[USER]

My wife’s parents changed from assets under management to transferring over their accounts to Fidelity. They are 66 and retired.

This is my suggestion to them for asset allocation. Please let me know what you think.

“My suggestion on your asset allocation (what to invest in).
Option 1: keep 10 years of living expenses (social security plus $25,000 extra per year = $200,000) in money market (currently making 4.38%) plus any other big expense (car $50,000 ect) -$250,000.

Invest the rest in the total stock market index fund (fzrox) or the s&p500 (FNILX)

Option 2: more diversification
keep 10 years ($200,000) in cash plus any other big expense (car $50,000 ect) -$250,000.

The total stock market index fund is 70% s&p 500 (large cap growth) and 30% (large cap value, small cap growth, small cap value)
Invest 70% in the s&p 500 (FNILX). 10% in large cap value (FLCOX). 10% in small cap growth (fssnx). 10% in small cap value (Fisvx).

Say the s&p 500 is down, one of the other asset classes might be up.

If you need to withdrawal you can withdrawal from the asset class that is up instead of the asset class that is down.

Holding these 4 funds is the same as holding Fzrox(total stock market index fund) in 4 different funds instead of 1.”

[Andrea]

Without knowing the entire retirement worth it’s hard to give good advice. What percent of the total is the 250k?

10 years worth of cash is way too high in my opinion, especially if it’s more than 20% of the total nest egg.

They may be better off being bond heavy then putting too much of their nest egg in cash.

[Laken]

Read the power of zero and the volatility shield by David McKnight.
If they pull too much from their brokerage, they will risk their social security to be taxed up to 85%!!

This strategy could hurt them. Read those 2 books

[Roy]

If they are 66 and 10 years of expenses = 200K-250K (in addition to SS), it means yearly expenses are 20K (in addition to SS)? And total portfolio is 2M?.

If the numbers as listed here are correct, I would put 750K (more than life expectancy) in very safe investments (bonds, mm, REITs, Utilities, etc). The rest (1.25M), in index funds for heirs.

[Author]

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