Hi everyone-
I am seeking help related to the diversification of my fixed income assets.
My wife and I (mid 40's) are near a "50x" annual expense to nest egg multiplier, are are both considering "retiring" over the next year. Early retirement would result in our tax rate dropping from ~35%+ to ~10% . Currently our asset allocation is 68% equity (mostly VTI and "like" etfs) and 32% (16x) fixed income. All net-new investment goes into fixed income to try to get the asset allocation to 65%/35% (desired state).
Below is the current state of the fixed income portion of the portfolio only (32% of portfolio; 16x annual expenses):
"Taxable" account fixed income assets (20% of total portfolio; 10x annual expenses): 8x in MUB (iShares Muni Etf), 1x in iBonds, 1x in HYSA
"Tax deferred" account fixed income (12% of total portfolio; 6x annual expenses): 6x in BND (Van Total Bond) like funds/etfs in our 401k and IRAs.
Forward-looking the plan is to:
Prior to retirement: Continue to max out tax deferred space with total bond funds and put any additional investment into MUB in our taxable accounts (Muni etf). Buy the maximum allotment of iBonds in Jan 2025.
Post retirement: When the time is right from a tax standpoint, sell out of the MUB positions and put the funds into a intermediate treasury fund or BND.
The question for the group is whether you would make any adjustment to the above plan? Should I be including more shorter term duration fixed income assets into the mix and when?
Thank you for the help.
I am seeking help related to the diversification of my fixed income assets.
My wife and I (mid 40's) are near a "50x" annual expense to nest egg multiplier, are are both considering "retiring" over the next year. Early retirement would result in our tax rate dropping from ~35%+ to ~10% . Currently our asset allocation is 68% equity (mostly VTI and "like" etfs) and 32% (16x) fixed income. All net-new investment goes into fixed income to try to get the asset allocation to 65%/35% (desired state).
Below is the current state of the fixed income portion of the portfolio only (32% of portfolio; 16x annual expenses):
"Taxable" account fixed income assets (20% of total portfolio; 10x annual expenses): 8x in MUB (iShares Muni Etf), 1x in iBonds, 1x in HYSA
"Tax deferred" account fixed income (12% of total portfolio; 6x annual expenses): 6x in BND (Van Total Bond) like funds/etfs in our 401k and IRAs.
Forward-looking the plan is to:
Prior to retirement: Continue to max out tax deferred space with total bond funds and put any additional investment into MUB in our taxable accounts (Muni etf). Buy the maximum allotment of iBonds in Jan 2025.
Post retirement: When the time is right from a tax standpoint, sell out of the MUB positions and put the funds into a intermediate treasury fund or BND.
The question for the group is whether you would make any adjustment to the above plan? Should I be including more shorter term duration fixed income assets into the mix and when?
Thank you for the help.
Statistics: Posted by gck1891 — Sun Dec 01, 2024 7:36 am — Replies 2 — Views 142