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Message
Retirement investment options and expected return
Posted on 5/10/24 at 12:42 pm
Posted on 5/10/24 at 12:42 pm
I am about to retire and wonder if anyone here has crossed over that beautiful bridge. If so, what does your portfolio look like? Annuities? (Not a personal fan of annuities) What is the expected rate of return on investments?
Looking to see what 1.2 million in 401K will yield.
Looking to see what 1.2 million in 401K will yield.
9
Posted on 5/10/24 at 3:09 pm to ShermanTxTiger
How old are you? If eligible, will you take SS?
Posted on 5/10/24 at 4:13 pm to Enadious
Mine is mostly stock with about two years of current spending in cash and one year in a floating rate fund. However, I am getting an annual payout from an ESOP over the next four years which will be in cash, and each payment will be in the neighborhood of two years of my spending. So I will reallocate as those payments come in.
I am 58 but already retired. I expect to start taking Social Security starting at 62. In projecting future assets, in all cases they are highest the earliest I take Social Security.
I am not married. If I had a wife who was much younger than me I would consider waiting until 70 to take Social Security, but the math says I will have at least 1.5 x more assets at that age if I take it earlier, more if the market is better, and that continues for as long as I have projected. I suspect the "wait until 70" rule only works if you "work until 70". If you are already drawing your assets down it's probably best to get SS as soon as you can. Also consider that if you wait until 70 potentially more of your 401K/IRA savings will be consumed by taxes because of RMD's starting at age 73.
It's probably a crap shoot to project anything over two years anyway.
I am 58 but already retired. I expect to start taking Social Security starting at 62. In projecting future assets, in all cases they are highest the earliest I take Social Security.
I am not married. If I had a wife who was much younger than me I would consider waiting until 70 to take Social Security, but the math says I will have at least 1.5 x more assets at that age if I take it earlier, more if the market is better, and that continues for as long as I have projected. I suspect the "wait until 70" rule only works if you "work until 70". If you are already drawing your assets down it's probably best to get SS as soon as you can. Also consider that if you wait until 70 potentially more of your 401K/IRA savings will be consumed by taxes because of RMD's starting at age 73.
It's probably a crap shoot to project anything over two years anyway.
Posted on 5/10/24 at 10:49 pm to ShermanTxTiger
This is what I would do if I just retired with $1.2 Million, Obviously there are risks so this is not investment advice. Do your own research.
Put $1 Million in BITO and $200K in cash. That's about 40,000 shares of BITO. BITO's monthly dividend might pay $1 or more per share per month. The last two monthly dividends were $1.14 and $1.68 per share.
So your 40,000 shares would have paid you $45,600 on April 8th and $67,200 on May 8th. Even if the monthly dividend dropped to 50 cents, your monthly dividend would be $20,000. Did you ever get monthly pay that high? Plus it tracks Bitcoin like a Spot ETF.
Start living like a really rich retiree after you see month after month of massive pay days of doing no work and all play.
Put $1 Million in BITO and $200K in cash. That's about 40,000 shares of BITO. BITO's monthly dividend might pay $1 or more per share per month. The last two monthly dividends were $1.14 and $1.68 per share.
So your 40,000 shares would have paid you $45,600 on April 8th and $67,200 on May 8th. Even if the monthly dividend dropped to 50 cents, your monthly dividend would be $20,000. Did you ever get monthly pay that high? Plus it tracks Bitcoin like a Spot ETF.
Start living like a really rich retiree after you see month after month of massive pay days of doing no work and all play.
This post was edited on 5/10/24 at 10:57 pm
Posted on 5/10/24 at 11:10 pm to 98eagle
quote:
Put $1 Million in BITO and $200K in cash.
Dude
Posted on 5/10/24 at 11:14 pm to CecilShortsHisPants
quote:
Dude
Glad I made you laugh! Seriously, go check out BITO if you like Bitcoin as an investment. They could only put a much smaller amount in it if they decided they want to try it. I'm making a killing on it.
