[USER]

We are 47(F) and 50(M) with $3.3M in total invested liquid assets. We would like to retire 3 years from now.

We estimate our expenses to be $100K per year in retirement (net of taxes), while the retirement income is expected to be $80K from a lifetime annuity for F.

For purposes of this question, let’s assume no SS.

Conservatively, per my calculations we will need $1.4M lump sum to draw from in order to cover expenses and taxes in retirement.

That means we have an additional $1.9M as a cushion for adverse events (economic, health, etc).

Currently, 70% of all invested assets is in brokerage, 24% in traditional IRA/401k and 6% in Roth.

Our intention is to convert almost all of TIRA to Roth during the first 20 years of retirement.

Total asset allocation is 85% stocks, 11% bonds, 4% money market.

However, when it comes to asset location, the brokerage account has 92% in stocks 2% in bonds and 6% in money market.

In our TIRA, we have 60% stocks and 40% bonds. In Roth, we have 100% stocks.

The total allocation is heavy in stocks, because we have that extra cushion and as a result can tolerate more risk.

Please give your thoughts on the asset allocation and asset location.

What changes should we make in the next 3 years before retirement? What else are we missing in our plan?

Many thanks in advance.

[Stacey]

Why not retire now? You really have way more than you need, considering the annuity covers 80% of your expenses, and you have another $3.3 million besides.

Plus, SS will probably be there in some form or another.

In regards to bonds, I think you’re fine for now.

I’d work towards transitioning to 30% bonds (between all accounts) after retirement.

However, that’s just me.

Given your financial situation, you can afford to be more aggressive if you want.

I assume your stocks are all low cost index funds/ETFs?

[Scott]

What’s to criticize you can retire now. Just come up with a cashflow plan.

I keep about 18mos lying around.

I use stop orders to capture gains if the market takes a dip.

Don’t forget ins

[Allen]

Is your goal to die at peak net worth? It looks like that’s what’s bound to happen based on the numbers.

[Lori]

In theory your heavy stock portfolio makes sense in part because of your young age (you have a 30+ year horizon and I think the rule of thumb is anything beyond 10) and because it’s balanced by the annuity.

[Joe]

How do you realize $100k per year from $1.4M?

[Author]

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