I’m 53, my wife is 54. Our $1.4 million retirement nest egg is 100% in equities and crypto. What should I do now for retirement?

- Advertisement -

Dear Marketwatch,

- Advertisement -

I read your articles on retirement every week, and I’m looking for advice on whether I can retire now, but what I should be thinking about and doing differently in the next decade before retirement.

- Advertisement -

Background: I am 53 years old, married (wife is 54) and our total income is $220,000. We have two children, one who is going into his final semester of college and the youngest who is entering his junior year in college. Both will finish college with zero debt and already have Roth IRAs set up in their names. Our house costs $450,000 to pay off the mortgage, and we have a $20,000 car loan and zero credit card debt. We have $1.3 million in IRAs and $125,000 in 401(k) plans. I have a pension that will start paying in 14 months of $800/month. We save a combined $3,000 per month, with 60% going to traditional tax deferred (401(k), IRA) and 40% going to Roth. Our taxable accounts are currently $1.3 million and our Roth accounts total $125,000. We have invested 100% in equities and crypto, approximately $1.1 million in FAANG shares, $125,000 in mutual funds, and $200,000 in bitcoin (cost basis on crypto is $50,000). thIf we each take this to 62, the Social Security estimator gives us about $3,000 a month in benefits.

We’re trying to be aggressive with our investments and debt reduction and when we make $220,000, we live on about $145,000 (supporting monthly savings, mortgage payments and college costs) or about $12,000 a month. Huh.

- Advertisement -

UP Unless About two years ago we were invested in broad market mutual funds on a very low cost basis (Warren Buffett recommended approach) but I think focusing more on investing is both satisfactory and necessary to have the greatest wealth. We have had an investment advisor in the past, and it never felt like they earned their 0.75-1.25% fee for managing our investments. We want to retire by 62 at the latest, and leaving the workforce at 59-1/2 feels even better.

What should we do differently as we enter the final years of our careers? What should we keep the same? And when do you think we should retire?

I’m retiring on my 78th birthday, I have over $200,000 in savings and I share the expenses with my 80-year-old boyfriend. will i be fine?

Dear reader,

Many thanks for arriving. Looks like you have definitely put retirement at the forefront of your financial planning and it will totally pay off in the future!

The first thing I noticed about your letter was the allocation of your assets. I always say that people near and even in retirement should have a healthy mix of equity in their retirement portfolio because retirement can last for decades and that money needs to last. Also, though, you need some sort of security in your asset allocation. With an unfortunate change in the markets, your account balance can drop quickly and suddenly – and no one wants that. It may take longer to recover, which is not ideal if your goal is to retire in less than 10 years.

“Given your age, equity may be the key to growth, but the desire to retire early can offset it,” said Christiane Finfrock, financial advisor and founder of Retirement Income Strategies.

Check out the Businesshala column “Retirement Hacks” For actionable advice on your own retirement savings journey

Take FAANG shares for example. “Everything is working well for FAANG, but we may be moving into a phase where their growth slows down,” said Thom Rindahl, certified financial planner at TrueWest Wealth Management Services. A diversified portfolio may not rapidly increase your portfolio balance, but it won’t hurt it that much. “I certainly believe in a diverse portfolio of asset types and management styles,” Rindahl said. “You get the best risk-adjusted returns this way. It’s not what you make, but what you keep.”

Another priority: healthcare. Where do you get health insurance if you both intend to retire before age 65? Medicare isn’t available to you until age 65, and private insurance can be expensive. If you have access to a health savings account, which is available to people with high deductible health plans, take advantage of it—they triple the tax benefit (when used for contributions, growth, and distributable health expenses). tax-free) and you can wait until retirement to start withdrawing money.

As far as Social Security is concerned – you may want to delay it. When to claim Social Security depends on several factors: that income requirement, life expectancy and how much more you can get if you delay, for example. Your benefits are reduced for each month before your full retirement age, and they are also increased for each month after FRA until age 70. “I would probably wait until there is some extenuating circumstance,” Rindahl said.

There are also lots of claiming strategies especially for married couples. For example, you might want to consider deferring the highest payer’s benefits until at least full retirement age or beyond, so if that person dies, the surviving spouse will. There would be a higher benefit to being dependent on (as opposed to having to do less later in life), Finfrock said.

You may also want to pay off the house between now and retirement. Mortgages aren’t inherently bad debt, and many people go into retirement still paying off a mortgage, but if you have assets and can make it a top target before you leave the workforce, why not? If you decide not to pay off the mortgage early, that’s okay—bringing the debt into retirement is perfectly acceptable, as long as those payments fit into your overall bigger financial picture.

Too I’m Retired, My Wife Isn’t – How Should We Pay Off Our $60,000 Mortgage Before She Retires?

Try to keep your savings rate the same as well. If you pay off the house, increase that savings rate, Rindahl said. Also, as your retirement date approaches, think long and hard about what you plan to do during this next chapter. Sometimes people are in such a hurry for retirement that they don’t plan for it properly, and they end up in boredom or loneliness. During this time, you should also think about what you will spend in retirement – ​​will you move? Take up expensive new hobbies or extravagant trips? All of this will affect how much you need to save or spend in your old age.

Finally: Delivery Strategies. Think carefully about how you want to withdraw your hard earned money. Typically, sequences are taxable sources first, followed by tax-deferred sources and then Roths and other tax-exempt options, Finfrok said. But reversing that order also has benefits—if you’re retiring before age 65, Rindahl suggests using Roth money first to keep your income low, which is covered under the Affordable Care Act. Will also help in terms of paying for health insurance.

Readers: Do you have suggestions for D? Add them in the comments below.

Have a question about your own retirement savings? email us [email protected]


- Advertisement -

Stay on top - Get the daily news in your inbox

DMCA / Correction Notice

Recent Articles

Related Stories

Stay on top - Get the daily news in your inbox