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Explorer ○○○

trying to figure this out, yet once again, at age 64 ....

i posted this on the old forum, under my old user name of floete, but now guess this is the place to be.  here tis again.

over the years, i've been here many many times, taken some advice, ignored some advice, dithered a bunch, taken some lumps, zigged when i should have zagged, etc etc. for the past two or three years, i've done nothing at all with my portfolio and slept a lot easier than before. but once again, i'm trying to figure out if i can better situate myself for the future.

i'm now 64, with one month left before i hit 65. and go on medicare. (and finally take care of this Montana-sized kidney stone in my gut.) i recently sold my east coast house, for 370k, which is now in a bank acount, and moved to CA. Now I live w/ my girlfriend and split the cost of her mortgage and utilities and upkeep and whatnot, to the tune of around 2k a month each. i have no debt. i once paid off an ex-girlfriend's mortgage and one day will get that money back + interest, around 100k now.

my assets are currently about 1.7 mil, invested thusly:

35%: cash
20%: PRWCX
25%: bond funds, split more or less equally among PIMIX, IOFIX, LFRAX, SPFPX, SAMBX
8%: PRHSX and a bit in FBIOX
3.5%: Vanguard tax managed balanced

Total here is about 92%. the remaining 8% is scattered hither and yon among various dividend paying stocks, when i thought that's where i ought to put all my money, before deciding not to.

i moved from the east coast to southern california a week ago and am afraid i can't afford to live here for too long.

i am slowly being phased out of my job. am down to 50k a year now, from multiples of that just four years ago. i think my SS payment would be around $2,000/mo right now.

i think i'm about 50/50 ira / non ira at the moment, with much of the non-IRA money in cash that i don't know what to do with.

I have never spent principal in my life, but I'm guessing I'll have to change my attitude about that soon enough.
I spoke to a financial planner today and realized that, as much as i might need outside help, I'm never going to be able to give up control to someone else, for better or worse. So, here I am, sitting here, asking advice from ya'll, as a starting point toward doing a bunch of due diligence and hopefully getting somewhere.

i am a conservative investor, to the degree that i can call myself an investor at all. constitutionally, i believe all hell is going to break loose any time now ...

any suggestions about what i might do to maximize the potential of my life savings, given the above? btw/ i do best when i don't do much in the way of change w/ money. and if you need more info from me, feel free to fire away.

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Participant ○○

Re: trying to figure this out, yet once again, at age 64 ....

I'm nearing retirement, but currently gainfully employed.  Considering how comfortable I am with finances, have actually thought about starting  some sort of personal finance business once I do retire in a few years.  So, I'll gladly provide some free advice, but would appreciate some feedback too.

First, a few questions:

Do you have any beneficiaries in mind?

You stated something about getting money back from an ex girlfriend.  This really doesn't good.  However, I'm thinking it is outside the bounds of standard financial advice although I can understand that it is a concern.

Social Security should have sent you a statement regarding your benefits and options.  I believe it's yearly for somebody over 60.  If they have not, then suggest standing in line at the SS office.  There should not be much guessing.

You did not mention any pension.  Is there one?

You have a lot of cash and I recommend placing all of it into the ETF MINT right now.  It's paying about 2.7% right now.  It appears you are not  in a high tax bracket, so I don't believe you should be looking at non-taxable forms of cash.  Also, if the market correct significantly, then I would place most of the cash into the market.  However, currently the market is roughly neutral. 

PRWCX is a great fund.  Gold 5* by Morningstar.  So, would keep that as it.

PRHSX is also good 5*, but Neutral by Morningstar.  I would also keep that as is for the time being.

I don't have time to review all the bond funds.  PIMIX is highly rated, but I would only recommend it in a tax advantaged account.  If not, then at some point in time, it should be sold for something more tax efficient.  Same goes for all the other bond funds and maybe more so unless they are as highly rated as PIMIX.

I think the next big step would be to get a real good grip on your tax situation and work to minimize them.  This would involve transferring funds from IRA's into Roths.

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Explorer ○○○

Re: trying to figure this out, yet once again, at age 64 ....

hi, 3m -- thanks for weighing in.

1/ i have one beneficiary, a daughter, 35, more than gainfully employed, as a nurse practitioner.  i'd still like to leave as much to her as i can.  sadly, i didn't do any advance planning as re nursing homes, etc, so i fear i'll eventually give every last $  to the system and then go on the dole.  i do have MS, so that's not an unlikely scenario.  otoh, i am not adverse to self delivery but, as also know, there are no atheists in foxholes.

