It looks like more than 80% of your money is in retirement accounts.1. How best to simplify? I admit I probably want a little more than a 3 fund portfolio – I do find investing fun and interesting and want a little more control than target date funds but currently I have 20 different funds, plus HSA, I-Bonds, CD ladder, checking account. When I think about rebalancing I get mired in the details of which funds in which accounts.
After I retired I also wanted to make my finances easier to manage if I am 80+ years old and in a nursing home. Most of my investments were in retirement accounts so I just moved most of our money to target date funds to make it easier to manage as I get older. Sometimes people think of target date funds as being sort of a dumbed down "Investing for Dummies" option which needs to be improved on but in the right situation they are an excellent choice. The main reason not to use a target date fund are;
1) You have a lot of money in taxable accounts. Target Date funds are not tax efficient so they are not a good choice for taxable accounts.
2) You do not have a good low cost one in your 401k which is too way too common.
Unless you can come up with a compelling reason I would just roll the 401k into the IRA since that would make it easier to manage by having one less account.6. I am of the understanding that my 401(k) RMDs will have to be calculated separately from my IRA RMDs so best to be balanced in 401k?
One risk with a 401k is that the company could go through a merger or just decide to change 401k administrators 10+ years from now when you may not want to deal with that then.
Your spending from your portfolio may be higher in early retirement before you start your late husbands Social Security and your spending on things like travel during your "go go" years may also be higher. I didn't play with your numbers but being a bit cash heavy right now may make sense to help cover your early retirement expenses and maybe Roth conversions.11. And then, how to deploy some of this cash. Admittedly, I like having some cash so I can buy when the market goes down....but that's called market timing and I can't predict the market!
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Social Security: will take mine at 62 (about 10k/year) and late-husband's at 67 (about 24k/year) (today's dollars)
Be sure to understand the complex way that Social Security is taxed since that can change your expected tax bracket.
https://www.bogleheads.org/wiki/Taxatio ... y_benefits
The tax brackets are scheduled to revert to the old higher tax rates in 2026 if there are not any tax law changes. For example the 12, 22, and 24 percent tax brackets will revert to 15, 25, and 28 percent in 2026.
Between the way your Social Security will be taxed, the tax rate changes in 2026, and eventually RMDs it would be worth looking at doing Roth conversions in 2024 and 2025 up to the top of the 22 or even 24 percent federal tax bracket. It will take some research to figure out if a Roth conversion makes sense for you or not, but it would be worth looking into.
Also check this web site to see when it suggests that you should start Social Security.
https://opensocialsecurity.com/
Statistics: Posted by Watty — Thu Mar 14, 2024 9:52 pm — Replies 1 — Views 245