and you have to pay tax on that each year even though it isn't fully realized until maturity. https://www.tipsladder.com/

Personally I think a roughly 50/50 asset allocation with stock index investing and CDs/Treasuries/MYGAs is better because you have more potential for growth.

 

[PaunchyPirate]

Given your kinda newly found risk aversion, and low spending, maybe take the time to learn about a tips ladder. The advantage is guaranteed preservation of spending power. The disadvantages are the learning curve (not that bad really) and the ghost income. The ghost income is that the TIPS principal increases with inflation, and you have to pay tax on that each year even though it isn't fully realized until maturity. https://www.tipsladder.com/

Personally I think a roughly 50/50 asset allocation with stock index investing and CDs/Treasuries/MYGAs is better because you have more potential for growth.

If the TIPS are purchased in an IRA, there is no ghost income tax to worry about. That only applies if the TIPS are purchased in a taxable account.

 

[Golden Mean]

Makes sense to me.

I would caution you to look at how bond funds work. The NAV can fluctuate just like stock. Bond/ bond ladders preserve your capital while paying your guaranteed interest, as long as you hold each bond to maturity.

Personally I just have my fixed/cash in a money market fund (MMF), VMFXX, Vanguard's settlement fund. It's not worth the extra .5-1% interest to me to do anything else.

 

[pb4uski]

I totally agree with de-risking and putting your 20% in a tIRA into fixed income. I would stay away from bond funds. Individual bonds are a possibility, especially if you stay with government bonds with no credit risk. I like the idea of a TIPS ladder.

Another alternative, and what I have in my traditional IRA, are a ladder of target maturity bond ETFs. Each ETF is a portfolio of bonds that nature in a stated year. As bonds mature in that stated year, the maturity proceeds are reinvested short-term, and in December the entire fund is paid out to the investors and the fund no longer exists. They are sort of a middle ground between individual bonds and bond funds. There are treasury, investment grade corporate bond, and high-yield corporate bond versions.

Is there a reason why you are managing your income to $0 tax and not taking advantage of lower tax brackets for Roth conversions? Do you expect to be in a low tax bracket when RMDs start?

 

[engineernerd]

I'm 60 and single, retired 9 years with no pension. Plan on taking SS at 70 but that could always chance.

I'm around 57% taxable, 23% roth IRA, 20% tIRA.

I'm 99-100% stock mutual funds, almost entirely s&p 500.

So I'm finally to the point that I would like to move some money out of the market. I dont want to move any taxable money for ACA, fed, and state income reasons (I pay $0 in taxes every year and my aca premium is $0). Selling the taxable mutual funds is something I really wont even consider at this point. To be honest if I could I would give strong consideration to moving all my money out of the market were it not for ACA and taxes.

That sounds like an emotion-driven desire. Repeat after me: you can't time the market. I tried a couple of times, many years ago, and regretted each attempt as the market went to new highs while I was sitting on the sidelines missing out. You will do best by tuning out all those voices trying to provoke fear, or at other times greed, in you as an investor.

So how bad/dumb is it do you think to move the IRA portion out of the market (I would move both roth and tIRA out)?

It's not dumb at all to move the tIRA out of the market, in fact it's the most tax-efficient place for your fixed-income holdings. Holding stock assets in taxable lets you take advantage of the lower tax on capital gains and qualified dividends. Holding stocks in Roth is best of all, since the earnings will always be in the best bracket of all, 0%. So I don't recommend switching to fixed-income assets in that account.

I also think 80% stocks is a fine allocation and see no need to go lower.

How much analysis have you done in FIRECalc? A lot of people start with it and never go beyond the "Start Here" tab, failing to notice the other six input tabs and coming away with the impression that FIRECalc is too simple. In any case, if you enter all your data and then choose "Investigate changing my allocation" in the Investigate tab, you can see your odds of success graphed out over stock allocations from 0% to 100%. A very useful tool, IMHO. If it shows you 100% odds of success across a wide range of asset allocations, consider bumping up your assumed spending rate until you can see more of a curve.

The reason a low stock percent does badly is inflation. Inflation is a bigger threat to a comfortable retirement than is SORR. The stock market always bounces back, sometimes slowly but often quickly, and then keeps going up. Inflation almost never reverses itself. It increases your necessary withdrawals for the rest of your life even if it is brought back down after a short time.

