what should your 401/457's look like when retired and collecting

[mtwarden]

I'm not quite there, but very close . I have two different 401's and a 457. My 457 has a fixed option (in whatever % you want), my 401's don't. The fixed option changes every 3 months and is not overly high, but low late has been bouncing around 2.5-3%. Obviously this is very safe, but not high yield option. Because I'm close to start collecting, I now have 75% of my 457 in the fixed, 15% in some bond funds and 10% in a mutual fund.

I was thinking rolling over my two 401's to my 457 because of this fixed option. Also thought having the money in one account might be a little easier to deal with.

Thoughts what your 401/457's should look like when you are at (or very close) to start collecting. I would rather err a little on the safe side at this juncture in my life

Thanks in advance.

Mike

 

[dirtytough]

I’m not that close yet. But I have thought about it a little on what I think I would be able to accept allocation wise. A few things obviously matter. If a person is looking at normal retirement age a 4% SWR is pretty standard

Can you live on a 4% SWR? If yes then I personally would put 50% +- 10% into your fixed allocation, and the rest into a total us equities index fund. I personally would not put some into fixed and some into bonds.

You should really get on bogleheads.org. There is a wealth of financial knowledge on there.

 

[SDHNTR]

Talk to a financial planner or wealth management pro. Don’t guess. You should have a formalized financial plan. Get it nailed down to the dollar, for YOUR specific financial and family situation. Don’t ask a bunch of broke hunters on the internet. What someone else does should be of zero consequence to you.

 

[mtwarden]

I've used a "how long will your $ last" calculator at 3% and at the monthly amount I was thinking about drawing, it shows it lasting 30+ years. Anything over 3% would be a bonus.

 

[Marble]

I'm not quite there, but very close . I have two different 401's and a 457. My 457 has a fixed option (in whatever % you want), my 401's don't. The fixed option changes every 3 months and is not overly high, but low late has been bouncing around 2.5-3%. Obviously this is very safe, but not high yield option. Because I'm close to start collecting, I now have 75% of my 457 in the fixed, 15% in some bond funds and 10% in a mutual fund.

I was thinking rolling over my two 401's to my 457 because of this fixed option. Also thought having the money in one account might be a little easier to deal with.

Thoughts what your 401/457's should look like when you are at (or very close) to start collecting. I would rather err a little on the safe side at this juncture in my life

Thanks in advance.

Mike

Is this your only source of income?

I would error on the side of caution and stability if it was me. If not, then depending on my savings, the amount in the 457, the status of all the other financials like debt, mortgage, age and life expectations, meaning what do you want to do while retired, I would make the choice best for me.

Sometimes a good finciancial planner can ask those questions and get the information they need to give you options on what you can do.

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[mtwarden]

Is this your only source of income?



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No. I guess I should have mentioned that I collect a pretty decent pension, should also mention that unlike most pensions, this was gets a 3% bump each and every January .

I'm also eligible for SS, but haven't starting collecting yet (but getting every so closer!)

 

[texag10]

Tie your asset allocation to your comfort level with risk, your timeframe, and your withdrawal needs.

I was helping an advisor with a retired client's plan yesterday, he was 89% in equities...but ALL of his expenses were covered by pension and SS income. If he can take the volatility, rock on.

The same allocation for someone relying on their investments to cover 50% of their expenses would likely be a terrible idea.

An easy way to think of it is money needed in the next 1-2 years is in cash, 2-3,4,5 in bonds (might stick with the fixed option in the 457 in today's rate environment) and further out than that in equity. Adjust the timeframes to match your risk tolerance.

EDIT: I'll add that knowing your plan's withdrawal options and rules is crucial.Some plans are full payout only once separated from the employer. Some will limit the amount of withdrawals you can take per year. 401Ks require mandatory 20% withholding for income tax. Will they let you link to a bank account and use EFT? Can you take fund specific withdrawals? If I'm taking $1k/mo from my 401K once retired, I damn sure don't want that money to come from my equity funds when they are down.

 

[rayporter]

i could have retired at 49 but was chicken. i did not know if i had enough saved. started talking to an advisor and researching and doing a budget. i know where every penny went for 2 years and when the next window opened i had a plan and jumped out the window. no hard landing and i enjoyed every second of it since.