Hello friends,
It seems as good a time as any for a portfolio review, especially as we are/will be moving to decumulation phase soon.
Some context: I have not really changed much re: what i invest in over the past 15 years of being a Boglehead (retiredjg helped me immensely in my first few months here to select funds etc).
Preamble:
Approaching our 50’s, we want to enjoy this decade more than any other. Work stopped for me this year (and i’m thoroughly enjoying my time off!), DW is still working with an income around $170k. Being low/no debt will help us generally live on one income, however we are not low spenders. Current spend is around $200K, and I expect this to continue.
One reason for this review is to set us up well for next year (expect income around $170k) & start planning for full retirement for both of us in 2027 ($0 earned income forecast). The main puzzle i’m trying to solve for is paying the bills for the next 10 years before DW turns 59.5. So, looking for a full review but also some guidance from those who have lived thru early retirement in their 50’s.
Note: we are at 24X today & not at the ~30X multiple we/I aspire to in early retirement (ce le vie, that ship may have sailed!).
Perhaps I need to make my portfolio a little more resilient at this turning point for us (key life change) and understand how/where to pull money from. I’ve always heard/known folks use TIPS and Treasuries during transition from accumulation to decumulation, and perhaps it’s time for me to wake up to this too. Anyway, enough of my rambling….
My portfolio & questions:
Emergency funds: I use CA long term muni’s as my EF. I have $180k in these muni funds. No other significant cash holdings.
Debt: Yes, $50k debt across 4 0% interest cards. Due in Feb/March 2026. Current plan is to sell CA muni’s to pay this debt.
Own home, no mortgage. Estimated value: $2M.
Tax Filing Status: MFJ
Tax Rate: 2025: 32% Federal, 10.3% State. 2026 (forecast): 22% Federal, 9.3% state
State of Residence: CA
Age: 47 & 49. 14 & 17.
Todays AA: 80% stocks / 20% bonds (55% intl)
Desired Asset allocation (for full retirement in 2027): 70% stocks / 30% bonds
Desired International allocation: 50%+ of stocks
Please provide an approximate size of your total portfolio: $4.8M (not incl: $340K in 529’s for a senior and freshman in HS).
Current retirement assets:
Taxable
4% CA Long Muni’s (VCLAX): $180K
14% FTSE All World ex-US large cap (VFWAX): $680k
8% FTSE All World ex-US small cap (VFSAX): $400K
His 401k ($300k is roth in-plan conversion)
40% Vanguard Target 2035 (VITFX): $1.93M
His Roth IRA at Vanguard
1% Emerging Markets (VEMAX): $55k
3% Small Cap Value (VSIAX): $170K
Her 401k ($135k is roth in-plan conversion)
12% Vanguard Target 2035 (VITFX): $570k
9% Non-US equity fund (no ticker, company specific fund): $430k
6% US Small/Mid cap fund (no ticker, company specific fund): $300k
Her Roth IRA at Vanguard
1% Emerging Markets (VEMAX): $55k
2% Small Cap Value (VSIAX): $110K
Social security forecast: ~2k/month when DW is 62 (lower earner) & ~4k/month when I am 70 (higher earner). Both past second bend point.
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Total: 100% (~$4.8M)
Contributions
New annual Contributions
$12k her 401k (~6k match)
Fund options:
I/He could move from 401k to IRA as no longer employed.
Her 401k, not great funds. OK to continue with her 2 company specific funds for now (low ER).
Questions:
1. Should i continue with the portfolio as-is? If so, how should i fund expenses in 2027 once in full retirement (planned).
2. I think my best option is to only fund DW’s 401k up to the match next year. This will help with cash flow to pay the bills in 2026. Thoughts?
3. I could switch one gear lower in the 401ks to the Vanguard 2025 fund. This would change my AA from 80/20 to 70/30. Thoughts?
4. If I do #3, it doesn’t really help my cash flow needs for the next 10 years of early retirement, does it? (Struggling with this one).
5. Main question: for early retirees that may have been at a similar transition point, what change did you make in your late 40s/early 50s?
Did you move to Treasuries or TIPS for example. If so , I’m not familiar with how to make this change & would appreciate some guidance.
Thanks for reading!!
