Check out your future benefits on www.ssa.gov. DW and I receive about $5,000/month. We would need ~$1.0-1.5MM in investments to generate that income.
This calculator is probably fine for this case. For others who might want to quit work significantly earlier or explore the impacts of part-time work, they should also check out the unofficial site
https://ssa.tools/ where you can input amounts earned by year.
Instead of thinking about Asset Allocation, consider when you need the money (aka Time Horizon). Money that you may need within 4-5 years should be in a lower risk investment (bonds, CDs, etc.). Money you won't need for 8-10 years should be in higher risk investments (equities). IMO, this is the essence of Asset Allocation. Given your comment about $350K to cover 5 years of expenses, this money represents about 20% of your NW and should be in a fixed income investment. The rest should be in equities that can ride out a 2 year slump like we just went through.
I agree with this for the most part. It is worth considering, at your age, if you want to be biased towards conservativeness given reduced human capital compared to someone retiring at 45.
Consider eliminating the international exposure. The returns are comparable (+/- 2% over 10-20+ years). Because this is >10 year money, why bet against US equities? The performance history does not support international unless you start bouncing from country to country to find better returns. I don't have the time nor interest.
I like international myself at this allocation percentage. I also don't think it likely that it will matter much if you put 15% towards it or not. I expect results will be dominated by a retiree's actual expenses first and foremost, then if the future looks more like US SWR or global SWR, regardless of allocation.
My traditional ROTH=$25,000
Can we assume this means traditional IRA? It doesn't make any difference as far as answers to this question, just in the interest of clearing a few things up.
you might consider the mortgages as bonds when working out your asset allocation. IMO, not doing so can make your AA too conservative.
I agree. OP, if you do go searching online you'll find that this is a classic internet fight, and the what to do about it can get confusing quickly. See
https://www.bogleheads.org/forum/viewtopic.php?t=346160. If you're starting by picking an asset allocation I'd use the below or Dicey's recommendation in tallying up the asset allocation.
The mortgage is a negative bond, but your home value is a positive bond. So they tend to cancel out. But net effect should be a “positive bond” unless you’re under water. That’s why you actually need less bonds if you buy into this “mortgage is a negative bond” business to begin with.
Thus I would instead prefer to use the phrase “your net home value is a bond.”
Net home value bond = home value - mortgage balance.
No matter what, if you can buy bonds at a higher rate than your mortgage do not pre-pay your mortgage during your work years at the very least =).
For me, I work backwards, using Blueberry's approach of starting with your needs and letting the AA fall where it may. I.e. if I'm retiring 10 years before SS, maybe I want 12-13 years of expenses in fixed income and bonds regardless of what I have in stocks, with an intent to spend that down to hopefully 4-5 by the time I take SS. I don't care what the AA is along the way. For fun, when people say they'll save up 2-3 years of cash to spend down the first few years, this is equivalent to a small bond tent. If they'll only spend it during a down market, this is them temporarily taking a more conservative AA and rebalancing.
This is especially true depending on how you two work out expenses once the rubber hits the road. I.e. it might make sense for "your" practical AA to be higher since your partner will still be working. Plus the question of who will inherit and thus the investment horizon of your inheritors. Even if you don't
want to treat it this way, there are real considerations adjacent to this. Such as if you should take SS early or instead wait, with that portion of "your" expenses covered by your partner, if your survivor SS benefits taken at 70 might be higher than your partners benefits. This is also colored by who inherits your stache.
Lastly, and purely pedantic, "ROTH" is "Roth" and named after senator Roth who introduced them =).
