Max many people with minor children have a will that sets up a trust for the children. You list that trust as the contingent beneficiary of the life insurance proceeds. You can do the same with any retirement accounts BUT be sure to check make sure you get the exact way to name the beneficiary and that the language of the trusts allows it to accept the retirement account assets without creating problems.
Max, the attorney who helps you will the will is the one who will provide the language to use for the beneficiary.
Ray if that is your picture you sure are holding up well:-) A financial planner can help you determine what portfolio mix you need to maximize the chance you can fund all of your retirement goals. That said, the mix you mentioned often works. Vanguard has a fund called Wellesley Income (VWIAX for the admiral shares but the have one with lower minimums as well). This is a great fund and MAY be a one stop shop for you. They currently have the mix you are targeting but can have 30-50% equities. They have had great long term performance results with MUCH less volatility/risk than an all equities fund. Be sure to check with an advisor to see if this could be a good alternative for you (though you may want to add another international fund to increase your exposure to foreign investments).
Stuart, rebalancing periodically...every year or so...forces you to buy low and sell high. So you probably should do it. If so, why not leave enough in cash for next years RMD?
Mark - Nice pension! The $250,000 withdrawal looks like a bad deal to me. If you live longer than 10-12 years, the pension is a much better deal. If you haven't already, consider a "joint pension" so you and your wife are protected against a premaure death.
Mark, just FYI, with no Cola, the difference on the payment represents about a 7.5% return on the 250K if you lived for 30 years. And with an inflation rider, that is hard to beat. I might be tempted to go all pension...joint life options. But if you don't have any money saved in other accounts it would also be nice to have a lump sum of money that you could draw from for things like big trips, house improvements, etc. Assuming you put the money into an IRA, you will have to pay a penalty AND income tax if you withdraw it before 59.5 (there is a limited exception). Lots of moving parts here. The best investment you could make is to do a plan with a fee only financial planner and then you will see how to answer this question in the context of your entire situation.
Rajen, this is hard to answer without knowing your income needs and your tax situation. I do know that if you wait until 70 for your social security and do not begin taking money from your IRA until you have to at age 70.5, your tax bill at that time will surprise you. So I would probably take distributions from the IRA for living expenses until you reach 70. Using a little of the CD money might also be a good idea (ladder the CDs so you get difference maturity dates). Your CPA can help you decide how to mazimize the tax advantages by taking IRA distributions to max out your current tax bracket. Give him/her a call. Or visit with a planner for an overall strategy.
Dear OrenCPA, I'm not sure which ETFs you are talking about but the 3 minimum volatility etfs at ishares are all stocks. And they probably can invest in almost anything to achieve their low volatility/risk goal. But none of these include fixed income. I suggest that you could reduce your total portfolio volatility by using equities AND fixed income/cash. I've already mentioned Vanguard Wellsley Income Fund as a good alternative for a blended fund (both equities and fixed income) with relatively low volatility. Remember you can have inidividual holdings within the ETF that have high volatility BUT if they go in different directions at the same time, the overall volatility would be low. A financial planner can help you come up with a mix that specifically suits your situation and your goal of lowering risk.
Barry, social security rules just changed. How old are you? The key dates for grandfathered positions are 62 by 12-31-15 (there was one for another feature for those who were 66 by April 31 but it isn't effective anymore. If you WERE 62 before 12-31-15 you will be able to file a restricted application at your normal retirement age and draw off your spouse's benefit while letting yours grow until age 70. Maximizing social security is complex and alas, not everyone at the social security office can give you a good answer.
OrenCPA, unfortunately an ETF name doesn't always match up with what it invests in. As Bobbie mentioned, it could be invested in almost anything. One way to see how it is currently invested is by visiting the ETF company's website or a third-party research tool like Morningstar.com. These resources should provide information about how the ETF is currently invested and what the goal of the ETF is in terms of types of stocks, bonds, etc.
Stuart, when you decide to sell to fund your RMDs/Required Minimum Distributions, it is a great time to rebalance. Decide what to sell based on what allocation you want left after the RMD.
Barry so you were both 62 by 12-31-15. A planner can help you decide how to do this. If you are a do it yourselfer understanding that you might miss some nuances, you can go to www.maximizemysocialsecurity.com and, for a small fee, get your answer. Disclaimer: I do know economist Larry Kotlikoff who created this site.
