seeking advice, in retirement now

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ZWorkLess
Posts: 26
Joined: Thu May 04, 2017 8:13 pm

Re: seeking advice, in retirement now

Post by ZWorkLess » Tue Aug 08, 2017 9:39 pm

One little thing to consider . . .

I helped manage my mom's finances during her final years, and a smart thing to consider was . . . Keeping some serious cash accessible . . .to facilitate a sudden move w/o having to first sell the home. This would be for your mom. What if she wants/needs to move at some time in the next few years . . . and, say, buy a new 300k home or "buy in" to some senior living place that requires a 6 figure buy in. Ordinary mortgages might be hard/impossible to attain depending on her needs. For my mom, we set up a HELOC on her primary residence (which was paid for and very valuable, much more so than she'd possibly need, so a 40% HELOC was plenty). In your mom's case, she might not be able to get a HELOC now, and 40% of 200k isn't much, anyway.

That's just to say that I'd be sure to keep that cash very accessible. I don't know if a CD ladder would really make a huge amount of sense, unless you can cash out those CDs with minimal penalty. I'd keep all the CD lengths under 1 year, for sure, if that's cash you could in any way need. So, unless you yourself are so flush that you could easily float your parent(s) the 100s of thousands that might be tied up in CDs, I'd be cautious about using savings vehicles that have substantial penalties for withdrawal.

A parent's health can deteriorate very rapidly, necessitating large cash infusions with little notice or planning time. In my mom's case, she had Alzheimer's that advanced very rapidly. We know her years were limited, so we spent her money like water so she could enjoy every penny possible. We spent 100s of thousands in her last year on home modifications, personal care/aides, lots of travel for her to visit family and for family members to accompany her and/or visit her, etc. Once we knew her days were short, we spared no expense (it was her money, after all) on anything that could bring her comfort or pleasure. You can easily spend 20-30/hr on 24-hour care, which blows through cash very quickly. For us, spending her money was a no-brainer once we knew her money would outlast her, which it did.

It sounds like you are a very loving person, and I would imagine you'd treat your folks similarly . . . So, anyway, that's my input. Hope it helps. (((hugs)))

retiredjg
Posts: 30566
Joined: Thu Jan 10, 2008 12:56 pm

Re: seeking advice, in retirement now

Post by retiredjg » Wed Aug 09, 2017 9:03 am

If what you really want is 30% stocks and 70% bonds, then all the accounts should just be in VTINX - Target Retirement Income - which is 30% /70%. If you want 30% stocks, there is no need to use the LifeStrategy Moderate Growth at all. Without reading the entire thread....I wonder why you have a mix of the two funds in the first place?

Unless you want to convert the entire portfolio to something like Inflation Protected bonds, you want the portfolio to have a certain amount of stocks. Some people say 25% is the minimum amount that should be in stocks. Apparently, Vanguard believes 30% is a good minimum (since that is what is in the TR Income Fund).

If she has 5 years of cash sitting on the sidelines, I do not believe you need to worry at all about selling whatever is in the IRA. The portfolio is already low enough in stocks.

I found it difficult to cull out what she actually has in a quick look through all the old posts. It might be helpful if you just summarized what she currently has. If you decide to do this, just make a quick list.

I know I'm kind of rambling here, but I don't think you need to worry about what you sell during a market crash. If you have to sell some Target Retirement Income, you are selling mostly bonds anyway.

JohnnyM
Posts: 52
Joined: Sat Feb 14, 2015 10:54 pm

Re: seeking advice, in retirement now

Post by JohnnyM » Mon Oct 23, 2017 2:53 pm

Anyone can comment.

retiredjg wrote If what you really want is 30% stocks and 70% bonds, then all the accounts should just be in VTINX - Target Retirement Income - which is 30% /70%. If you want 30% stocks, there is no need to use the LifeStrategy Moderate Growth at all. Without reading the entire thread....I wonder why you have a mix of the two funds in the first place?
I understand. Had some individual stocks to slowly sell over an unknown # of years. All are sold except one position that s up over 250% So I'm comfortable letting it ride

Unless you want to convert the entire portfolio to something like Inflation Protected bonds,
No, I don’t want that
you want the portfolio to have a certain amount of stocks. Some people say 25% is the minimum amount that should be in stocks. Apparently, Vanguard believes 30% is a good minimum (since that is what is in the TR Income Fund).
I agree I'm comfortable with 30-40% stocks
Today she is (ROTH-IRA 42% and t-IRA 58%) is 37s:59b (4% cash, but TOTAL portfolio is 8% cash because of cash elsewhere, MM)

If she has 5 years of cash sitting on the sidelines, I do not believe you need to worry at all about selling whatever is in the IRA. The portfolio is already low enough in stocks.
OK, very helpful, I thought one wanted to try to avoid selling stocks in a prolonged downturn by selling bonds instead, wait for the stocks to recover in hopefully 5 years or less.

