Author Topic: Ideas for portfolio 5 years into retirement.  (Read 3048 times)

Miss Prim

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Ideas for portfolio 5 years into retirement.
« on: December 21, 2019, 09:16:08 AM »
Hi all.  Haven't posted in awhile.  I am 66 years old and husband is 70.  We did not really retire too early, but I went out at 61 and husband was 65.  I handle all of the finances and my husband was getting concerned that if something happened to me, he would not know what to do.  So, we have a local Fidelity office and since some of my portfolio was with Fidelity, we dedided to consolidate most of our "stache" there.  The transfers are almost complete and I need to decide on a portfolio.  I went through the suggestions they made online, but they seem to be in funds that have higher expenses than the ones I currently hold as part of my attempt at a portfolio.  Also, husband inherited a lot of individual stocks that his brother set up who is a retired head of a bank Trust fund department.  Some of the ones I'm looking at don't make any sense such as 24 % in Norfolk Southern Corp.!  His brother is a big train buff, but this seems like a loosing proposition!  I think if we get into a mix of low cost Fidelity Mutual funds it would be a lot easier.  Any suggestions based on our age and the fact that we would like to pass on money to our children?  We are currently taking out 4 % of our "stache" per year and have an easy time living on that.  Total "stache" now is 1.69 M.  We started out with 1.3 in 2015, but we didn't touch much for 2 years as we sold two rental properties and used that money instead.

Much Fishing to Do

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Re: Ideas for portfolio 5 years into retirement.
« Reply #1 on: December 21, 2019, 12:03:18 PM »
Fidelity has  "index Focused" target allocation models which are probably what your looking for, built from very simple and low cost funds, this is different than their 'regular' model portfolios which maybe you've been shown instead. 

Unless you get extremely bond heavy, or you go heavy equity and we happen to have historically horrible equity returns, drawing 4% at your ages will most likely leave your heirs a portfolio worth around what it is now on average (though of course average never seems to happen, but it should be good and could be huge)

Sounds like neither one of you want to be stock picking/re-evaluating stocks each year, so I agree there's no point in holding things like the NS stock, but of course if its in a taxable account and has a lot of gain it may not be wise to sell all at once as you reset here, something to consider.

Good luck!

flyingaway

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Re: Ideas for portfolio 5 years into retirement.
« Reply #2 on: December 21, 2019, 10:54:24 PM »
I would just invest in two index funds, one is total stock market fund (60%) and another is total bond fund (40%), or buy one index lifestyle fund at a similar combination, for simplicity. If leaving money to your children is not a priority, I would settle at 50/50 (stock/bond funds).

Greystache

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Re: Ideas for portfolio 5 years into retirement.
« Reply #3 on: December 22, 2019, 08:36:30 AM »
https://portfoliocharts.com/portfolios/
Here is a link to a site that has examples of several popular portfolios. You can see if any of them suits your needs.
For what it's worth, my personal preference is a reverse glide path.
https://www.kitces.com/blog/should-equity-exposure-decrease-in-retirement-or-is-a-rising-equity-glidepath-actually-better/
My current portfolio is very conservative 50% Vanguard total stock fund, 25% total bond fund and 25% cash. I plan to gradually increase my stock holdings to 75% as I get older.  The rationale of this plan is to protect against sequence of returns returns risk early in retirement.

Modern Fimily

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Re: Ideas for portfolio 5 years into retirement.
« Reply #4 on: December 22, 2019, 01:05:44 PM »
https://portfoliocharts.com/portfolios/
Here is a link to a site that has examples of several popular portfolios. You can see if any of them suits your needs.
For what it's worth, my personal preference is a reverse glide path.
https://www.kitces.com/blog/should-equity-exposure-decrease-in-retirement-or-is-a-rising-equity-glidepath-actually-better/
My current portfolio is very conservative 50% Vanguard total stock fund, 25% total bond fund and 25% cash. I plan to gradually increase my stock holdings to 75% as I get older.  The rationale of this plan is to protect against sequence of returns returns risk early in retirement.

We are doing something similar. We are retiring early in 2021 and currently sitting at 55% stocks, 23% bonds, and 22% cash in a high interest savings account. Will be shifting to 90% stocks over the next 5-10 years.

