I’m 53, my wife 54. Our $ 1.4 million retirement note money is 100% stocks and crypto. What should I do now for retirement?

I read your articles on retirement every week and look not for advice on whether to retire now, but what to think and do differently in the next decade before retirement.

Background: I am 53 years old, married (wife is 54) and together we have an income of $ 220,000. We have two children, one in the final term of college and the youngest in the junior year of college. Both will graduate from college without debt and have already established Roth IRAs on their behalf. Our home is valued at $ 450,000 with just under four years to pay off the mortgage, and we have a $ 20,000 auto loan and no credit card debt. We have $ 1.3 million in an IRA and $ 125,000 in 401 (k) plans. I have a pension that will be paid out at $ 800 / month in 14 months. We’re saving $ 3,000 a month together, with 60% going into the traditional tax provision (401 (k), IRA) and 40% going to a Roth. Currently our taxable accounts are $ 1.3 million and our Roth accounts are totaling $ 125,000. We’re 100% invested in stocks and crypto, with around $ 1.1 million in FAANG stocks, $ 125,000 in mutual funds, and $ 200,000 in Bitcoin (cryptocurrency cost base is $ 50,000). The Social Security Estimator puts us at roughly $ 3,000 a month in benefits if we take both of us at 62.

We try to be aggressive with our investments and deleveraging, and while we make $ 220,000 we live on about $ 145,000 (with monthly savings, mortgage payments, and college expenses), or about $ 12,000 a month.

Up until about two years ago we were fully invested in large mutual funds with a very low cost base (the Warren Buffet approach), but I believe that a more practical investment focus is both satisfactory and necessary for the greatest wealth. We have had an investment advisor in the past and have never felt that they deserve their 0.75-1.25% fee for managing our investments. We want to retire by 62 at the latest, and leaving the workforce at 59-1 / 2 sounds even better.

What should we do differently in the last few years of our careers? What should we keep right now? And when do you think we should retire?

See: I will retire on my 78th birthday with over $ 200,000 in savings and share the expenses with my 80-year-old friend. Will i be fine

Dear Reader,

Thank you for contacting us. It sounds like you’ve definitely kept retirement at the forefront of your financial planning and it will absolutely pay off in the future!

The first thing I noticed about your letter was your asset allocation. I always say that people near retirement, or even retired, should have a healthy mix of stocks in their annuity portfolio as retirement can take decades and money has to last. At the same time, however, you need some protection in your asset allocation. In the event of an unfortunate shift in the markets down, your account balance could suddenly and suddenly go down – and nobody wants that. Recovery can take longer, which is not ideal if you want to retire in less than 10 years.

“Given your age, equity can be important to growth, but a desire to retire early can make up for it,” said Kristian Finfrock, financial advisor and founder of Retirement Income Strategies.

Check out the MarketWatch column “Retirement Hacks” for actionable advice for your own retirement planning journey

Take FAANG shares, for example. “Everything at FAANG worked well, but we can enter a phase where their growth will be dampened,” said Thom Rindahl, certified financial planner at TruWest Wealth Management Services. A diversified portfolio cannot add to your portfolio balance as quickly, but it won’t do as much damage either. “I definitely believe in a diversified portfolio of investment types and management styles,” said Rindahl. “This is how you get the best risk-adjusted returns. It’s not what you do, but what you keep. ”

Another focus: healthcare. If you both want to retire 65 years ago, where will you get health insurance? Medicare won’t be available to you until you are 65, and private insurance can be expensive. If you have access to a health savings account available to those with high deductible health insurances, take advantage of it – they offer triple tax benefits (contributions, growth and distributions are tax-free when used on qualifying health expenses) and you can get up to Waiting for pension to withdraw the money.

As for social security, you might want to put it off. When to apply for social security depends on a number of factors: the need for that income, life expectancy and how much more you can get in the event of a delay, for example. Your benefits will be reduced for each month before your full retirement age, and will also be increased for each month after FRA up to the age of 70. “I would probably wait, unless there are extenuating circumstances,” said Rindahl.

There are also many utilization strategies, especially for married couples. For example, you might consider postponing only the highest earner’s benefit to at least full retirement age or beyond to a reduced one later in life, Finfrock said.

You may also want to pay off the house until you retire. Mortgages are not inherently bad debt and many people retire and still pay off a mortgage, but if you have the assets and can make this your ultimate goal before you leave work, why not? If you decide not to pay off the mortgage any faster, that’s fine – retiring debt is perfectly acceptable, as long as those repayments fit your larger financial picture.

See also: I’m retired, my wife isn’t – how are we going to pay off our $ 60,000 mortgage before she retires?

Also try to keep your savings rate the same. If you pay off the house, you increase that savings rate, said Rindahl. Also, as your retirement date approaches, think long and hard about what you are going to do in this next chapter. Sometimes people are in such a rush to retire that they don’t plan it properly and end up feeling bored or lonely. During this time, you should also think about what you are likely to spend in retirement – will you be moving? Do you take on expensive new hobbies or extravagant trips? All of this will affect how much you need to save or spend for your old age.

Finally: sales strategies. Carefully consider how you plan to withdraw your hard earned money. Typically, the order is taxable sources first, followed by tax-privileged sources, and then Roth and other tax-free options, Finfrock said. But there are also advantages to reversing this order.

Reader: Do you have any suggestions for D? Add them in the comments below.

Do you have a question about your own retirement provision? Send us an email at [email protected]

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