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?
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.
Giving directly to charity from your IRA keeps your MAGI down also.
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
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!