Allocation for retired couple

[Anonymous]

Do you not have confidence in your advisor?

How much is his/her take?

[Anonymous]

Anonymous wrote:If I am reading this correctly, then you have 11.7M investments + 4.1M that is being paid out 500K/year for 9 years.

Are you going to spend 500K/year? I'm guessing a portion of that will be reinvested.

The way I look at it is how much can I afford to lose. I am conservative, and I assume if we have a crash in retirement we need to be able to withstand a 50% loss in equities and a protracted flat period. So, I half our equities combine with bonds and from there determine what combination gives us about 3% return to live on.

We will spend a good portion of that after taxes, yes.

[Anonymous]

Anonymous wrote:

Anonymous wrote:If I am reading this correctly, then you have 11.7M investments + 4.1M that is being paid out 500K/year for 9 years.

Are you going to spend 500K/year? I'm guessing a portion of that will be reinvested.

The way I look at it is how much can I afford to lose. I am conservative, and I assume if we have a crash in retirement we need to be able to withstand a 50% loss in equities and a protracted flat period. So, I half our equities combine with bonds and from there determine what combination gives us about 3% return to live on.

We will spend a good portion of that after taxes, yes.

Well, 4% of 11.7M is 468K. You are covered for 9 years, not having to spend down from the 11.7M. And even if that drops to 8M in a crash, you'd have close to the 9 years to recover without having to touch the amount. Plus, I assume you'll be getting SSI. Also, the 4% is based on normal retirement years. You'll be tapping into the 11.7 much later. If you're close to RMDs only you can guesstimate how long you'll both live.

Have you run any of the online calculators? Firecalc, cFireism. There are others. I spent a good amount of time running those with all sorts of different input which helped me feel comfortable with what we needed and what we could spend. We were managed, but they drove me crazy. We have since gone to self managed.

Also, if you need the 500K/year now, will that go up or down in the future, taking into consideration potential LTC.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If I am reading this correctly, then you have 11.7M investments + 4.1M that is being paid out 500K/year for 9 years.

Are you going to spend 500K/year? I'm guessing a portion of that will be reinvested.

The way I look at it is how much can I afford to lose. I am conservative, and I assume if we have a crash in retirement we need to be able to withstand a 50% loss in equities and a protracted flat period. So, I half our equities combine with bonds and from there determine what combination gives us about 3% return to live on.

We will spend a good portion of that after taxes, yes.

Well, 4% of 11.7M is 468K. You are covered for 9 years, not having to spend down from the 11.7M. And even if that drops to 8M in a crash, you'd have close to the 9 years to recover without having to touch the amount. Plus, I assume you'll be getting SSI. Also, the 4% is based on normal retirement years. You'll be tapping into the 11.7 much later. If you're close to RMDs only you can guesstimate how long you'll both live.

Have you run any of the online calculators? Firecalc, cFireism. There are others. I spent a good amount of time running those with all sorts of different input which helped me feel comfortable with what we needed and what we could spend. We were managed, but they drove me crazy. We have since gone to self managed.

Also, if you need the 500K/year now, will that go up or down in the future, taking into consideration potential LTC.

Adding to say that our investment firm (that we left) was very much about them making their own numbers. They in no way beat the averages and in no way helped us with smart tax investing. And that was one of their biggest pushes. We could have just left it in VOO and done better.

Is the person you are using now doing well for you?

[Anonymous]

OP's husband is in the 8th inning (about to take RMDs) and just now talking about Roth conversions, tips ladder, and asset allocation LMFAO

[Anonymous]

You have enough money to take the risk of investing 100% in stocks. Even if you lost 50% in a stock market drop, you'll still be fine.

If you are very conservative, you could move to a 50/50 allocation. With $15M, you don't really need to take much risk with your investments. You will never run out of money.

[Anonymous]

Anonymous wrote:OP's husband is in the 8th inning (about to take RMDs) and just now talking about Roth conversions, tips ladder, and asset allocation LMFAO

Because income and taxes were so high in the last several years due to need to exercise options before retirement. Last year W2 was over $2M. Yes, it's a nice problem to have.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If I am reading this correctly, then you have 11.7M investments + 4.1M that is being paid out 500K/year for 9 years.

Are you going to spend 500K/year? I'm guessing a portion of that will be reinvested.

The way I look at it is how much can I afford to lose. I am conservative, and I assume if we have a crash in retirement we need to be able to withstand a 50% loss in equities and a protracted flat period. So, I half our equities combine with bonds and from there determine what combination gives us about 3% return to live on.

We will spend a good portion of that after taxes, yes.

Well, 4% of 11.7M is 468K. You are covered for 9 years, not having to spend down from the 11.7M. And even if that drops to 8M in a crash, you'd have close to the 9 years to recover without having to touch the amount. Plus, I assume you'll be getting SSI. Also, the 4% is based on normal retirement years. You'll be tapping into the 11.7 much later. If you're close to RMDs only you can guesstimate how long you'll both live.

