I am currently restructuring my entire portfolio after moving from AUM.
I am 50, currently not working with about 30% of our assets in IRAs (14% Roth, 16% Traditional). With no 401K, we are limited to about 14-15K year in additional contributions and perhaps also have the ability to put into an HSA (possibly for both of us), so in an ideal scenario we can put up to \~22K yearly into our IRAs (preference will be to go towards Roth, while also maxing out conversions from traditional while still in low bracket).
I am considering only a 20% bond allocation. While this seems somewhat aggressive for my age (by some?), I feel I will have some opportunity to go back to work if required over the next 20 years. Additionally, I am also expecting an inheritance from my parents worth roughly 80% or so of my current assets likely (statistically) within the next 12-20 years.
IOW, I feel comfortable with my 20% allocation, although I acknowledge that I may wish to slant this more to bond as I get older. ***The challenge here is keeping my bonds in the preferred IRA accounts instead of having them in my taxable. Common sense would assume that since my stocks will grow at a much higher rate than my bonds, the yearly cost to keep my bonds aligned at the 20% mark (let alone grow them) will become substantially higher each year.*** Once they increase beyond the 22K I can fit into the IRA/HSA, I don't know how to avoid moving them into taxable accounts and generating interest which will raise my bracket.
I'll also note that the 22K headroom may not exist beyond a 5 year horizon. It is dependent on whether or not my wife continues to work, if I went back to work, and what our current health insurance will permit (for HSA).
The strategies I have considered:
1) Any bonds which may be held in taxable accounts to be **munis**. This would decrease the tax burden to some degree. However, at some point I think even the lower yield of munis is likely to push us over lower brackets. Also, I'm not sure how to truly calculate the cumulative loss (or gain) by going with a lower yield muni to avoid more taxes.
2) **I-Bonds**. Begin purchasing I-Bonds (20K yearly) this will allow the bond balance to align better, though tilt it towards inflation-protection from nominal. I'm have not yet even settled on what % of my bonds should be nominal vs IP.
3) Currently the bulk of the bonds are slated to go into the Trad. IRA accounts in the form of an aggregate bond like SWAGX. The remaining 10% or so of that money will be in taxable. The **Roths are currently slated to be filed entirely with TSM like VTI to maximize tax-free growth.** I can always start selling the stake in VTI to increase Bond holding in years that we can't grow the IRAs large enough to keep close to the 20% balance. It seems the only downside here is losing the stake in VTI that is growing tax-free. I don't know how this tradeoff compares overall to just buying the bonds in taxable and taking the tax hit then.
I don't know which of these strategies is best (or maybe all), or if there is another route I haven't considered.
Appreciate any advice.