I found it difficult to cull out what she actually has in a quick look through all the old posts. It might be helpful if you just summarized what she currently has. If you decide to do this, just make a quick list.
Whatever you culled is close enough.

I know I'm kind of rambling here, but I don't think you need to worry about what you sell during a market crash. If you have to sell some Target Retirement Income, you are selling mostly bonds anyway.
As I said, OK, very helpful. The reason I am posting again is because she will be taking her t-IRA RMD on Nov 1 (for various and good reasons). She doesn’t need to use the money because she has over 5yrs living expenses in cash on hand. Part of this "more than 5yrs living expenses in cash" is in cash in the t-IRA; taking the entire RMD from the cash-portion of the t-IRA is possible (& will still leave some cash in the t-IRA).

So her RMD will be entirely invested in a new (and only) "taxable investment account" at Vanguard. I would like to make it (keep it really) part of her " more than 5yrs living expenses in cash". Since money in excess is starting to accumulate as she remains in good health, I dislike putting it in a 1%MM or CD ladders. I'd rather put it all in either a single s:b Index fund or a single bond fund; comments?
Wouldn’t a single bond fund be more like cash than a s:b index fund?
If it was a single bond fund, wouldn’t that likely be the best place to get needed cash during a prolonged stock market downturn (should she have a sudden need for cash)?
Are there any bond funds you can recommend for a taxable account in this situation.
Or would you advise an index fund like a 20s:80b or a 30s:70b?

Your thoughts appreciated & if you like certain funds their ticker symbol would be great if you know it off hand.

retiredjg
Posts: 30566
Joined: Thu Jan 10, 2008 12:56 pm

Re: seeking advice, in retirement now

Post by retiredjg » Wed Oct 25, 2017 8:12 am

JohnnyM wrote:
Mon Oct 23, 2017 2:53 pm
Wouldn’t a single bond fund be more like cash than a s:b index fund?
If it was a single bond fund, wouldn’t that likely be the best place to get needed cash during a prolonged stock market downturn (should she have a sudden need for cash)?
Are there any bond funds you can recommend for a taxable account in this situation.
Or would you advise an index fund like a 20s:80b or a 30s:70b?

Your thoughts appreciated & if you like certain funds their ticker symbol would be great if you know it off hand.
If she/you are currently happy with the portfolio, why not just buy the same thing that gets sold for the RMD? If she sells bonds, buy bonds. If she sells the target fund, buy the target fund. This way the portfolio stays exactly the same.

JohnnyM
Posts: 52
Joined: Sat Feb 14, 2015 10:54 pm

Re: seeking advice, in retirement now

Post by JohnnyM » Wed Oct 25, 2017 2:31 pm

Thank you for the replies.

retiredjg > If she/you are currently happy with the portfolio, why not just buy the same thing that gets sold for the RMD? If she sells bonds, buy bonds. If she sells the target fund, buy the target fund. This way the portfolio stays exactly the same.

That makes perfect sense. The issue is she has no "bond-only fund" to sell in the t-IRA, just the two "s&b" funds + cash in the t-IRA; that have her at about 30s:70b.

I was just curious re her new taxable account that will be opened at Vanguard from the RMD; what would be the closest thing to cash that may earn a bit more than cash? She can take her RMD from the cash-portion of the t-IRA (so no trade fee because not at Vanguard), and with that cash what can you suggest as a good "near-cash" Vanguard product? Every month she stays healthy is another month her income will exceed her expenses, so I'm thinking she can take this $31K RMD from the cash-portion of the t-IRA & invest it at Vanguard in something pretty darn safe so we can just keep it "nearly cash". TIPS, a bond fund? The ticker you are referencing?

In Dec 2018 about 14 months from now, I will do exactly as you said "If she/you are currently happy with the portfolio, why not just buy the same thing that gets sold"

retiredjg
Posts: 30566
Joined: Thu Jan 10, 2008 12:56 pm

Re: seeking advice, in retirement now

Post by retiredjg » Wed Oct 25, 2017 3:44 pm

JohnnyM wrote:
Wed Oct 25, 2017 2:31 pm
Thank you for the replies.

retiredjg > If she/you are currently happy with the portfolio, why not just buy the same thing that gets sold for the RMD? If she sells bonds, buy bonds. If she sells the target fund, buy the target fund. This way the portfolio stays exactly the same.