2/ my ex whose mortgage i paid off has parkinson's, so i did what i did so she could continue to live in her home.  i'll get it back when she can no longer live on her own.  i'm not worried about it.

3/ i just applied for medicare, which has temporarily halted my ability to go online and see my potential SS benefits and options.

4/ i'll definitely look into MINT.  had never heard of it before, so thanks for that.  the market may be neutral but, as stated, i'm firmly in the camp that believes we're due for a mama of a bear sooner rather than later.  want i'd like to do is prepare myself in such a way that, should that happen, i don't flip out and sell at a time when i should be buying.  to that end, i might jettison my health care funds, which are small amounts anyway, and put the money either into MINT or into PRWCX.

5/ PIMIX and the other bond funds are all in IRAs.  in the past, with bonds, i tried to follow along with fd1000's thinking as much as i could.  i probably ought to bone up on his latest noodlings.  or wait for him to hopefully weigh in here.

6/ the whole IRA to Roth business is a mystery to me but i will look into it and try to find some online sources for the hows and whys.

7/ yes. my tax situation.  i need to deal with that as well.

anyone else have suggestions?  if so, tia!

 

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Follower ○○○

Re: trying to figure this out, yet once again, at age 64 ....

Suggest you take a look at PULS for your cash, rather than MINT. Pays more and costs way less.

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Explorer ○

Re: trying to figure this out, yet once again, at age 64 ....

Orion FCU pays 4% for checking currently.

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Participant ○○○

Re: trying to figure this out, yet once again, at age 64 ....

You’re probably aware of this but I thought it worth reminding you...Since you are very concerned about a major drop in the market, you could figure out just how much you could tolerate before pushing the panic button; and that speaks to your percentage in equities, which could drop as much as 50% over a year or 2.  If you have 50% of your funds allocated to equities then that would be a potential (temporary?) drop of 25% in those funds.  Just something to consider...

Still, as far as predicting the future I’m fond of the expression, “no one knows nothin,” which is why as an already retired guy, I keep 2-3 years worth of bond/money market funds to liquidate in the chance of an extended market drop.

The above will not help you maximize your returns, but it could help minimize your anxiety about your investments.

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Frequent Contributor

Re: trying to figure this out, yet once again, at age 64 ....

      Something like SPY, a bond fund of your choice (how about 45/45) and 10% cash. Only you know your risk tolerance. When our last parent was in LTC we were all in with CEF’s. We went for high income to get in the best facility we could afford and ignored the principle which the facility would eventually get. The facility took Medicaid so the quality of (good) care never changed. We plan on doing the same for us if the need arises.

       You probably should allocate to your risk tolerance and managing interest rather then trying to predict future market trends. An all weather allocation you can live with under most market conditions. We mostly monitor at the present time and skip the wall of daily woe as much as possible.

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Frequent Contributor

Re: trying to figure this out, yet once again, at age 64 ....

This poster already started a similar thread see link.

A typical retiree DOES NOT need 2-3 years of MM/CD because he/she usually have a portfolio of stocks and bond funds and some of the bond funds should be higher rated bonds.  Stocks down means high rated bonds are up and he/she can take money from the part that is up.  Another option is to go with lower % in stocks with riskier bond funds.

The following is an example of one fund with no possibility of selecting bonds or stocks and the results prove they you can do it without cash.  Let's look at 2 retirees one using only VWINX(40/60) and the other using only VWELX (60/40) and take 4% from a starting portfolio of one million Dollar for 30 years.  The results show you don't need any cash, just use the dist and if you need more just sell more share.

PortfolioInitial BalanceFinal BalanceCAGRTWRRMWRRStdevBest YearWorst Year
Portfolio 1$1,000,000$3,547,801 4.30% 8.63%9.53%6.15%28.91%-9.84%
Portfolio 2$1,000,000$4,375,491 5.03% 9.39%10.06%9.36%32.92%-22.30%

Sure, I have several thousand in the bank, if you like more then 3 months but not more.  In over 4 decades I never needed cash.  I can use my credit cards right away for everything or sell my mutual funds and use it within 1-2 days.  The only time you need cash is for illegal drugs or ransom and I never use that.

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Participant ○○○

Re: trying to figure this out, yet once again, at age 64 ....

Fd: point taken on cash/MM, thanks!

Brian

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Participant ○○○

Re: trying to figure this out, yet once again, at age 64 ....

I can just tell you what we do as conservative retirees.

We keep our age in fixed income (investment grade bonds and cash) and the rest in world equities. Right now it's 40/60.

