, you want an AA of 80% stocks, 20% bonds (low for your ages), with 25% of stocks in international. That breaks down to 60% US stocks, 20% international stocks, and 20% bonds. Here is a possible retirement portfolio:His 401k -- 59%
19% (N/A) Fidelity US Equity Index Fund (0.02%) <-- This assumes this is a 500 Index fund.
) Vanguard Total International Stock Index Fund Institutional Plus Shares (0.10%)
) Spartan US Bond Index Fund Advantage Institutional Class (0.05%)Her Individual 401k at Vanguard -- 7%
) Vanguard Total Stock Market Index Fund Admiral Shares (0.05%)His Traditional IRA at Vanguard --8% <-- This includes "His Previous 401k".
) Vanguard Total Stock Market Index Fund Admiral Shares (0.05%)Her Rollover IRA at Vanguard -- 7%
) Vanguard Total Stock Market Index Fund Admiral Shares (0.05%)Her SEP IRA at Vanguard -- 9% <-- Is this still current or can it be combined with "Her Rollover IRA"?
) Vanguard Total Stock Market Index Fund Admiral Shares (0.05%)
) Vanguard Extended Market Index Fund Admiral Shares (0.14%) <-- Roughly 80% large caps (Equity Index) plus 20% mid/small caps (Extended Market) makes up the total US stock market.His Roth IRA at Vanguard -- 5%
) Vanguard Total Stock Market Index Fund Admiral Shares (0.05%)Her Roth IRA at Vanguard -- 5%
) Vanguard Total Stock Market Index Fund Admiral Shares (0.05%)My comments:
-- A 20% bond AA at almost 50 is very aggressive and risky. I'd recommend at least 35% if not 40%.
-- Do you have a ticker symbol for Fidelity US Equity Index? I'm assuming it's something like (FXSIX
) Spartan 500 Index Fund. US Equity Index and Spartan 500 merged a few years ago. If that's incorrect, and it is a total US stock fund, the above portfolio is a little tilted.
-- If possible combine "Her Rollover IRA" and "Her SEP IRA". Fewer accounts makes things easier. That's why I combined "His Traditional IRA" and "His Previous 401k".
-- It's too bad she got the I-401k at Vanguard. If it had been at Fidelity she would have been able to roll "Her Rollover IRA" and "Her SEP IRA" over, and would then have been able to use the
Backdoor Roth IRA
method. Oh well.Your questions:
1. How are we doing? We got a late start but always max out tax-deferred accounts and save aggressively. I hope we are on track for retirement. Ideally, retirement at 60 would be within reach (edit: added-although at least one of us will likely work until 65 and we are prepared for an age 65 retirement).-- You're doing very well.
2. His 401K is offering Fidelity Brokerage Link to access wider range of ETF's/funds (fee schedule not yet looked into). Is it worthwhile to consider or does His401K have sufficient diversification and good quality funds?-- You don't need it.
3. How much to keep in international? 25% a good number?-- 25% of stocks is fine. Vanguard has found that between 20% and 40% of stocks in international to be the "sweet spot". See the discussion and the Vanguard paper link. Vanguard splits the difference and uses 30% in their Target Retirement and LifeStrategy funds.
4. Is small cap necessary in his 401k?-- If the Fidelity US Equity Index is a 500 Index fund then you need mid/small caps to balance it out. But the above portfolio has Extended Market in an IRA which covers it.
5. Should Roth 401K be contributed to? Her individual 401K has access to Roth 401K. Backdoor Roth is not used due to Her IRA's and his one traditional IRA (of 14,000 value). I know based on (28% tax bracket) income tax-deferred is the way to go -but then I am confused as to why backdoor Roth is so popular. -- Check out these articles by tfb who posts here often:
The Case Against Roth 401(k) and Roth 401(k) for People Who Contribute the Max.
6. Should Fidelity Growth Fund as actively managed fund be dumped in his 401K. It had a good run for a while, but is lagging versus the index and has higher fees.-- It has a much higher cost. Drop it.
7. Does our taxable tiered emergency fund look alright?-- Using a stock fund as part of your emergency fund is risky, other than that it's good.
Something to think about.