That makes perfect sense. The issue is she has no "bond-only fund" to sell in the t-IRA, just the two "s&b" funds + cash in the t-IRA; that have her at about 30s:70b.
Why is that an issue? it would not hurt to sell a balanced fund (fund that contains both stocks and bonds) and buy the same fund in taxable. Is the problem that the IRA is not at Vanguard?

I was just curious re her new taxable account that will be opened at Vanguard from the RMD; what would be the closest thing to cash that may earn a bit more than cash? She can take her RMD from the cash-portion of the t-IRA (so no trade fee because not at Vanguard), and with that cash what can you suggest as a good "near-cash" Vanguard product? Every month she stays healthy is another month her income will exceed her expenses, so I'm thinking she can take this $31K RMD from the cash-portion of the t-IRA & invest it at Vanguard in something pretty darn safe so we can just keep it "nearly cash". TIPS, a bond fund? The ticker you are referencing?
Vanguard has two money market funds. I don't know the difference. Pick one. It's not going to make much - will probably not keep up with inflation. If that is not OK, a short term bond fund would do. Are you interested in that?

In Dec 2018 about 14 months from now, I will do exactly as you said "If she/you are currently happy with the portfolio, why not just buy the same thing that gets sold"
I don't understand why you can't just do that now. I feel like I'm missing something.

JohnnyM
Posts: 52
Joined: Sat Feb 14, 2015 10:54 pm

Re: seeking advice, in retirement now

Post by JohnnyM » Wed Oct 25, 2017 5:54 pm

Thanks retiredjg
Why is that an issue? it would not hurt to sell a balanced fund (fund that contains both stocks and bonds) and buy the same fund in taxable. Is the problem that the IRA is not at Vanguard?
That is one and a small $17 problem, so the RMD will come from the cash in the t-IRA to avoid that $17 trade fee. I just want it to go to something a little better than cash


Vanguard has two money market funds. I don't know the difference. Pick one. It's not going to make much - will probably not keep up with inflation.
Right & I know Ally bank has the an even better MM interest rate.
If that is not OK, a short term bond fund would do. Are you interested in that?
I suppose so, can you make a suggestion?


In Dec 2018 about 14 months from now, I will do exactly as you said "If she/you are currently happy with the portfolio, why not just buy the same thing that gets sold"
I don't understand why you can't just do that now.
No need to sell the s&bond fund until Dec 2018, but in 2017/now I will just distribute (RMD) the cash in the t-IRA, and want it to go to a taxable account hopefully a little better than cash.

I feel like I'm missing something.
So sorry I haven't explained this well, very kind of you to take the time to help me.

retiredjg
Posts: 30566
Joined: Thu Jan 10, 2008 12:56 pm

Re: seeking advice, in retirement now

Post by retiredjg » Sun Oct 29, 2017 7:30 am

I think what is missing is knowing where your money is held. You apparently want to use Vanguard funds products but these products lose some or much of their low cost benefit when held at other custodians because of transaction fees.

Not knowing where the money is, it is hard to suggest what to buy.

JohnnyM
Posts: 52
Joined: Sat Feb 14, 2015 10:54 pm

Re: seeking advice, in retirement now

Post by JohnnyM » Sun Oct 29, 2017 2:00 pm

The new money (from the RMD) of which I am asking about to conservatively invest, in a taxable account hopefully a little better than cash, is going to be at Vanguard in some type of Vanguard fund. ( The rest of her money that is indeed Vanguard index funds but not held at Vanguard get no more than one transaction a year so I can live with that and I was not keen on her making all kinds of changes for $17 per year.)

Thank you once again; any suggested funds appreciated. The amount is in the $25K range.

retiredjg
Posts: 30566
Joined: Thu Jan 10, 2008 12:56 pm

Re: seeking advice, in retirement now

Post by retiredjg » Mon Oct 30, 2017 7:41 am

Vanguard has a number of short term bond funds. Here is one you might consider. It's sort of middle of the road, vanilla.

https://personal.vanguard.com/us/funds/ ... IntExt=INT

JohnnyM
Posts: 52
Joined: Sat Feb 14, 2015 10:54 pm

Re: seeking advice, in retirement now

Post by JohnnyM » Mon Oct 30, 2017 6:41 pm

Thank you again, very helpful.

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