Frankies Girl

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Re: Ideas for portfolio 5 years into retirement.
« Reply #5 on: December 22, 2019, 01:33:31 PM »
https://www.bogleheads.org/wiki/Fidelity

I have my portfolio with Fido, taxable/IRAs, with a lazy 3 fund setup with the bonds/REIT held in deferred accounts and FSKAX is all the taxable contains (I turned off reinvesting and use the dividends/cap gains as spending/expenses).

I use a mix of:

Fidelity Total Market Index Fund (FSKAX)
Fidelity ZERO Total Market Index Fund (FZROX) is newer than when I'd started, but is literally a zero fund and good option for FSKAX at this time

Fidelity Real Estate Index Fund  (FSRNX)

Fidelity U.S. Bond Index Fund (FXNAX)


I have maybe 1% in silly/sentimental funds that should be sold but likely won't as they aren't hurting anything really (just stating it for the record).


So my husband is also not real interested in more than the absolute basics, so this is what I've got set up, and he can figure out if something were to happen to me.

1. Taxable account throws off a good amount to cover about half our expenses because we don't reinvest dividends/cap gains. He can check in April and December each year and sweep the money into the savings account (already connected to said account, walked him through it on the website and it is really simple, but it's likely an easy phone call to any rep - "how much cash is in there? Okay now can you transfer it to the BANK name account, or walk me through how to do it on my own?" and they'll do so.

2. inherited IRA (which likely is not going to be repeatable since the #@$! jerkwad SECURE bill was passed*) has automatic required minimum distributions already in place. Can also make sure to set them up for your own IRAs. Automatically sells off whatever funds in whatever percentages you specify on whatever date you'd like. Can set it up to do so monthly even if you like the idea of monthly "income" to sweep over into the taxable and then refer to 1 above about how to get cash from taxable to your local checking/savings account. 

3. Something super $ pops up and need extra? Figure out if it's better to draw out of an IRA (since he's already 70 and you're over 59, you can draw from any source penalty free, and may be better to start depleting the IRAs due to the SECURE act). Tell him to sell "X" fund in X account if you need more money for some reason. Can again show him how to do so online (and then once cash is settled, then do #1 sweep cash to where needed). Again, can just leave him basic instructions and he can call rep and have them walk him through it on his own or they may be able to execute the sells/moves.

* This means no more stretch IRAs and you definitely need to see about depleting your IRAs at this point so your heirs aren't smacked with a "must remove all $ in 10 years" amount that causes a huge tax nightmare for them.


Between the automatic RMD sweep and the dividend/cap gains in April (small amount) and December (bigger amount), it's pretty easy for us to make our spending/expenses without any real effort. He'd need to maybe make a call a few times a year to get them to walk him through the process of moving the cash over unless he remembers how or even write it down for him. But once you get the portfolio set up in low cost index funds, no one really has to do anything else other than take the money out and no stock buying and selling or fussing with the actual portfolio at all....
 


Miss Prim

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Re: Ideas for portfolio 5 years into retirement.
« Reply #6 on: December 23, 2019, 05:51:03 AM »
Thank you so much for all of your replies!  I am going to research them all and decide on a portfolio.  Frankies girl, it sounds like you and I have similar situations.  We also have an inherited tax-deferred account and a taxable account.  We also do not have dividends and capital gains from the taxable account reinvested, so we get a check every quarter.  I did not know about the SECURE bill!  We will have to rethink how we pass our money to our son and daughter.  All of our money is in tax-deferred accounts.  Sounds like we may have to do back-door Roths.  I also noticed you mentioned the laboratory.  I was a medical technologist who retired in 2015. 

Greystache and Modern Fimily, reverse glide path sounds interesting.  I have purposely kept more money in stocks than is probably prudent for our age because I figured we wanted to grow our "stache" for our heirs.  We can adjust our spending when there is a downturn.

Also thank you flyingaway and Much Fishing To Do for your thoughtful suggestions. 

Although we did not retire very early, we were pretty Mustachian our whole lives and saved 20% of our income from our 30's on and it really paid off because we are enjoying a great retirement!