Emergency funds: 1.5 months, contributing $500/mo until 3 months saved
Debt: $55k total from auto & student loans @ 2.25%-4.5%, $224k mortgage @ 3.75%
Tax Filing Status: MFJ
Tax Rate: 25% Federal, 7.05% State
State of Residence: MN
Age: him 27 / her 34
Desired Asset allocation: 80-85% stocks 15-20% bonds
Desired International allocation: 20-30% of stocks
Current retirement assets: mid five-figures
His Traditional TSP
48% Lifecycle 2050 (ER .027)
His Roth TSP
7% Lifecycle 2050 (ER .027)
His Roth IRA at Vanguard
2% VANG TARGET RETIREMENT 2050 (VFIFX, ER .18)
Her 401(k) at Fidelity
8% PIM TOTAL RT INST (PTTRX, ER .46)
19% SPTN 500 INDEX INST (FXSIX, ER .04)
10% VANG INTL GROWTH ADM (VWILX, ER .36)
4% VANG SM CAP IDX SIG (VSISX, ER .10)
Her Roth IRA at Vanguard
2% VANG TARGET RETIREMENT 2045 (VTIVX, ER .18)
New annual Contributions
$2900 to Roth TSP, all to L2050
$2900 to Trad TSP (full employer match), all to L2050
$4200 to Fidelity 401k including full match, 45% to FXSIX, 11% to VSISX, 24% to VWILX, 20% to PTTRX
No Roth IRA automatic investments setup for now
Funds available in his TSP
*all .027 ER
C, S, I, G, F, Lifecycle
Funds available in her 401(k) at Fidelity
FID GROWTH CO K (FGCKX) 0.77%
FMI LARGE CAP (FMIHX) 0.96%
SPTN 500 INDEX INST (FXSIX) 0.04%
FID LOW PRICED STK K (FLPKX) 0.76%
DFA US TARGET VALUE (DFFVX) 0.38%
ROXBURY SMCAP GRTH I (RSCIX) 1.58%
VANG SM CAP IDX SIG (VSISX) 0.10%
DODGE & COX INTL STK (DODFX 0.64%
VANG INTL GROWTH ADM (VWILX) 0.36%
DODGE & COX BALANCED (DODBX) 0.53%
<Snipped Fidelity Freedom K Funds>
FID FREEDOM K 2045 (FFKGX) 0.63%
FID FREEDOM K INCOME (FFKAX) 0.39%
PIM TOTAL RT INST (PTTRX) 0.46%
VANG INFL PROT INST (VIPIX) 0.07%
VANG PRIME MM INST (VMRXX) 0.09%
We just bought our first house last year with an FHA mortgage, so 2012 and 2013 contributions have only been up to the employer match, plus minimum opening deposits in Roth IRAs. We made it through one full round of MN seasons and now have the full arsenal of lawn/garden/snow equipment, and with the one major necessary project with this house nearing completion, we should be able to increase savings and debt repayment within the next few months. Anyway!
1) Looking mainly for help with asset allocation between the TSP and her 401k. Roth IRA balances are too low right now to be in anything other than Target Retirement funds (just opened in February with $1k minimum investments). Tried to do the best I could with her 401k, but not really feeling the international fund (VWILX), and unsure if PTTRX is worth the ER over VIPIX. Past performance doesn't indicate future results and I get that, but PTTRX seems to be a fund Bogleheads like to hate.
2a) Our MAGI for 2012 was barely in the 25% bracket. I do believe that tax rates will be going up by the time we retire. I believe social security benefits will exist then, but at a reduced rate. There is also a FERS pension involved -- currently vested at 5 years of service, age 27. In today's dollars, if everything was factored out ~35 years, estimated income at retirement from SS, FERS pension, and ~45-50k/year from retirement accounts would give us an income equal to or possibly even slightly greater than we earn right now. Should he continue to contribute to Roth TSP or go back to Trad TSP?
2b) Additionally, is it worth it for him to contribute to Roth IRA beyond the company match instead of just continuing with Roth/Trad TSP? Our thought was it would be good for both of us to have Roth IRAs, and they could act as an "extra emergency fund" if absolutely needed.
3) I know the US is a marginal tax system, so only a couple thousand for us was taxed at 25% last year. Should we look at increasing her 401k contributions to stay out of the 25% bracket completely or should we just start some monthly Roth IRA contributions?
4) Which account should be the first place we increase the rate of retirement savings? I'm going to guess either her 401k or her Roth IRA since she is 7 years older. Is that an accurate assumption?
Thanks in advance!