I've been browsing the forums for about 6 months and have learned a great deal. I hope to be able to contribute something to the folks around here in return for what I have learned. The metrics are below, but for those who don't read all that, here it is in english:
I am 29 years old, and have become much more interested in my finances this past year. I realized that it wasn’t an inevitability that you must work until your mid 60’s for retirement to be possible, so I tried hard to increase my savings rate to 50% of gross salary where it is now. It still appears that this won’t allow for early retirement, especially with a home purchase, marriage, etc. in the near future.
So here are the numbers::
Emergency funds: 11 months cash in a savings account (8 months without help from my girlfriend with whom I live.)
Tax Filing Status: Single
Tax Rate: 25% Federal, 6.37% State
State of Residence: New Jersey
Desired Asset allocation: 75% stocks / 25% bonds (?) Age in bonds seems a bit high
Desired International allocation: 25% of stocks (?)
Total portfolio is low 6-figures, approximately 2x gross income.
Current retirement assets
27% Fidelity Spartan Total Market Index (FSTMX) (0.10%)
401k (These don't have ticker symbols that I am able to find, so I gave the benchmark mentioned in their data sheets.)
5% Government/Credit Bond Fund (Barclays Capital U.S. Government/Credit Bond Index) (0.03%)
12% Equity Fund (S&P 500) (0.01%)
5% International Equity Fund (MSCI EAFE Index) (0.03%)
3% Emerging Markets Equity Fund (MSCI Emerging Markets® Index) (0.10%)
3% Company Stock
Company match: 3.6% (60% of first 6% of employee contribution)
I contributed to a Roth 401k for all of 2011 within the 401k mentioned above, and there is about $11,000 there. I've rebalanced my whole 401k since then, so this piece is probably invested to the same proportions as the traditional 401k shown above, but I'm not sure if that's the case.
Rollover IRA at Fidelity
30% Spartan 500 Index Fund (FUSEX) (0.10%)
8% Spartan U.S. Bond Index Fund (FBIDX) (0.22%)
8% Spartan International Index Fund (FSIIX) (.20%)
New annual Contributions
$17,000 401k (increasing to $17,500 for 2013)
Employer match of 3.6% of salary, fully vested.
$21,000 to taxable
Funds available in 401(k)
Lifetime Income Strategy (0.13%)
Target Retirement 2005 Fund (0.13%)
Target Retirement 2010 Fund (0.13%)
Target Retirement 2015 Fund (0.12%)
Target Retirement 2020 Fund (0.12%)
Target Retirement 2025 Fund (0.12%)
Target Retirement 2030 Fund (0.11%)
Target Retirement 2035 Fund (0.11%)
Target Retirement 2040 Fund (0.11%)
Target Retirement 2045 Fund (0.11%)
Target Retirement 2050 Fund (0.11%)
Target Retirement 2055 Fund (0.11%)
Income Fund (Stable Value Fund managed by my company. According to the data sheet: The Income Fund is managed by the Defined Contribution Investment Committee. The fund enters into investment contracts with different insurance companies) (0.33%)
Government/Credit Bond Fund (Barclays Capital U.S. Government/Credit Bond Index) (0.03%)
Equity Fund (S&P 500) (0.01%)
Small Company Stock Fund (Russell Small Cap Completeness Index) (0.01%)
International Equity Fund (MSCI EAFE Index) (0.03%)
Emerging Markets Equity Fund (MSCI Emerging Markets® Index) (0.10%)
1. Should I continue to invest the 21k annually in taxable investments? I know the typical advice is to max tax advantaged before contributing to taxable, but I want to have investment income before age 59 1/2 (hopefully well before then, so I can afford to work part time when I have kids). I also want to buy a home in the next 3-5 years, and investing in equities isn’t good for that time horizon. I could use my cash for that short term goal, and consider some of my taxable investments as an emergency fund. Is this a sound method? (I know many people don’t have a separate “emergency fund”. They would just sell some of their holdings if need be)
2. I am saving/investing about 50% of my income, yet it still appears that I won't be able to retire before 60, especially not if homeownership takes away from investing. Doing some math, I figure I could retire at 45-50 and have enough in taxable investments to provide income until 59.5, and enough in the IRA/401k after then, but that only works with my current expense level, no home purchase in that plan. It seems like I should do better than that with this savings rate.
3. A more minor question: Specific shares in IRA. Does this matter? I know this consideration is for tax purposes, but depending on which shares i sell, i will end up with a different number of shares owned, even though the dollar amount will be the same. The reason I ask, is because I am trying to rebalance by selling equity funds to buy stock funds in my IRA.
Thanks for reading!
Last edited by jasc15
on Fri Jan 18, 2013 10:33 am, edited 1 time in total.