In your shoes:Thanks for the replies. I just wanted to clarify my total annual spend/budget will be 150k. That total is broken down into 90k mandatory expenses and 60k extra/discretionary. This helps me feel more comfortable in early retirement if the market is down, then I can lower extra spending that year.
Also, I appreciate the comments on my large cash position. At this moment with mmf yielding 4.2% i don't see the advantage to the bond fund. If rates drop below 4%, then I will start converting my cash position in the taxable account first for efficiency. Any suggestions on best bond fund with vanguard (vbtlx)?
As far as insurance is concerned, we currently pay about 15k/year for our combined policy. I realize this will increase as we age. Aca policies have always been more expensive and provided worse benefits at our current high income. I am not sure how this will change when our only income is dividends, interest, and capital gains. If anyone can provide additional insight that would be appreciated.
I have started looking into roth conversions, but I don't fully understand the process yet. Can anyone that switched from vanguard to ascensus provide any details on this. I am not sure if it is possible with ascensus.
- I would move the majority of my cash to bond funds. A mix of ST bonds and IT US Treasury bonds. The problem otherwise is if interest rates fall, bond fund NAVs will shoot away - you will have lost that opportunity for an upside
You might also consider BNDX, the Vanguard International Bond fund (USD hedged) as a way of diversifying credit risk. Depends how you are feeling about US government fiscal policy right now (ie tax + spending plans).
- I would consider having half my bonds in TIPS. There is some concern now over economic statistics, in light of the BLS thing. How seriously to take that I don't know. But definitely in retirement, TIPS bonds, which are intended to preserve real buying power, are an important asset. However the ordinary TIPS fund is long duration - ie very volatile wrt changes in interest rates (as 2022 showed). So a mix of the ST TIPS fund and the TIPS fund.
William Bernstein's books are worth a read. Particularly the Intelligent Asset Allocator and also the one Deep Risk.
You are in good shape to manage a c 2.5% withdrawal rate, and you should be able to do that indefinitely *if*:
- you can avoid a major expense like a house wiped out by hurricane (and uninsured). Also any major legal expense which is uninsured.
- you can manage healthcare & health insurance costs. It's almost certain that these will rise by faster than inflation. I am not sure what the historic experience is, but say by +1-2% above inflation pa? And of course you will be getting older, which will count against you.
- you are still of an age when life insurance is affordable. You definitely want to consider the financial position of one partner if the other is gone (even if term life assurance would be unnecessary. You need to think it through).
That said, there are links to several Monte-Carlo type simulation planners here (such as tpaw) and I would recommend trying *all* of them, and seeing if your plan has say less than 1% of failure. Because if you retire now, it's unlikely that you will find a job anything like as lucrative, if you are forced to restart your career in say 5 years due to divorce or other financial catastrophe.
Asset Allocation
I would consider something like:
- 2 years expenses say in cash & MMFs
- Rest of portfolio 60/40 equities/ bonds
- Bonds 50% straight US Treasury bonds/ ST US Treasury bonds/ international bonds + 50% TIPs (ST & full TIPS index fund)
- 30% of your equities in non-US equities (somewhere between 20% & 30%)
You need to "bomb proof" your plans against a fall say like 2008-09 ie -50% on equities. Which doesn't recover rapidly. After 3 bear markets since 2000: 2000-03, 2008-09, 2020 (March/April), I think it's fair to say volatility is the watchword. And we cannot rely on a rapid recovery.
I think you rule out Municipal Bonds -- and I'd have worries re Florida's exposure to natural disasters on that front ie the sort of systemic risk that can hit state and local governments at the same time. However I would concede that Florida is not Puerto Rico (natural disaster leading to default) and too electorally important to be really left hanging by the US Federal Government?
Although the amounts may seem trivial, I wouldn't ignore the opportunity to buy ibonds annually. 20 years time, it's going to be a decent chunk of money which can substitute for cash reserves.
Statistics: Posted by Valuethinker — Tue Aug 26, 2025 9:04 am — Replies 25 — Views 3877