BITO is one of ProShares ETFs, so it's legit. ProShares has 144 ETFs listed with a total of 67.5B in assets under management, which makes ProShares the 12th biggest ETF provider on the U.S. stock market.
BITO started trading in November 2021 so it's not new. Currently I don't believe there is any dividend stock or fund that pays dividends anywhere close to BITO's recent distributions.
This post was edited on 5/10/24 at 11:42 pm
Posted on 5/10/24 at 11:47 pm to 98eagle
quote:
Bitcoin as an investment.
Bitcoin and investment are contradictory in the same sentence
Posted on 5/11/24 at 9:13 am to Beessnax
quote:
Bitcoin and investment are contradictory in the same sentence
I respect your opinion, and a lot of people feel the same way as you do.
I've been a believer in Bitcoin since 2016. I'm not sure what to call it if it not an investment. Maybe "massive money maker for those who can handle significant volatility".
Concerning BITO, it's the best Bitcoin related non-investment in my opinion. If you take it's latest dividend, multiply it by 12 and divide by it's closing price on May 1st (ex-dividend date), it has an annual yield of about 80% just based on that single payout. The dividend has been steadily increasing, so actual yield is less (about 18% actual yield) factoring in the previous 12 month's total dividends. Not bad at all for a non-investment.
This post was edited on 5/11/24 at 9:27 am
Posted on 5/11/24 at 9:29 am to 98eagle
quote:
Put $1 Million in BITO and $200K in cash.
Putting almost 85% of ones portfolio in ANY single investment (and I don’t care what it is)…
quote:
Obviously there are risks so this is not investment advice.
But since you included that disclaimer, I guess I can’t really criticize you.
Posted on 5/11/24 at 9:41 am to Jag_Warrior
I agree. I deserve all of the down votes I can get for my poor judgement. Having no diversification at all is actually really bad advice.
Posted on 5/11/24 at 9:56 am to ShermanTxTiger
I have about 1.7. Not about to retire. I keep 200k in high yield savings, 200k in short term Laddered CDs. Making around 5% on this 400.
The other 1.3 is in a fee based managed account that has averaged about 8% after fees and taxes over the last 5 years. My risk preference has been moderate. My largest single holding is around 70k.
Based on friends- 8% after fees and taxes is about average. Some who are aggressive are making more but they lost like 20% a couple years ago. I only lost like 1%.
My planner recommends maintaining my strategy through retirement. He says I can take 5% and still protect against inflation.
The other 1.3 is in a fee based managed account that has averaged about 8% after fees and taxes over the last 5 years. My risk preference has been moderate. My largest single holding is around 70k.
Based on friends- 8% after fees and taxes is about average. Some who are aggressive are making more but they lost like 20% a couple years ago. I only lost like 1%.
My planner recommends maintaining my strategy through retirement. He says I can take 5% and still protect against inflation.
This post was edited on 5/11/24 at 10:07 am
Posted on 5/11/24 at 10:22 am to 98eagle
quote:
agree. I deserve all of the down votes I can get for my poor judgement. Having no diversification at all is actually really bad advice.
Just come across as a shill pumping your bags. Which is basically everyone in crypto land so, we are used to it
Posted on 5/11/24 at 10:25 am to ShermanTxTiger
quote:
If so, what does your portfolio look like? Annuities? (Not a personal fan of annuities)
Me neither they have a place, but 99% of people are just throwing money at fees.
quote:
What is the expected rate of return on investments?
Loaded question, lots of factors we need a better picture of your entire retirement situation.. Is the 401k your only retirement income?
Posted on 5/11/24 at 10:35 am to CharlesUFarley
What's your income from your investments? Taking SS at 62 can mean that your payout gets reduced because of your income. The income threshhold is $22300 and change and every $2 you are over in income reduces the SS payout $1.
This post was edited on 5/11/24 at 10:37 am
Posted on 5/11/24 at 11:11 am to VABuckeye
That 1 for 2 reduction only applies to earned income from a job or business, not unearned income from investments and retirement assets.