We use the  4% rule for withdrawals. We treat our pensions (social security) as "bonds" in our withdrawal calculations as our goal is to SAFELY extract as much monthly spending as possible.

We estimate we would lose 15-20% of our portfolio's value if another 2008 financial crisis occurs.

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Frequent Contributor

Re: trying to figure this out, yet once again, at age 64 ....

         Just to add a slightly different view to FD’s about cash. We’re “speculating” we have enough income coming in to last into our 80’s with half of our assets on reinvestment so we stopped investing and cash is accumulating. 

          If our income needs increase we have a high income source waiting in the wings to pick up more income during inevitable downturns with cash or assets on reinvestment.

          Some short term cash adds stability (safety to value) and flexibility (opportunity) in all markets. How much or what’s short term is up to the individual. I don’t have blind faith in any studies when applied to my personal needs and circumstances.

            Because of that I suppose most can (and should probably) have a simple portfolio as FD advocates and rely on past studies because some seem to really need that stability. Others do require something more customized and flexible to their personal retirement situation as it unfolds.

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Participant ○○○

Re: trying to figure this out, yet once again, at age 64 ....

Transitioning right now from full time work to part-time/semi-retired.  I was planning to do so after the market crash at the end of this bull market, but got tired of waiting and pulled the trigger this month.  I'm still expecting a major downturn this year or next.  If the SP500 crashes 40%, I expect my portfolio to go down 20-25% and I can live with that for a 3 year period. I'm ready and able to return to full time work should the downturn be deeper and/or more prolonged. I've dialed back my stock exposure from 65% to 60% and increased my bonds to 35% and upped the quality a little. Within the equity portion also, I'm more defensive.  I've almost eliminated my 7% cash position. Just kept enough to keep my spending accounts topped up as needed. I'll sell my bonds if I need more cash, but I want every dollar working for me.

Taxable accounts: VWALX (hi yield muni) and VTCLX (tax managed cap app)

Retirement accounts: Price Cap App (PRWCX), Wellesley, VDIGX (dividend growth), VMNVX (global minimum volatility), VBILX (IT bond index).

 

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Participant ○○

Re: trying to figure this out, yet once again, at age 64 ....

1.  Get out of California:  the taxes are too high.  Most I know, left the state for that reason, the first chance they got.  I had a chance to move there, and I said nope.

2.  Too much cash; invest it in something, stay away from junk bonds and high pe stocks.

3.  Dont pay other peoples stuff;  you will regret it someday. Everyone I know never appreciated one thing I did for them.

 

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Explorer ○○○

Re: trying to figure this out, yet once again, at age 64 ....

wanted to thank all again for weighing in.  it'll take me a while to digest everything, do my own dd and start making changes, but i've got to do it, so it'll happen.

hku:

1/ which taxes are you talking about?  i'm making 50 to 60k a year now, so i've got to be in a low tax bracket.  (p.s., i don't know for sure, because i just moved here to live w/ my girlfriend in the cool moody mossy home she owns, for which she pays 2,250 mo mortgage, including prop taxes and insurance, meaning my half is ... 1,125, with most of her elec "paid" for by solar and the major utilities expense being water.)

2/ yes, i've got to do something w that cash.

3/ i didn't do it for appreciation; i did it 'cause 1/ i could and 2/ it was the right thing to do.  i've never regretted it.  and if i never get the money back, i still wouldn't regret it.  some things are just like that.  and believe me i'm no saint.  in fact, far far from it.

 

 

 

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Follower ○○○

Re: trying to figure this out, yet once again, at age 64 ....

Open a  Schwab account, you can move your cash in and out of there money market fund SWVXX, there is no transaction fee or minimum balance, current weekly yield is 2.24%.

Also, check out living in San Miguel de Allende in Mexico, a lot Americans and Canadians live there, it's an adorable colonial town.


@fffloyddd wrote:

wanted to thank all again for weighing in.  it'll take me a while to digest everything, do my own dd and start making changes, but i've got to do it, so it'll happen.

hku:

1/ which taxes are you talking about?  i'm making 50 to 60k a year now, so i've got to be in a low tax bracket.  (p.s., i don't know for sure, because i just moved here to live w/ my girlfriend in the cool moody mossy home she owns, for which she pays 2,250 mo mortgage, including prop taxes and insurance, meaning my half is ... 1,125, with most of her elec "paid" for by solar and the major utilities expense being water.)

2/ yes, i've got to do something w that cash.

3/ i didn't do it for appreciation; i did it 'cause 1/ i could and 2/ it was the right thing to do.  i've never regretted it.  and if i never get the money back, i still wouldn't regret it.  some things are just like that.  and believe me i'm no saint.  in fact, far far from it.

