Author Topic: Stategic Finacial planning for my second year of retirement  (Read 3441 times)

BTDretire

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Stategic Finacial planning for my second year of retirement
« on: November 12, 2019, 12:41:15 PM »
 Getting close to the end of the year, and want to start getting things in order.
I'll explain last year first. We started with $35k in a checking account, and used that to pay for our expenses, I had to add $10k twice during the year. I can't say this is all for our living expenses. I have two kids in college and pay rent for one, also we had hurricane related expenses that came from that account also. Some money in that account was used for those expenses. I will correct that for next near and have a separate account for non living expenses, (AKA, when the kids get off the dole!)
 I know I can do better than having $35k in a non paying checking account. So maybe this year, I will keep it in a Vanguard MM account, or should I just keep it in VTSAX and sell when I need to refund my checking account? I have a well funded emergency account.

jim555

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Re: Stategic Finacial planning for my second year of retirement
« Reply #1 on: November 12, 2019, 03:47:24 PM »
I really wonder if an emergency account is productive at all.  It ties funds up in a low to no return investment.  Why not have funds maxed out (in your allocation) at all times, only selling some as needed and do away with the emergency account?  The checking account should be for immediate payment of bills only. 

BicycleB

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Re: Stategic Finacial planning for my second year of retirement
« Reply #2 on: November 12, 2019, 06:41:39 PM »
^As long as you have the necessary liquidity, good plan!


soccerluvof4

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Re: Stategic Finacial planning for my second year of retirement
« Reply #3 on: November 13, 2019, 04:13:44 AM »
Yea at the very least I would have it in like VMMXX and make something. Wire as needed to your checking account.

BTDretire

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Re: Stategic Finacial planning for my second year of retirement
« Reply #4 on: November 13, 2019, 02:24:32 PM »
 Yes, I have gotten lax on the $5 and $10s on our accounts. I don't strive to maximize interest on every dime. I should but I'm Lazy. As I said, I have two kids in college, and it not unusual for my son to call and say my tuition is due tomorrow. (Ya, I know I should fix that instead of padding my checking accounts.)
 Also my bank is a problem, I can have Vanguard do a transfer and I can't access that money for 7 days. So, it helps to have a cushion.
 My son's tuition is somewhat minor at about $2,500 and can come near the same time his $1,000 rent is due, so again a cushion.
 My daughters tuition is $28k twice a year and another $10k for tools, so three withdrawals a year.
 I'm just trying to get this all smoothed out while triggering minimal taxes.

Mr. Green

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Re: Stategic Finacial planning for my second year of retirement
« Reply #5 on: November 13, 2019, 09:19:05 PM »
I have read, but am too lazy to find, articles that have analyzed the numbers over the past and found that keeping and significant "safety net" in cash is pretty much always a drag on returns. That's just the cold hard math, of course. Psychology comes into play too. My wife and I choose to make quarterly withdrawals from our brokerage accounts and not keep a big cash pile. I know that bear markets are short lived so if we're only selling quarterly it's even possible that we don't sell anything at the bottom, rather on the way down or coming back up. Also, the quarterly draws are small enough that it isn't psychologically paralyzing because we're not selling a whole year's worth of living expenses while the market is down.

Much Fishing to Do

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Re: Stategic Finacial planning for my second year of retirement
« Reply #6 on: November 15, 2019, 08:43:17 AM »
I've gone with 80/10/10 equities/bond/cash.  The cash sits in VMMXX and every month it automatically sends me my monthly "paycheck" for expenses.  (I do keep a half-month in the checking as a buffer).  This does somewhat well at efficiently getting a return on the cash vs it all being in the checking acct.

Now whether you have the money beyond say a Quarter or so in VTSAX versus the MM is more of a portfolio allocation question with its many variables and preferences depending on your plans.  I'm just now getting around to looking into better Cash options given I carry a significant amount


meatgrinder

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Re: Stategic Finacial planning for my second year of retirement
« Reply #7 on: November 18, 2019, 03:12:32 PM »
Have you considered keeping cash in an online MMA instead?  The primary benefit being faster transactions and the secondary being a slightly better interest rate.  They also have some decent sign up bonuses (CIT $300 bonus).