However, unearned income does result in a part of your SS benefits being taxable income, and in one of the most unfair twists in tax law I can think of, for a given amount of total income (SS + investment income), the guy who gets more SS is subject to less of it being taxable than the guy with less SS, at least at the combined income levels I am looking at.
Still works out better for me to take it early. However, if there is a jam up market performance or if that ESOP soars enough (probably a better chance of that) I may still put off SS until 70 for just "fell good" reasons. The "feel good" reasons being that my projected SS 70 benefit is sufficient to be my only income source and that waiting for it would make a large part of my income subject to an inflation adjustment. Downside is that I would be subject to larger RMD's and I can probably take the greater IRA assets I would have and do a better job than SS on beating inflation.
However, this isn't all about the math. After a while, all these numbers are just numbers on a spreadsheet. You can tweek and change percentages here and there, but none of it is likely to reflect the real situation you will face at 70, 80, 90 + if you live that long, just like you can't know how rough the ocean is going to be in a month when you plan a fishing trip. You have to get there with what you got and figure out how to catch some fish. Maybe go inland fishing that day, and just bag something for dinner. However, all these spread sheet analysis do help you figure out what you got and what you can do with it right now and maybe a little about how to steer in rougher waters. In particular, if you update your numbers as the market changes and watch the way your projections change, you learn a lot about navigation.
However, unearned income does result in a part of your SS benefits being taxable income, and in one of the most unfair twists in tax law I can think of, for a given amount of total income (SS + investment income), the guy who gets more SS is subject to less of it being taxable than the guy with less SS, at least at the combined income levels I am looking at.
Still works out better for me to take it early. However, if there is a jam up market performance or if that ESOP soars enough (probably a better chance of that) I may still put off SS until 70 for just "fell good" reasons. The "feel good" reasons being that my projected SS 70 benefit is sufficient to be my only income source and that waiting for it would make a large part of my income subject to an inflation adjustment. Downside is that I would be subject to larger RMD's and I can probably take the greater IRA assets I would have and do a better job than SS on beating inflation.
However, this isn't all about the math. After a while, all these numbers are just numbers on a spreadsheet. You can tweek and change percentages here and there, but none of it is likely to reflect the real situation you will face at 70, 80, 90 + if you live that long, just like you can't know how rough the ocean is going to be in a month when you plan a fishing trip. You have to get there with what you got and figure out how to catch some fish. Maybe go inland fishing that day, and just bag something for dinner. However, all these spread sheet analysis do help you figure out what you got and what you can do with it right now and maybe a little about how to steer in rougher waters. In particular, if you update your numbers as the market changes and watch the way your projections change, you learn a lot about navigation.
Posted on 5/11/24 at 11:19 am to VABuckeye
The Social Security Administration conducts an earnings test that only applies to earned income, such as your wages from a full or part-time job or the profits from a small business you operate. Investment income, capital gains, pension income, and income from any annuities do not count against you when it comes to the earnings test.
Posted on 5/11/24 at 2:34 pm to weadjust
Thank you both for the response. We are at the age where we are starting to think about my wife drawing SS.
Posted on 5/12/24 at 6:36 am to ShermanTxTiger
How much do you need to live on each year with your SS income included? I have a mix of dividend yielding bonds, stocks (oil and shipping primarily), REITs, BDCs, and ETFs (so I'm diversified). I now really like Ishares high yield yearly maturing ETFs like IBHE, IBHD, etc. They are high yield at around 7% and low risk, you get your money back when they mature so you can "ladder" it for income yearly. You should also have a portion in growth like SMH, SOXX, etc. All investments together it yields an average of 6.84% dividend.
Posted on 5/12/24 at 6:29 pm to RedlandsTiger
What is the catch with "Ishares high yield yearly maturing ETFs". Almost sounds like a CD?
Posted on 5/12/24 at 7:33 pm to ShermanTxTiger
(no message)
This post was edited on 5/12/24 at 7:43 pm
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