Have you run any of the online calculators? Firecalc, cFireism. There are others. I spent a good amount of time running those with all sorts of different input which helped me feel comfortable with what we needed and what we could spend. We were managed, but they drove me crazy. We have since gone to self managed.

Also, if you need the 500K/year now, will that go up or down in the future, taking into consideration potential LTC.

Adding to say that our investment firm (that we left) was very much about them making their own numbers. They in no way beat the averages and in no way helped us with smart tax investing. And that was one of their biggest pushes. We could have just left it in VOO and done better.

Is the person you are using now doing well for you?

They are doing as well as expected considering our allocations. We are payiing .5% right now and fee will be reduced to .35% if we move the 401K over...so pretty good deal. They also do our taxes, so all under one roof. Honestly our financial planning aptitude is pretty low to average, which is why we need someone. As a CPA and CFP, he is very sensitive to tax implications.

[Anonymous]

Anonymous wrote:OP's husband is in the 8th inning (about to take RMDs) and just now talking about Roth conversions, tips ladder, and asset allocation LMFAO

NP. The best time to do Roth conversions is after retirement and before real RMDs. There’s a sweet spot, and many people, who don’t crunch numbers, over convert.

OP AI is trash. Why aren’t you saying this to your advisor? Tell him to run some more scenarios for you. He should be able to do it with you watching. Also, did he do a financial plan? If not, you need a new advisor.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If I am reading this correctly, then you have 11.7M investments + 4.1M that is being paid out 500K/year for 9 years.

Are you going to spend 500K/year? I'm guessing a portion of that will be reinvested.

The way I look at it is how much can I afford to lose. I am conservative, and I assume if we have a crash in retirement we need to be able to withstand a 50% loss in equities and a protracted flat period. So, I half our equities combine with bonds and from there determine what combination gives us about 3% return to live on.

We will spend a good portion of that after taxes, yes.

Well, 4% of 11.7M is 468K. You are covered for 9 years, not having to spend down from the 11.7M. And even if that drops to 8M in a crash, you'd have close to the 9 years to recover without having to touch the amount. Plus, I assume you'll be getting SSI. Also, the 4% is based on normal retirement years. You'll be tapping into the 11.7 much later. If you're close to RMDs only you can guesstimate how long you'll both live.

Have you run any of the online calculators? Firecalc, cFireism. There are others. I spent a good amount of time running those with all sorts of different input which helped me feel comfortable with what we needed and what we could spend. We were managed, but they drove me crazy. We have since gone to self managed.

Also, if you need the 500K/year now, will that go up or down in the future, taking into consideration potential LTC.

We haven't run calculators ourselves, but our planner has done an extensive cash flow analysis and there would be a significant amount left at the end of life for our children, and he used very conservative growth and inflation factors (3.84% inflation, and 5% growth). In terms of LTC, the analysis did not include that, however, within that analysis it showed that we would need to spend about $500K a year (after taxes) starting now to exhaust the portfolio by the end of life. Right now we are spending about $325K after taxes, and with that spending level, we would have $27M in our portfolio at the end of life. The Monte Carlo analysis showed a pretty high level of confidence.

[Anonymous]

Great job on building a nice nest egg. My only advice to you is to drop the FA like a bad habit. They offer little value for the amount they are paid and almost none can beat the indexes. AI and common sense are all you need assuming you have both.

[Anonymous]

Anonymous wrote:We are working with a financial advisor, and currently our allocation is 63% in equities. DH's 401K still has not been rolled over and has done quite well with over $3.5M at a 60/40 equities/bonds allocation. Not paying any significant fees for this 401K, but we are going to roll it over anyway considering he will soon be taking RMDs and we are also going to start Roth conversions and having it under the umbrella of our advisor's management we feel will take a lot of complexity out of it. We are getting a nice fee reduction to do this.

Advisor is proposing a 55/45 equities/bonds allocation for the new IRA. This would bring our entire portfolio to a 60/40 stock/bond allocation. He is allocating a lot to inflation protected bonds. I have asked him about the thinking behind this and we are scheduled to meet next week.

One thing to note is DH also has a $4.1M deferred comp account (not under advisor's mgmt) that will pay out approx $500K annually (before taxes) for the next nine years. This account is also invested at approximately 60/40 equities/bonds. On top of that our advisor manages the rest of our portfolio with the exception of a company stock account (which isn't doing great). Total portfolio is worth $15.8M and advisor is currently managing $5.1M. With the new IRA, that would increase to $8.6M

I ran all of this along with our current allocation through AI and they are saying we might be too conservative for our situation. Because DH is getting the deferred comp distribution every year, AI thinks we can afford to be a bit more aggressive with the rest of the portfolio.

Any opinions on this strategy? Should we push back on the 60/40 overall allocation?

I would ask the advisor if he can manage the incremental 3.5MM fee free for 3 years (or reduced fees for 5).

I think the difference between a 55/45 and 60/40 is negligable to be honest.