Asset Allocation and Investment statement for 70 y.o. retiree

[Kevin Aster Tin Obin]

If you were to offer advice and structure one's savings for a 70 year old retiree with a few hundred thousand in tax advantaged retirement accounts (Trad. and Roth IRA), that is living off social security income to cover the needs. What would you recommend?

No other assets.

Good health, has 20 more years at least hopefully.

thinking something like the following

Holdings
Hold 10% in cash/CD equivalent

Hold 50% in total bond fund ??

Hold 40% in total stock fund?

Annual Actions
Every year roll over ~$20K from TRAD to ROTH up to the 12% income tax limit (41K minus social security income of 20k leaves 20K left to rollover)

Every year withdraw 5% of account from the cash/CD and deposit into checking to spend

Every year rebalance to 10/40/50 AA

thoughts?  better ideas?

[MDM]

That is one of many plausible strategies.

With $20K SS income, the tax rate on Roth conversions will go through zones of 0%, 10%, 15%, 18%, and 22.2% before dropping to 12% and then rising to 22%, etc.

Whether to convert any more than the amount taxed at 0% now would depend on expected RMDs, etc.

[wageslave23]

I would probably have the next 5 years worth of withdrawals in cds or treasuries. At 4 or 5% interest you don't really need to take on risk. Then 60/40 stocks to bonds with the rest.

[ChpBstrd]

The plan looks sound to me.

I would probably have the next 5 years worth of withdrawals in cds or treasuries. At 4 or 5% interest you don't really need to take on risk. Then 60/40 stocks to bonds with the rest.

Yes, there's no time like the present to build a nice CD/bond ladder. In terms of risk-adjusted-returns, FDIC-insured CDs are in the lead right now, IMO, with yields well above treasuries. iBonds remain attractive too, but require some maintenance as their forward yields are going to near nothing in the event of a recession, so you'd want to pivot out of them and into equities at that time as part of your annual rebalancing.

At age 70, I think the OP's asset allocation is a permanent plan rather than a bucket or bond tent strategy. I.e don't literally withdraw the next 5 years from the CD/Treasuries account. I don't think that's what @WageSlave was saying, but just wanted to clarify that point!