 

[mrfeh]

Also, can you change investments within an ira as often as you like? Like if I have the IRAs at vanguard, and I want to switch between MM's and stock mutual funds at vanguard, can you do that as often as you want?

Holding fixed income in a traditional IRA is exactly what you should do, for tax purposes.

https://www.bogleheads.org/w/index.php?title=Tax-efficient_fund_placement&mobileaction=toggle_view_desktop

 

[sengsational]

Yep, what PB said...target maturity ETF's in your tIRA and you're done. Easier than a bond ladder and you're not stuck with the bond fund flu. Super simple and gets you where you want to be.

But I think you should run a calculator to see if you shouldn't be paying a little tax at low brackets now so you don't hit high brackets with RMD's. Maybe it's not needed, but without running the numbers, you don't know.

 

[NW-Bound]

(I know I'm a poor compared to most).

I went from 625k nine years ago at retirement to 1.824m yesterday (was 1.897m at high). My yearly living expenses have been less than 1% of my current portfolio (will probably increase to 2-3% going forward). By my standards as a poor blue collar worker I went from being poor at retirement to well off today (by my standards)....

Wow! For someone who retired at 50 and has almost $2M at 60 now, that's no mean feat. You are not at all poor. And your frugality is among the highest I have seen on this forum.

And you are right that you can give yourself a raise going forward. I am sure that no matter how you are going to shuffle your money, you will still do well.

 

[Digger1000]

I totally agree with de-risking and putting your 20% in a tIRA into fixed income. I would stay away from bond funds. Individual bonds are a possibility, especially if you stay with government bonds with no credit risk. I like the idea of a TIPS ladder.

Another alternative, and what I have in my traditional IRA, are a ladder of target maturity bond ETFs. Each ETF is a portfolio of bonds that nature in a stated year. As bonds mature in that stated year, the maturity proceeds are reinvested short-term, and in December the entire fund is paid out to the investors and the fund no longer exists. They are sort of a middle ground between individual bonds and bond funds. There are treasury, investment grade corporate bond, and high-yield corporate bond versions.

Is there a reason why you are managing your income to $0 tax and not taking advantage of lower tax brackets for Roth conversions? Do you expect to be in a low tax bracket when RMDs start?

Its 15 years till rmd's. I may not live till then. I have always thought I would really step up the conversions at 65 when ACA will not be an issue. I have already converted $15,855 this year (plus I have a $1534 inherited ira rmd). My irs deduction is $19,100 this year if you figure in my $3,000 longterm capital gains loss. I still have a 59k longterm capital gains loss from the 2000 dotcom bust.

 

[Digger1000]

Given your kinda newly found risk aversion, and low spending, maybe take the time to learn about a tips ladder. The advantage is guaranteed preservation of spending power. The disadvantages are the learning curve (not that bad really) and the ghost income. The ghost income is that the TIPS principal increases with inflation, and you have to pay tax on that each year even though it isn't fully realized until maturity. https://www.tipsladder.com/

Personally I think a roughly 50/50 asset allocation with stock index investing and CDs/Treasuries/MYGAs is better because you have more potential for growth.

Your right I would need to study as I know nothing about anything that isnt a stock mutual fund. It looks Chinese to me when people talk terms about anything besides stock mutual funds. I have zero idea what they are talking about. I have zero idea how a bond fund works or how bonds work. I know how to check a stock mutual fund NAV and I know I get my quarterly dividends. I follow the stock market daily.

Back about 1983 or so as a teenager I had a CD that paid 9%.

 

[Digger1000]

That sounds like an emotion-driven desire. Repeat after me: you can't time the market. I tried a couple of times, many years ago, and regretted each attempt as the market went to new highs while I was sitting on the sidelines missing out. You will do best by tuning out all those voices trying to provoke fear, or at other times greed, in you as an investor.


It's not dumb at all to move the tIRA out of the market, in fact it's the most tax-efficient place for your fixed-income holdings. Holding stock assets in taxable lets you take advantage of the lower tax on capital gains and qualified dividends. Holding stocks in Roth is best of all, since the earnings will always be in the best bracket of all, 0%. So I don't recommend switching to fixed-income assets in that account.

I also think 80% stocks is a fine allocation and see no need to go lower.

