Portfolio check up

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Topic Author
Roland
Posts: 5
Joined: Fri Mar 12, 2021 8:47 am

Portfolio check up

Post by Roland »

Greetings. I previously asked a 401k question but I’m no money expert and on my own so I thought this was a great time for some feedback.

AGE: 64.5. Planning on starting SS next year at 2725.00 a month

DEBT: None, own my home worth about $500k

TOTAL CASH: 675,000

TAX: Single State: 9% Fed: 15%. Property tax 5,500.

Taxable account: 75k in VDIGX

401k inherited: 325,000 just transferred this to V. Planning to invest this week ! My plan is 3/4
Wellington 1/4 VDIGX. Hope to get some feedback...

401k from work: 330,000 1/3 in retirement 2020 fund, the rest in mix of small/lg cap fund’s. Don’t plan to draw from this before I have to.

I view these as the last thing to draw from...

Roth: 40,000. At vanguard in VDIGX and VWINX. I’m thinking of exchanging this for VTSAX
Roth: 50,000 At American Funds (mistake as there’s costs to move this) all in AMCPX which has done
great.

I’m covid retired, living off IRA and savings. I hope the exchange of homes nets 25-75,000 in additional cash to invest as well as steeply lower property tax.. looking at condos in the 400k
range...

I’m in good health, have few big expenses except the property tax on my house.

Thanks in Advance for taking the time !
lakpr
Posts: 7476
Joined: Fri Mar 18, 2011 9:59 am

Re: Portfolio check up

Post by lakpr »

Few pieces of information missing. What are your annual expenses? Can you wait until age 70 to start your SS, drawing your living expenses from the $675k cash you have? Delaying your SS has the same effect of earning 8% annualized return, practically stock market like returns without the stock market risk.

By your figures you have $1.3 million in total assets not including the paid off home. A 3% to 3.5% withdrawal rate from this pot of money should give you $40k to $50k income per year; if you can live comfortably on that level of income, you are golden. That is the reason for my first sentence ...
User avatar
JoeRetire
Posts: 8122
Joined: Tue Jan 16, 2018 2:44 pm

Re: Portfolio check up

Post by JoeRetire »

Roland wrote: Sun Apr 18, 2021 11:22 pm AGE: 64.5. Planning on starting SS next year at 2725.00 a month
Why start SS early?

Play with https://opensocialsecurity.com/ a bit to see what you are giving up in lifetime benefits.
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.
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CyclingDuo
Posts: 4238
Joined: Fri Jan 06, 2017 9:07 am

Re: Portfolio check up

Post by CyclingDuo »

Roland wrote: Sun Apr 18, 2021 11:22 pm Greetings. I previously asked a 401k question but I’m no money expert and on my own so I thought this was a great time for some feedback.

AGE: 64.5. Planning on starting SS next year at 2725.00 a month

DEBT: None, own my home worth about $500k

TOTAL CASH: 675,000

TAX: Single State: 9% Fed: 15%. Property tax 5,500.

Taxable account: 75k in VDIGX

401k inherited: 325,000 just transferred this to V. Planning to invest this week ! My plan is 3/4
Wellington 1/4 VDIGX. Hope to get some feedback...

401k from work: 330,000 1/3 in retirement 2020 fund, the rest in mix of small/lg cap fund’s. Don’t plan to draw from this before I have to.

I view these as the last thing to draw from...

Roth: 40,000. At vanguard in VDIGX and VWINX. I’m thinking of exchanging this for VTSAX
Roth: 50,000 At American Funds (mistake as there’s costs to move this) all in AMCPX which has done
great.

I’m covid retired, living off IRA and savings. I hope the exchange of homes nets 25-75,000 in additional cash to invest as well as steeply lower property tax.. looking at condos in the 400k
range...

I’m in good health, have few big expenses except the property tax on my house.

Thanks in Advance for taking the time !
I agree with those above. You look to be in good shape financially so that you can delay taking SS. Why the rush to take it so soon at a lowered level?

CyclingDuo
"Save like a pessimist, invest like an optimist." - Morgan Housel
Exchme
Posts: 395
Joined: Sun Sep 06, 2020 3:00 pm

Re: Portfolio check up

Post by Exchme »

I don't understand why you are holding so much cash, do you mean CDs, TIPS, bonds or really just passbook saving earning basically nothing? It's losing 2+%/year to inflation sitting around. A multimillionaire might afford that much cushion, but you just can't have half your portfolio losing money.

As for the fund choices, Wellington is an actively managed 50-70% equity balanced fund but has a 0.24% fee. VGIDX is also actively managed high dividend fund with a 0.27% expense ratio. You could just buy total stock market and total bond market funds and pay lower fees. Doesn't sound like much, but the difference in fees will be thousands of dollars over your lifetime.

Please do check out opensocialsecurity.org, you are likely leaving money on the table by not at least getting to your FRA.

With a 4% withdrawal rate (putting the cash to work), you could have $52k/yr from the portfolio + SS, which would be quite comfortable for most people.
Topic Author
Roland
Posts: 5
Joined: Fri Mar 12, 2021 8:47 am

Re: Portfolio check up

Post by Roland »

Thanks to all. I live on 22k per year at this point. Was thinking of SS a bit early to protect the cash reserve but hoping that after the move, with 700k to invest I should be able to invest and draw from that instead of SS.

Am I correct that Roth IRA should be in more aggressive long term investment like vtsax ?

Would you put some of the Ira money in vtsax or should Ira be in more downside risk adverse funds !
I see Wellington and vdgix as conservative choices...
User avatar
BolderBoy
Posts: 5593
Joined: Wed Apr 07, 2010 12:16 pm
Location: Colorado

Re: Portfolio check up

Post by BolderBoy »

Roland wrote: Mon Apr 19, 2021 10:07 amThanks to all. I live on 22k per year at this point. Was thinking of SS a bit early to protect the cash reserve but hoping that after the move, with 700k to invest I should be able to invest and draw from that instead of SS.
If you can find a way to delay SS until age 70, that is usually the best option. You must be amazingly frugal to be able to live on $22k/yr.
Am I correct that Roth IRA should be in more aggressive long term investment like vtsax ?
In general, yes. Sometimes it isn't possible to be pure about it.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
Topic Author
Roland
Posts: 5
Joined: Fri Mar 12, 2021 8:47 am

Re: Portfolio check up

Post by Roland »

Oh, the cash is from savings and sale of condo I owned with my sister. It’s in savings at this time because I may need it quickly to buy another home. Having cash just puts me in a much stronger position to buy in this crazy market... once I’m settled I’ll keep 100k in emergency and rainy day fund and invest the rest.. I feel as though I’ll take a bit more risk if I have SS money coming in...

Yes, I’m pretty frugal these days ! Mostly play piano, tennis on public courts and library for my reading. I bike around 20 miles a day. Low cost fun for me....
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