• 0 Vote(s) - 0 Average
  • 1
  • 2
  • 3
  • 4
  • 5

OK, so you met the long-term goal of enough to last through your dotage. Securing it?

#1
I'm in that position; believe we have 2X what we might need to see us through, and maybe still leave a good deal to heirs. Currently 7% cash, 25% bonds/funds. the balance in equities. Contemplating cashing out more equities, into cash. Have some equities up 600-1300%, in deferred accounts (IRAs). Anyone in a similar situation? Not a bad place to be, just looking to be prudent. Next year, RMD's start. Feel like I should draw down IRA. Any opinions?
  Reply
#2
1. If you give to charity you can give directly from the IRAs once you reach 70 1/2.  (Please confirm.)  That will save you from paying on taxes for something you want to donate.
2. I read recently that a million dollars should last a couple 20 years in some states, 25 in cheaper cost of living states.  It didn't say whether that was a million in tax deferred accounts or not.
3.  The amount the equities rose doesn't matter since it is tax deferred. The whole thing will be taxed as income.  Stay within the tax bracket you want.  For that reason you may wish to take some out this year, to slightly reduce the amount you have to remove.  You can roll it over this year to a ROTH for the heirs, or for yourselves later if needed.
4.  Most say it is wise not to have a high percentage in equities when you first retire.  I agree.  Any money you plan to leave to heirs can be in equities.  But, use the bucket approach for your own needs.  Two years or so in safe funds, the next 4 or 5 in a moderately safe bucket.  The fly in the ointment is that interest rates may rise so bonds are not as moderately safe as one might hope.  If you can live on your Soc. Sec. and pensions that would be your safe bucket.  Otherwise, a cd ladder of funds to get you through each set of 2 or 3 years.
  Reply
#3
Giving directly to charity from your IRA keeps your MAGI down also.
  Reply
#4
You look ready for retirement but do you have a retirement plan too. Not a financial retirement plan but the rest like do you plan to relocate, take up new hobbies/sports, travel, go back to school, ... If so then do you think the financials will support the retirement plan? If not, it may be a good time to think them thru and match it to your financial plans.
FIREin2018 is right on with point 1. You can do a transfer up to $100K to charity direct from your IRA to the charitable institution and it counts as RMD money and because you do not receive the money it is not taxable or included as a tax deduction.
  Reply
#5
Good job on letting Mr. Market do what he does before he changes his mind. I have stayed ~60/40 for years and plan on staying with this allocation. CD's r paying better so ladder's help with the safety part. RMD's r good travel money but need to be managed to lessen bracket creep. buy a boat and drink cold beer. stay the course
  Reply
#6
Personally I think an important objective at this stage should be paying the minimum on taxes you're legally required to. I don't hear a concern for this in what you've written, more like "cash out IRA equities, pay the taxes... whatever." And personally, I'd like to see growth in my assets throughout my life, rather than watch it just sit dormant in a cash account.

Donating highly appreciated equities to a charitable gift annuity ( for instance Red Cross Charitable Remainder Unitrust) for instance can release you of all capital gains or income taxes on those equities, PLUS provide you with income from those assets PLUS provide survivor income to a child after your passing for the rest of their life, PLUS meet your required IRA distribution, PLUS provide a remainder contribution to the charity you've chosen, PLUS entitle you to a tax deduction for your contribution, PLUS it protects the portion that your child would receive from possibilities such as bad investments and loss through divorce; thus it can be a 6x-win compared to many other alternatives. (There are of course limits, exclusions etc. which a charity or your tax advisor can explain)

This isn't the only vehicle to consider, my point is just that taking a hit in taxes and putting assets in cash is not by any means the only option that should be considered at this stage.
  Reply
#7
Congrats to your remarkable achievement! Just a few simple suggestions for your consideration:

1. Start giving some equities to your kids and grand kids while they can enjoy/appreciate the most/earliest and you can share/witness their joy.

2. Start draw down your IRA. If you can't use it all, invest it or give it away.

3. Buy a bike, drink warm milk, and stay the course!
  Reply


Forum Jump:


Users browsing this thread: 1 Guest(s)