Going to sit this one out a bit

[sc419795]

Wife and I made a decision last night to shift 100% of our 401K into an Interest Income fund which has a 3% fixed rate of return. Won't make more than that, won't make less than that - so zero risk. I am 73 days from retirement. Leading up to this move, we have a 70/30 mix with 70% in the interest income. While the market is down considerably more, that 30% in stocks/bonds drew the overall 401K fund to -6% on the year. Realize timing the market is never a good thing.....while the coronavirus has caused a pretty significant drop in the market, I believe 1Q earnings will take a pretty major hit throughout the industries which could put us into a recession.

I know there are many opinions on what is taking place, and I do agree there is an opportunity to buy while the market is down, giving our pending retirement, having the funds to retire is more important to us than riding out the storm. So going to give this a few weeks to settle down and see where we are.

[boneil]

You're the perfect example of why your holdings should be adjusted you approach retirement.

Good Move and enjoy retirement

[Bassmaster96]

Smart move

[Neverest]

Well-played...

[Bassin08]

I am interested in this. In November of 2018 I moved 85% of our investments into CD’s. The 15% that I left in the market are large high yield paying individual stocks.

How does this Interest Income Fund guarantee 3% return? Do they guarantee your principle? I’m 76 years old and would love to have a no risk 3% income, especially now.

Could you share the company, or fund name with me? I’m not doubting what your saying, I’m just looking for a better way of what I’m doing.

Thanks

[GJA]

Following

[NitroZ7]

Everyone's situation is different and that is why you have to follow what is right for you. If I had a shorter term horizon I would have had it in something safe as well. Good move.

[sc419795]

I am interested in this. In November of 2018 I moved 85% of our investments into CD’s. The 15% that I left in the market are large high yield paying individual stocks.

How does this Interest Income Fund guarantee 3% return? Do they guarantee your principle? I’m 76 years old and would love to have a no risk 3% income, especially now.

Could you share the company, or fund name with me? I’m not doubting what your saying, I’m just looking for a better way of what I’m doing.

Thanks

Apparently this option in my 401K is not a tradable option with the SEC. Must be something between my company and Fidelity. I did check the rate of return since 2009. Copy and paste did not work the best but you can see the rate is right at 3%. Given where I am, not interested in hitting the home run. Just want slow and steady.

2009
3.18



2010 2011
3.89 3.57



2012 2013 2014
3.35 2.88 2.72



2015 2016
3.03 3.08

2017 2018
3.00 3.03

2019
3.08

[Grizzly]

Did this a couple of months ago with 75% of my IRA.

[Bassin08]

You will have to roll over your 401K into a traditional IRA within 60 days of your retirement. If I am right, it will not roll over in kind, meaning it will come into your traditional IRA as cash. From there you will allocate it into your preferred positions.

There are several financial planners on this site, so please tell me if I’m wrong. This happened to both my wife and I when we retired.

Unfortunately there isn’t any safe haven right now even close to 3% return. If you go into a Interest Income Fund, it won’t be insured. If it pays 3%, it would have to be in junk bond's or other risky assets, plus it will probably have a high expense ratio.

My only point is to be very careful. Find a very good fee for service CFP to handle your roll over for you you.

Good luck and enjoy retirement.

[GJA]

Apparently this option in my 401K is not a tradable option with the SEC. Must be something between my company and Fidelity. I did check the rate of return since 2009. Copy and paste did not work the best but you can see the rate is right at 3%. Given where I am, not interested in hitting the home run. Just want slow and steady.

2009
3.18



2010 2011
3.89 3.57



2012 2013 2014
3.35 2.88 2.72



2015 2016
3.03 3.08

2017 2018
3.00 3.03

2019
3.08

Thank you for that and good luck!

[bluejay10]

You will have to roll over your 401K into a traditional IRA within 60 days of your retirement. If I am right, it will not roll over in kind, meaning it will come into your traditional IRA as cash. From there you will allocate it into your preferred positions.

There are several financial planners on this site, so please tell me if I’m wrong. This happened to both my wife and I when we retired.

Unfortunately there isn’t any safe haven right now even close to 3% return. If you go into a Interest Income Fund, it won’t be insured. If it pays 3%, it would have to be in junk bond's or other risky assets, plus it will probably have a high expense ratio.

My only point is to be very careful. Find a very good fee for service CFP to handle your roll over for you you.

Good luck and enjoy retirement.

You don't have to roll your 401k over once you retire. Your employer's 401k plan outlines the details of what happens when you retire and if you have to roll it over or if you can leave it there.

[TexomaDan]

It's hard to say if this move is correct or not. Biggest question is "how long before you plan to die?" If you have 15 to 20 years expected, then your actual purchasing power might decrease too much to maintain your lifestyle. Depends on the rate of inflation. Also, selling at a low. But, this will help you sleep better at night.

It would be interesting to check back in 2 years to see if stock prices have recovered enough to make up current loses. I am betting that they will. I will be investing some of my retirement $ over the next few months.

[sc419795]

I already have a financial advisor outside of Fidelity that we plan to roll over to. Been meeting with him on/off now for almost 2 years. Once we roll it over, I will feel a lot more comfortable taking a portion of the fund and investing in the market. Right now, its just me trying to sort through what to invest in, etc...clearly I am an amateur. I feel a whole lot better if I have a professional sheparding my funds and assisting with my decision making.

Realize I may have pulled out at the bottom and I can live with that. Cost me $17,000 from where I started 2020 (not taking into account gains I made leading up to the recent downfall). With where I am - down to 73 days to retirement and counting - we have a solid financial plan with 3 sources of fixed income through survership of my wife and I. Don't need a home run - just slow and steady at this point.

[Bassin08]

You made the right move in my opinion. I fully understand what you did. I wanted to do the same thing with my wife’s 401K in 2008. I was advised to stay in and transfer her stock shares in a few months directly into a rollover. When she retired she had 60 days to do the rollover. The advisor then told me that she had to liquidate the shares and then roll it over. So his lying cost her $60,000. Needless to say, I fired him shortly after that and went with a CFP.

That was the only reason for my questions. I was just trying to be sure you weren’t making the same mistake as me.