was all ready to get an appropriate 401k mix, (I am overly into Stocks for my age); but the recent downturn has me wanting to wait for some recovery. I am now at a point I won’t try to ride the high
I need to do the same. I was 100% equities until I was 40 or a little older. I’m still only holding maybe 10% bonds, over the next five or so years I need to ramp it up to more like 20% bonds or similar.
I am going in a slightly different direction.
Going to be focusing on about 10-20% dividend stocks (vs bonds)
Its a bit more risky than doing 10-20% bonds, but it leaves you some upside over the longer-term.
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Individual stocks, or a fund like Vanguard’s VYM? That one has an expense ratio of 0.06% and would keep you diversified.
It’s an interesting idea. I’d have to look but would assume large companies paying dividends are lower volatility than the S&P?
I’d still want 2-3 years worth of expenses in something really stable but might err on the shorter side of that and throw a bit here. Will noodle on it.
I’ve shifted my portfolio in recent years to overweight Dividend ETF’s. I’ve got some bond ETF’s as well, but am more heavily in dividends. I have a big relative % in SCHD, and smaller chunks in a handful of international dividend / high dividend yield ETFs
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This made me look at my allocations. I’m about 10% fixed income now, and a little higher than that in dividend ETF’s. In addition, within equities I also have roughly 3% in REITs and MBS.
My brokerage thinks I’m light on bond allocation, but considering the dividend ETF’s I own and having a separate pension I am comfortable going light on bonds.
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SPHD is a high dividend low volatility etf. If you have 2-3 years a of expenses, you can divide that in a few buckets of risk profiles knowing that you have some time buffer that should prevent you from needing to access 50% of that money in the next 12 months. The higher divdiend ETFS won’t drop as much and you can likely get through the worst of a down market with the other 50%.
Yeah, I’m liking the idea of two years of expenses parked in CDs or bonds or similar, plus a year of expenses parked here. I’ll also have a big travel budget so if I retire into a recession I can cut expenses if needed. Or try to earn some money. I think that’ll be a heavy level of protection against sequence of returns risk.
Been looking into after-tax 401k contributions. I doubt my company offers it but may as well check.
I’m trying to discern the benefit over a brokerage fund. It looks like a brokerage would incur capital gains. The after-tax 401k is already taxed similarly to a Roth, then the earnings appear to be taxed like income as you take your distributions.
So, I have a large Roth balance and am now beefing up the Traditional side of that with a higher income and tax rate. Would the play be that in retirement, I take more Roth distributions in certain years to lower my income, and at that time sell out of the after-tax 401k?
I think the main draw for after tax 401k contributions is mega back door
If your plan doesn’t allow for that you may as well just stick the money in a brokerage account (this plan hinges entirely on investment income/capital gains tax rate being separate and lower than regular income tax)
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I’ve been thinking a bit about my planning for early retirement. It’s too early to have more than a broad range of how early.
I’ve been thinking about the 70% rule of expenses in retirement. I wonder when using calculators that allow this assumption to vary, does that account for saving 15% of your income?
If you’re talking about those 15% retirement savings no longer occurring, expenses of 70% of your working income is more like .7/.85 = 82% of the income you previously experienced after retirement savings.
So, if I save more like 30%, then 58% of my working income → 0.58 / 0.7 = 83% of the income I feel while working. So I think if I put 60% in there, to be conservative, it will better align me with the “70% rule”.
Was doing some browsing of dividend ETF’s, and came across one with a 13.9% net expense ratio. Wow!
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No, it does not IMO. These rule of thumb type assumptions can be helpful for general understanding, but you know way more than the general public. It also doesn’t consider if you have paid off your house, what lifestyle changes you may have after retiring, whether you were putting your kids through private school/university on your income,…
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Seems like there won’t be a very useful rule of thumb - I’ll just need to track my expenses closely for a couple years, pull out anything extraordinary like paying for college, and factor back in some risk margin.
I think most of us will likely have complicated financial situations that make rules like that somewhat difficult to apply in the general sense. Fortunately, we are also capable of projecting and discounting out our future needs.
I save pretty much all of my annual incentive compensation and as I have been in my house a long time now, my expenses relative to regular salary is pretty low. What I actually need to continue on is well under 50%. If I pay off my house and move to something smaller at retirement, I’ll be below 25% of what I think I will be earning at that point. No more need to save for college, etc.
My expenses have basically stayed flat in the retirement so it was very easy for me to project my expenses. It was also very easy for me to track my expenses because I use a single credit card for everything
I am sure expenses will climb over time due to inflation, but investment income should theoretically grow to meet that
I had a dedicated financial consultant at my brokerage due to having enough money there. I don’t typically need assistance from a human, but it was occasionally nice to have a specific contact person for some services.
My consultant left the brokerage in July. I got a nice email from a branch manager informing me of the change, and that they would identify a new consultant for me. So far, crickets. It’s a fairly big office I think, and I know they have multiple other consultants there (6 according to their directory).
I don’t need anything at the moment, but it’s slightly annoying not to have someone follow up on this. I could poke them, but won’t bother until I need something.
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Company uses Fidelity and I have a consultant with them.
I was overly invested in company stock, so he helped me divest it
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Me too. Lots. LOTS.
There’s a lot what I consider to be bad information touted by retirement pundits.
I think that you should plan your retirement on what you want to spend, not as a percent of income. If you retire at 57, you may be healthy enough to enjoy spending big bucks on travel and your spending is more than before you retire. If you wait until you are 70 to retire, maybe your lifestyle is more homebound and cheaper.
Some of the better retirement pundits refer to a “retirement smile” what is a graph of one’s retirement spending. Higher at first in the early retirement years, as you spend more discretional dollars on enjoying life, travel, gifting, and your 1967 Mustang convertible. Then your spending gradually decreases in middle retirement, as your version of “enjoying life” is more about relaxing than maxxing. And then in later retirement, you inevitably start spending more on healthcare.
You can decide for yourself how much of this “smile” curvature you like, but thinking about retirement spending in this way seems way more insightful than a rudimentary 70% rule of thumb.
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mine asked expected expenses, normal, travel, hobbies