• Question
  • Retiring in 5 years - invested 65 percent in bonds?

    Asked on 8/24/2010

    I have recently read both of your books, and would like your feedback on the following scenario:

    As the 55-year-old widow of a long-term Boeing employee, I was the beneficiary of substantial funds in the VIP and FSP accounts. I plan to retire in 5 years, collecting my SS survivor's benefit at age 60, deferring my own SS benefit until I turn 70. Using your formulas and accounting for the effects of inflation on pensions, plus a reserve amount for future large expenses, I calculate that the SS benefit plus the two pensions that I will receive will more than fund my needs for a long time. I chose to roll over my inherited vip and fsp funds into a beneficiary IRA and buy corporate and taxable muni bonds (not funds) which I plan to hold to maturity. I will not have any debt at retirement as working hard to retire my mortgage by that date. As I will not need proceeds from these funds for quite some time, is this a realistic strategy? I have not decided what to do with my own fsp and vip, which will comprise about 1/3 of my available funds at retirement.... Your feedback will be greatly appreciated!

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  • Categories: Asset Protection, Retirement Planning, Budgeting, Retirement Assets and Savings, How Much to Save?, 401k, Maximizing Returns, Rollovers, Social Security, Retirement Investing, IRAs

Answers

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  • Congratulations! You are very well informed AND very well prepared for retirement.

    First a couple of questions:
    1) Have you planned for Medical insurance between age 60 and age 65 (the age at which you will be eligible for Medicare? Medical insurance can be prohibitively expensive in those age ranges.

    2) Social Security adjusts for inflation, but do your pensions also adjust? You mention that you have accounted for inflation, but I am not sure exactly what you mean. It is very important -- when living on a fixed income -- that you be prepared for inflation -- especially in this volatile economy.

    In terms of whether or not you should keep your money in bonds. We can not give investment advice. And current economic conditions are making much conventional wisdom iffy if not obsolete.

  • Login to rate this answer:   Answered on 8/27/2010
**All above answers are provided as general information only. No warranty is made regarding the fitness or accuracy of the information provided in this answer. You should seek advice from a licensed CPA, attorney or CERTIFIED FINANCIAL PLANNER™ as to your unique financial situation.