ICS, one thing to keep in mind when deciding whether or not to go the deferred income annuity route is the risk of inflation. Since no one can predict the future, some folks would consider it very risky to make a bet on what inflation will be like 20+ years from now when you plan to start retirement, let alone the possible 20-30+ additional years throughout retirement. This doesn't even consider the risk of the insurance company who issues the annuity. Let's not forget that some of the companies that had troubles during the financial crisis were once considered "safe" insurance companies. This doesn't mean the deferred income annuity is a bad option for your situation, but you should probably have a fee-only advisor take a look at your complete financial situation before making a decision on which way to go.
ICS, I have no idea what the specifics are for the product you are contemplating. And to say that the features AND EXPENSES of such things can differ is an understatement. For most of my clients we reduce risk by adding more fixed income and cash as they age. Then, if we do want to create a pension substitute with some of the money, we wait as long as possible (the older you are the better the payout) to buy a single premium annuity...often age 70. Of course if you need the money before then that won't work. Also, interest rates are so low. Just like being older will increase your payout so will a higher interest rate environment. You seem young to to the route of a deferred income annuity. Disclaimer: I am not a fan of annuities except for single premium from low cost providers like Vanguard.
Bob, Pricing for individual gold coins can vary significantly across dealers. Purchasing gold in the form of an ETF or mutual fund can provide immediate liquidity and access to the gold market without the added costs.
Bob, your investment mix seems aggressive for your age. Do you have to take that much risk to fund your goals? I tell clients it is a like a football game. You have a 2 point lead with 20 seconds left on the clock and you have the ball. Are you going to pass or take a knee? Obviously take a knee which is often a good idea with your portfolio as you get older. So think about getting an allocation from a fee only advisor that is likely to maximize your probability of success re: funding your goals. As for gold, never really been a fan. I think it is overrated as a hedge and the long term performance is not good and it is so volatile. Did you know that on the last gold bull market, silver did even better? So if you feel like you must for for precious metals, I would diversify with a precious metals fund. But having a diversified portfolio with less in equities would be a better choice to reduce risk.
Bob, keep in mind that if you own a total stock market index fund, you already possibly own some of the companies that would benefit from an increase in gold prices. Also, as the Kiplinger article points out, holding gold doesn't necessarily protect you from stock market declines. Market declines are normal and should be expected, but as an investor, we should expect a return on our money over long periods of time. Even at 73, you could have as much as a 20-30 year retirement so a stock/bond allocation based on your time horizon, goals, and risk tolerance is likely your best bet at outpacing inflation and maintaining your standard of living throughout retirement.
Denise, as long as the funds are used for IRS qualified medical expenses then your withdrawals from an HSA should always be tax-free. Just make sure to keep your receipts so you can prove the medical expenses are eligible if the IRS ever comes knocking!
Denise, if the funds are used for qualified healthcare expense, then there won't be any tax on the withdrawals.
Denise, If you withdraw funds from an HSA after age 65, the distributions for any expense other than a qualified medical expense will be penalty-free but you will have to pay income taxes on the distribution. If you use the HSA for qualified medical expenses, there is no penalty and it is not taxable.
Salya, we can't time the market either. No one can. Math shows that it is better for the money to be in the market for the best long term performance. But, unless you are a truly aggressive investor with guts of steel, putting in the money all at one and then having a big downturn can be very painful. I would sugget putting in an initial amount and then dollar cost average the rest into the market (monthly purchases) over 6-8 months. Usually a brokerage can help you automate those regular purchases (after the initial investment). Be sure to use a discount brokerage.
Seb, Did you prepare your own taxes? If so, did you file Form 8606 each year to show non-deductible contributions. If you used an accountant, he/she may have records going back to when you made the nondeductible contributions. If there are no records between you or your accountant, it will be difficult to avoid being taxed again on the nondeductible contributions.
Seb, can you find the tax return for the last year you had a non-deductible contribution? If so, and if such contributions were reported correctly before that, Form 8606 should tell you what your basis is/was. If you don't have that, I'm wondering the the IRS has the magic number for you somewhere. Worth a phone call. I have to tell you that this is the reason I don't like non-deductible IRAs. There is no current tax savings and the recordkeeping is onerous given it could be decades before you need the information. Yes, the money does grow tax deferred but, since different buckets of money are desirable in retirement, I just have my clients put the money in a taxable account. I just added this part for the readers. No reason to feel bad about where you are on this. The past is the past. Good luck!