How much analysis have you done in FIRECalc? A lot of people start with it and never go beyond the "Start Here" tab, failing to notice the other six input tabs and coming away with the impression that FIRECalc is too simple. In any case, if you enter all your data and then choose "Investigate changing my allocation" in the Investigate tab, you can see your odds of success graphed out over stock allocations from 0% to 100%. A very useful tool, IMHO. If it shows you 100% odds of success across a wide range of asset allocations, consider bumping up your assumed spending rate until you can see more of a curve.

The reason a low stock percent does badly is inflation. Inflation is a bigger threat to a comfortable retirement than is SORR. The stock market always bounces back, sometimes slowly but often quickly, and then keeps going up. Inflation almost never reverses itself. It increases your necessary withdrawals for the rest of your life even if it is brought back down after a short time.

Thanx for your reply and all your helpful info.

Nikkei finally got back to its 1989 price what, last year?

Also what made you think I was emotion-riven in wanting to get out? Most retirees are much more conservative than I have been. I've tripled my money in 9 years of retirement. And I do understand the inflation part which I did mention.

 

[DEC-1982]

plus it sounds like most people feel bonds isnt a good place to be anymore.

I am not sure why you said that. Bonds or bond funds usually but not always add stability to a portfolio, and I will stick with them.

 

[target2019]

Thanx for your reply and all your helpful info.

Nikkei finally got back to its 1989 price what, last year?

Also what made you think I was emotion-riven in wanting to get out? Most retirees are much more conservative than I have been. I've tripled my money in 9 years of retirement. And I do understand the inflation part which I did mention.

Responding to your general situation.

Go 100% money market in your IRA. Then put a little time and discussion into a Bonds discussion. It's a wide area, so you'll want to approach it methodically.

For your strategy, look at all fixed income strategies. MYGA is mentioned a lot. You might choose a bond fund, MYGA, CD and MMF. Now that I understand duration, that becomes a key feature while you analyze for your strategy.

 

[mrfeh]

I am not sure why you said that. Bonds or bond funds usually but not always add stability to a portfolio, and I will stick with them.

+1

Many folks here are victims of recency bias.

 

[VanWinkle]

Keep it simple for now, invest your traditional IRA in a short term bond fund at Vanguard like VFSUX or VBIRX. I like Vanguard because they don't try to up-sell me on some high cost funds. If you choose Fidelity, look for short term bond funds with low cost. 20% in bonds sounds like a good move for some stability. No reason to get cute with this 20% for now, maybe later after you are more studied on fixed income investments.

Best to you,

VW

 

[Out of Steam]

I helped my sister move out of a 100% stock allotment late last year and we chose 2030 target date funds for her Fidelity and Vanguard 401(k) accounts. Though I'm learning that target date funds aren't necessarily a good fit well into retirement, as the 2020 TIAA/Nuveen fund is beginning to get more conservative than I'd like--especially as it's within a small Roth IRA.

I agree with the commenters here that the Roth IRA is best left fully in the market. The post reminds me that I should make sure my accounts skew towards having more stock in the Roth.

 

[pb4uski]

Its 15 years till rmd's. I may not live till then. I have always thought I would really step up the conversions at 65 when ACA will not be an issue. I have already converted $15,855 this year (plus I have a $1534 inherited ira rmd). My irs deduction is $19,100 this year if you figure in my $3,000 longterm capital gains loss. I still have a 59k longterm capital gains loss from the 2000 dotcom bust.

How much de-risking do you want to do and what AA would you like to end up with? You are now 100/0. You could get as low as 57/43 if you converted yout tIRA and Roth to bonds. You could probably even get lower if you sold some of your taxable to utilize you $59k LTCL carryforward.

It's unclear what you are living on now, but that $59K LTCL carryforward gives you a lot of flexibility to raise cash from your taxable account with no tax consequences which is a great thing when you are managing income for ACA subsidies.

You might want to input your 2025 tax situation in IRS & State Tax Calculator | 2005 -- 2025 and then add in SS and RMDs and perhaps adjust taxable account income, assuming that you were currently 75 and see what the tax will be on your RMDs. If the tax on some or all of your RMDs will be 22%, then it might be worthwhile to Roth convert beyond the standard deduction plus $3,000. IOW, it may be better to pay 10% or 12% now rather than pay 22% later. In doing that, obviously you need to consider tax implications including reduced PTC as a supplement to the income tax consequences. It gets complicated.