We are retired, currently 65 and spouse 63. No children or anyone we care to save any money for after we're gone.
We've been living off our savings now for about 13 years, everything is going well, but I'm always thinking about other options. We essentially follow the 2 fund portfolio, with VTI as our primary stock fund, and BND as our primary bond fund on about a 60/40 split. Right now our total portfolio stands at about $3mil and we're waiting until 70 for our SS.
In our very specific situation, not needing to save anything after we're gone, the primary sticking point with managing our portfolio is "how much to withdraw." There are several good threads on variable withdrawal strategies and I have multiple spreadsheets and calculators, all great info and very useful. But even still, it's very difficult to convince ourselves to take out as much as the calculators say we can take out. Being typical "bogleheads," we always take out less and in the first 13 years have always had a higher return than our estimates. Which leads to an ever expanding portfolio. A GREAT problem to have might I add!!!
To help with managing this and with recent increases in interest rates, we're playing with the idea of an annuity. Maybe putting something like $1mil in an annuity that starts at age 70 along with our SS.
The thought would be as follows. Create a guaranteed stream of income that we can convince ourselves to actually spend without concern that something would happen that would jeopardize our future. Keep enough outside of that for major purchases (cars, boats, house remodels/repairs,etc), medical problems, unforseen out of pocket expenditures. With 1/3 of our portfolio in the annuity, we'll still have the issue of having a lot left over at the end, but it might help. And we would be less concerned that a major market event would jeopardize our lifestyle. I've run calculators and an annuity+SS at age 70 creates a monthly stream that's actually bigger than my current calculations based on our entire portfolio. About $7K/month for deferred annuity + another $6K/month for SS. It doesn't increase with inflation as much as my calculations as the only COLA would be from the SS portion.
Another issue with doing this would be the tax implications of getting the $1mil together. Our portfolio is spread among a Joint account, my traditional IRA, and ROTH accounts for each of us. The joint account right now has enough to fund it, with a cost basis of about 50% of the total value. So selling my funds in there would incur a big tax event. I also have about enough in my IRA but of course would have to withdraw and pay another big tax event.
So the questions are:
1. Is this even a reasonable thing to think about doing?
2. Should I just keep the course and do what I've been doing for the past 13 years?
3. Are the tax issues with selling and buying an annuity too great to make it feasible?
What are your thoughts and advice?
We've been living off our savings now for about 13 years, everything is going well, but I'm always thinking about other options. We essentially follow the 2 fund portfolio, with VTI as our primary stock fund, and BND as our primary bond fund on about a 60/40 split. Right now our total portfolio stands at about $3mil and we're waiting until 70 for our SS.
In our very specific situation, not needing to save anything after we're gone, the primary sticking point with managing our portfolio is "how much to withdraw." There are several good threads on variable withdrawal strategies and I have multiple spreadsheets and calculators, all great info and very useful. But even still, it's very difficult to convince ourselves to take out as much as the calculators say we can take out. Being typical "bogleheads," we always take out less and in the first 13 years have always had a higher return than our estimates. Which leads to an ever expanding portfolio. A GREAT problem to have might I add!!!
To help with managing this and with recent increases in interest rates, we're playing with the idea of an annuity. Maybe putting something like $1mil in an annuity that starts at age 70 along with our SS.
The thought would be as follows. Create a guaranteed stream of income that we can convince ourselves to actually spend without concern that something would happen that would jeopardize our future. Keep enough outside of that for major purchases (cars, boats, house remodels/repairs,etc), medical problems, unforseen out of pocket expenditures. With 1/3 of our portfolio in the annuity, we'll still have the issue of having a lot left over at the end, but it might help. And we would be less concerned that a major market event would jeopardize our lifestyle. I've run calculators and an annuity+SS at age 70 creates a monthly stream that's actually bigger than my current calculations based on our entire portfolio. About $7K/month for deferred annuity + another $6K/month for SS. It doesn't increase with inflation as much as my calculations as the only COLA would be from the SS portion.
Another issue with doing this would be the tax implications of getting the $1mil together. Our portfolio is spread among a Joint account, my traditional IRA, and ROTH accounts for each of us. The joint account right now has enough to fund it, with a cost basis of about 50% of the total value. So selling my funds in there would incur a big tax event. I also have about enough in my IRA but of course would have to withdraw and pay another big tax event.
So the questions are:
1. Is this even a reasonable thing to think about doing?
2. Should I just keep the course and do what I've been doing for the past 13 years?
3. Are the tax issues with selling and buying an annuity too great to make it feasible?
What are your thoughts and advice?
Statistics: Posted by ch4au2 — Sun Aug 25, 2024 10:16 am — Replies 0 — Views 24