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Allocations & Glide Paths for An Inheritor

John Harrison
Posts: 5
Topic starter
Active Member
Joined: 10 months ago

I have worked through every part of ERN's Safe Withdrawal Rate series, and still don't feel like I've reached a clear conclusion on what's the optimal approach (in terms of asset allocation and glide path strategy) for my particular situation.

I'd really like to know whether any members of the forums could offer some interesting insights or suggestions that I have not considered yet.

I am currently in my early thirties, and have a job that pays well at around 140k/yr with strong prospects for continued employment as long as I want it.  Along with my wife who is also employed, our household currently has an income of around 250k.

Furthermore, I am in the very fortunate position of standing to inherit from my family before my own retirement (a trust that will be left to me by my parents upon their passing).  I don't want to go into particulars here, but it is basically an amount of money that makes a comfortable retirement accounted for, assuming a comfortable quality of life at an SWR of 3.5%.  It is not, however, f-you money, haha.  No private jets or yachts in my future.  It would though put a pleasant roof over my family's heads, educate the kids, pay for health insurance, put food on the table.

I have no immediate interest in pausing my career.  In fact I often think I'd like to never NOT have a job. That said, there are scenarios where it'd be very very important to me to at least have the option of pausing work for a few years to work through the "crunch time" of a person's mid-thirties or other phase of life (raising a young child, caring for elderly parents, etc.).  I am currently saving my money and simply placing it into a savings account right now towards having this option.  I haven't thought through it's investment more than that...

Once I inherit the trust upon my parents' passing, my goal will be capital preservation of the principal over as long a time-horizon as possible.  I want this money - at a minimum - to be preserved in real terms for the next generation of my family.  At the same time though I will aim to take an SWR from the portfolio to support myself and enjoy my life with my family in our retirement.  That said, I don't think that I'd necessarily  want to stop work as soon as I had inherited the trust...  I see its power as giving me options, rather than fulfilling some long-held wish to permanently escape from the professional world. 

So, I essentially have two buckets of money, to be used at two different times in two different ways...

Bucket 1. My own savings and non-retirement investment account which I'd like to support myself with during a sabbatical of sorts (if I want to) that would begin in the next 3 years or so and last between anywhere from 1 to 3 years.

Bucket 2. A trust which I stand to inherit in the mid-to-long term.  I will use this to support myself and the family if necessary, but never at the expense of real capital depletion for the future generation.  Upon inheritance, control of asset allocation decisions in the trust will fall to me.


Again, my general questions could be summarized as...

How should I be thinking about the current asset allocation and glide paths of Bucket 1?

What should the asset allocation and glide-paths of Bucket 2 be?

All this, keeping in mind that just like ERN I am a fairly risk-averse person who likes to have confidence in their options above all else, especially in the very interesting economic times in which we find ourselves...

Thanks for whatever you all are willing to suggest and share.

Huge fan of this website and its resources, so I'm excited to join the forums.

1 Reply
Posts: 250
Joined: 6 years ago

Sounds like you have a 2-stage retirement situation. You expect a large inheritance a few decades down the road. If you like to retire before then you'd have to plan almost like for a traditional retirement if you like to have the option to leave work. But that would mean you need higher returns than a savings account. You'd need roughly the same strategy as someone who retires at age 65 who needs to secure 30 years of retirement. Just like you need to bridge roughly 30 years.

In the Google SWR sheet, you can model that situation either as a 30-year horizon or a 60-year horizon with an expected large cash inflow 30 years into retirement.