57 & 5 years until I retire - Any ideas on pulling money from my 401k and asset allocation?

G

Gary 1958

New Member
I'm looking at retiring in 5 years at the age of 62. I currently have about $700k in my 401k and will continue to fund that to the max limits for 5 more years. My home is paid in full and there are no other debits. I'd like to postpone taking SS until 65 and use my 401k to bridge the gap. I'm single so there is no spouse income at this time.

I will need health care insurance once I leave my job so that expense needs to be addressed. My other question is how to invest the 401k money to generate income. I understand a balance attack of bonds, dividends and possible annuities but would like to get some input from others on how they setup their accounts and how will it's working for them?

Thanks!
 

Gary 1958 said:
I'm looking at retiring in 5 years at the age of 62. I currently have about $700k in my 401k and will continue to fund that to the max limits for 5 more years. My home is paid in full and there are no other debits. I'd like to postpone taking SS until 65 and use my 401k to bridge the gap. I'm single so there is no spouse income at this time.

I will need health care insurance once I leave my job so that expense needs to be addressed. My other question is how to invest the 401k money to generate income. I understand a balance attack of bonds, dividends and possible annuities but would like to get some input from others on how they setup their accounts and how will it's working for them?

Thanks!
Click to expand...
You don't need advice from us. You need a professional. Don't trust your old age to strangers who probably know less than you Gary.
 
I would begin by talking to a couple of good financial planners....get together with at least 2 or 3, and consider their options carefully. I would avoid annuities, as they are mostly a profit generator for the insurance companies. Look carefully at mutual funds that have an A+ rating from Lipper and Morningstar, and consider rolling the 401K into a conservative and balanced portfolio of funds from organizations such as Vanguard, Fidelity, or my personal favorite, American Funds. Bonds are of little value, right now, with these ridiculously low Fed Funds rates, and not likely to return much until if and when the Fed gets their rates up to a more normal 3 or 4%.

Above all. read several different resources, get in the habit of watching CNBC at breakfast, and learn as much as you can about investing between now and your retirement date. Knowledge is power, and the more you know about finance, the better your odds of making the proper decisions. Then, once you have made your decisions, continue to follow the markets closely, and be prepared to move your funds around, as market conditions dictate. Investing requires constant vigilance, and an hour a day devoted to monitoring your retirement finances can make all the difference in the world.
 

Gary 1958 said:
I'm looking at retiring in 5 years at the age of 62. I currently have about $700k in my 401k and will continue to fund that to the max limits for 5 more years. My home is paid in full and there are no other debits. I'd like to postpone taking SS until 65 and use my 401k to bridge the gap. I'm single so there is no spouse income at this time.

I will need health care insurance once I leave my job so that expense needs to be addressed. My other question is how to invest the 401k money to generate income. I understand a balance attack of bonds, dividends and possible annuities but would like to get some input from others on how they setup their accounts and how will it's working for them?

Thanks!
Click to expand...

Take a look at the Vanguard Managed Fund for your 401 K assets
 
i have never been a fan of managed payout funds .

they were a marketing ploy to try to lure in those folks who would not buy an annuity . these funds are nothing special nor are they a replacement for an annuity or even delaying ss.

all they do is pay you what you could pay yourself and they hope your money lasts because unlike an annuity there is no such thing as going on their dime if your account spends down to far because of poor markets and sequencing . they try to adjust the draw rate but of course the 2nd question is how would you pay your bills if the draw dips below what you need ?

all in all they are much ado about nothing and are no proxy for an annuity with guarantees
 
mathjak107 said:
i have never been a fan of managed payout funds .

they were a marketing ploy to try to lure in those folks who would not buy an annuity . these funds are nothing special nor are they a replacement for an annuity or even delaying ss.

all they do is pay you what you could pay yourself and they hope your money lasts because unlike an annuity there is no such thing as going on their dime if your account spends down to far because of poor markets and sequencing . they try to adjust the draw rate but of course the 2nd question is how would you pay your bills if the draw dips below what you need ?

all in all they are much ado about nothing and are no proxy for an annuity with guarantees
Click to expand...

I don't believe we are talking about the same kind of MANAGED Funds. I rolled all of my 401k money to a Vanguard Managed Account when I was 57 (25 years ago) I have never needed to draw on any of that money and it's grown substantially. I took Social Security and a corporate pension at age 62. I was able to live from age 57 to age 62 on some residual income. Now, at age 82 my Managed Fund is my safety net for any continuing care that I might require. I have had a ball for the past 25 years with no regrets and a empty BUCKET LIST.
 
if we are talking about the vanguard managed payout fund , then yes it is the same . if you are talking about just having an actively managed fund at vanguard then that is something else
 
mathjak107 said:
if we are talking about the vanguard managed payout fund , then yes it is the same . if you are talking about just having an actively managed fund at vanguard then that is something else
Click to expand...

He's talking about the latter. Lon said he rolled money into a Vanguard Managed acct 25 years ago. The VG Payout fund has only been around since 2008.
 
1st would be to understand the payout set up of your 401k. By that I mean once you begin drawing on it, is your plan set up to be depleted in 15 years?

Next since you have time and obviously a computer doing research on investing and the variety of options available to continue living the kind of lifestyle you are used to.

I don't think there is a one solution fits all way to look forward to retirement. I've been retired for 22 years, took Soc. Sec. at age 62 began managing our retirement funds in self directed IRA's that were converted to those IRA's from 401k plans. Like Lon we are at a point in our lives where expenses are minimal so income from 2 Soc. Sec. 2 RMD's from self directed IRA's 2 RMD's from traditional IRA's 2 pension payments continue to build.

My only real recommendation would be to make a healthy diet and exercise part of your retirement planning. We did and consequently our medical expenses amount to a yearly check up at zero dollar cost, med expense is the occasional cost of a bottle of asprin for headaches or muscle soreness.

It's all about you researching and understanding your needs. BTW if you didn't already know IRA's are not taxed until drawn on. That was one of the reasons for conversion from our 401k's to self directed IRA's
 
After a few changes in brokerages over the years, I'm currently invested with 4 that I'm happy with. I don't use their advisors, however. I'm a self taught investor and have been at it for 32 years. I also don't have as much invested as you do. Seeking professional advice is a good idea but you have to be careful when you do that as well. I had a friend who lost quite a bit of money in the markets because he let his broker do everything. Some brokers put their clients in investments that will boost their commissions but are not necessarily good for the clients. Here is advice by Suze Orman about using fee only financial planners. Makes sense to me.
http://www.forbes.com/sites/feeonly...mans-take-on-financial-planners/#1fba93695e99
 

You must log in or register to reply here.

Back
Top