Rich, Old rule of thumb was the % amount of cash and bonds in your portfolio should be your age with the rest in stocks. A newer more robust rule of thumb is cash/bonds your age minus 10. But it really depends on your risk tolerance and when you need the money.
Gary, check the management fees in your 401k. If they are upwards of 1% annual fee then you may be paying as much as $9,000 per year on a $900,000 401k portfolio. One way to reduce these fees would be to open up a rollover IRA account through Vanguard or Fidelity then rollover via a trustee to trustee wire transfer from your 401k to the rollover IRA account. Index stock and bond funds are as little as 0.1% which could possibly reduce your annual management fee expenses by several thousand $ per year.
Patricia - You seem to be doing a great job of saving for retirement so keep up that discipline. Doing some quick math you might have just over $1MM in savings when your husband retires at 58 so if you need $110,000 annually that is a lot of strain on the portfolio. You and he should consider working longer and or reducing expenses. An opportunity to downsize your home might help also.
David, as you have been able to save this much, I suspect you make too much to contribute to a ROTH IRA (married filing joint phase out limits are between 181K to 191K, single 114K to 129K). (See my comments to Pres at about 2:45 for a possible work around on the earnings limits). First let me say this is a wonderful problem to have. Most people will be in a lower tax bracket in retirement than they were when they were working but, if you have looked at this correctly (and advisor can help you confirm this in an individual appointment), you may want to reduce current contributions and simply save that money in a taxable account. Within the taxable account, invest in tax favored investments (those that generate capital gains or qualified dividends which are taxed at a lower rate than ordinary income which is the rate your required minimum distributions will be taxed at). It is GREAT to have different "buckets" of money during retirement. It can be problematic if everything is in retirement accounts. Another good reason for increasing savings to a taxable account.
Pres, I'm glad the information was useful. Good luck!
JD, the 4% rule gets used a lot because it is so easy but there are a lot of assumptions and variables behind the scenes. To your specific question, it would be based on your portfolio unless you were planning on selling your house and the proceeds would remain part of the capital base to support the 4% withdrawal.....
Elizabeth, I am concerned that I didn't hear back from you. You have been ill and you say that worrying about this is creating anxiety that you don't need. I strongly suggest that you consult with a fee only advisor to get a definitive answer so you can put a period on this and get some mental relief.
Sorry Maria, they got separated. But we don't see another besides the one below...
John, the rules on inherited IRAs & ROTHs can get complex depending on whether or not the beneficiary is a spouse or non-spouse. Also be aware that the beneficiary trumps a will. First start with your institution to see how that may be set up then discuss with an estate tax attorney to be sure.
Patricia - One rule of thumb is to try and spend not more than 4% of your portfolio, but that is simply a rule of thumb and you might want to consult an advisor to put a finer point on it for you.
The rule is based on a 30 year retirement so at 72, it is likely a bit on the conservative side. At 72, it is entirely possible that you will live to 102 but you would well surpass most averages. The are constantly new studies on withdrawal rate but I have not yet seen a consensus develop around other ages and withdrawal rate. I can't fid it right now but a researcher named Michael Kitces gave a nice overview of several of the different approaches last year.
Maria, good question. In 2014 you can give $14000 (this amount is indexed for inflation so it does increase from time to time) to anyone without having to keep track of anything or file additional tax information. Additionally, you can give more than that to cover education or medical expenses IF you make the check directly payable to the institution instead of the person. If you do give an amount in excess of $14000 to a single person you must file a gift tax return in addition to your income tax return. CAUTION: If a couple gives $28000 to one person, which is perfectly allowable (14000 from each one) BUT the money comes from one person's account, a gift tax return is advisable just to clarify the fact that the gift was from BOTH members of the couple.
Brent, it depends on what you are saving the money for. If you have the ROTH set up for funds that you will need in retirement then no it is not a good idea to use your ROTH as an emergency fund. If you are retired and do not need the money in the ROTH for retirement, then it may be possible as long as the funds in the ROTH were in the form of money market funds. Probably best to keep those accounts separate.
Hi Chris - You might be on the right track as an annuity certainly takes away the stress of watching the market and performance. Your annuity pension benefit might not include increases for inflation which could eat away at your purchasing power down the road, so you might need to rely on your 401k assets to supplement your pension annuity. Be sure to keep some equity exposure in the 401k to hedge inflation.
My pleasure Molly. Good luck!
JD, I would only include the house in the 4% it you expected to sell it. The rule is primarily testing the ability of a portfolio to withstand volatility. If you included the house in the capital base, you could end up with a house and a depleted portfolio. Your Net Worth may still look OK but you would have no liquidity for your next withdrawals.