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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.
StaceyWhy 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?
ScottWhat’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
AllenIs your goal to die at peak net worth? It looks like that’s what’s bound to happen based on the numbers.
LoriIn 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.
JoeHow do you realize $100k per year from $1.4M?
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