 

 

 


 

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Frequent Contributor

Re: trying to figure this out, yet once again, at age 64 ....

Been following this thread, and here’s my “two cents” (worth maybe one penny at most!):

1) You REALLY need to arrive at an overall asset allocation that you are comfortable with, and then STICK with it. From my “rough” calculation, you are about 35% cash, 25% bonds (all funds), and the rest (approximately 40%) in equities. Your long term performance is going to be mainly driven by your asset allocation, NOT by picking the latest “best” fund. Having an asset allocation you are comfortable with help you immensely if/ when we do get the “big selloff”. We are “overdue”, BUT the economy is still (slowly) growing, inflation is low, unemployment is VERY low, so we could go several more years like this. 

2) Consider simplifying your portfolio. It will be easier to manage, and probably help you manage things over the long run. If I were you, I’d consider going with low cost index funds (for equities), although your current fund choices are very good too.

3) It sounds like you can be your own worst “enemy” as far as emotions, you tend to alternate between outright fear and periods of feeling cautiously optimistic (mainly fear). You need to recognize these as setting you up for shooting yourself in the foot, when we do get a selloff. You will be prone to selling at the “bottom”, if you are not careful. Having an “ideal” asset allocation (say 50% equity, 50% fixed income), will help you manage to hold onto your positions and ride those times out. Be VERY careful with your “emotional” side, in regards to investing.

4) I agree with others, be VERY careful about “rescuing” loved ones/ friends, etc. who are in financial trouble. You feel “good” about what you have done in the past, but you cannot keep doing that. I have been VERY guilty of this in the past myself, still owed LOTS of money I most likely will NEVER see, so watch out. 

5) Long term, holding a significant percentage in “cash” will be a DRAG on your returns, as FD and several others said. Figure out what percentage you need to hold in cash (3 months, 6 months, whatever?), and invest any additional funds according to your asset allocation. When we retire, I’m going to hold ~2 years in short term high quality bonds, to essentially function as “cash like” but I will get a little additional return. Holding 35% in “cash” is REALLY going to hurt you long term.

6) Re-evaluate living in California long term. Higher costs, higher taxes, congested, etc. Great place to visit but I would NOT want to live there. Your income will go a LOT further in less expensive states. Also, figure out your tax situation. Converting some of your “pre-tax” money (IRA’s, 401-K’s) over to ROTh accounts may be a smart move, just try to prevent “kicking” yourself into a higher tax bracket.

7) I am circling back to the first point. Figure out an asset allocation you feel comfortable with and stick with it. Every 6 to 12 months, rebalance your portfolio back to the asset allocation. Try to figure out the “maximum” loss you can tolerate, and use that to pick out the amount you will hold in equities. 

8) Depending on your health, family history of health issues, family longevity, etc., it may be worthwhile to delay drawing SS. Each year you delay, you get a little “raise” of about 8% until age 70.

Good luck!

 

Win
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Explorer ○○

Re: trying to figure this out, yet once again, at age 64 ....

If you're on the mortgage for your girlfriend's house be sure you explore whether or not you are exempt from any local property/parcel taxes.  In our part of California there are some parcel taxes that specifically exempt seniors but you have to apply for the exemption, it's not automatic.

 

Also, if your home is located on multiple parcels check with your county about merging them into one parcel; this will save you on parcel taxes.  Years ago we realized we were actually on three parcels but with one address; it was relatively easy to have the county reclassify those three to one parcel, thus reducing our parcel taxes significantly.

 

None of these will save you a huge amount of money but my feeling is that it all adds up.  And welcome to California!

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Explorer ○○○

Re: trying to figure this out, yet once again, at age 64 ....

You didn't mention the breakdown of the IRAs-  Roth versus Traditional.

But if you are mainly in Traditional, consider doing Roth conversions in years where your salary is lower.

That will save you money when you have to start taking RMDs at age 70.

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Frequent Contributor

Re: trying to figure this out, yet once again, at age 64 ....

Mozart325,

In his initial post, he said something to the effect of having “about a 50:50 mix of IRA and non- IRA (presumably taxable) money”. He said some of the non- IRA is cash.

I agree with Mozart325, it may be worthwhile gradually shifting some of your money in IRA’s over to ROTH accounts. Try to do enough each year to get you “close” to the top end of your tax bracket, without going OVER into the next bracket. The time to do that is now before your RMD’s start kicking in. I’m planning on doing that once we retire. 

Win
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