BolderBoy wrote:Look at the Bogleheads wiki for some books to read - your local library probably has them. I particularly found the "Bogleheads Guides to..." books to be easy reads which are directly on point.
Personally, I'd bump up your retirement savings (particularly the 401k) to the max allowed every year. You can control that. Getting married, buying house and having kids have a ton of variables associated with them.
Welcome to the forum!
Yeah I'd like to bump it up more too, but then that's less money to save for the house.
Twins Fan wrote:
I like it... nice and simple. Let's make it more simple.
The T. Rowe ER of .78 isn't the worst in the world, but for a target date index type fund it's pretty high, in my opinion. The very low ER in the .18 range for the Vanguard target date funds is tough to beat. You can't control the market, but you can control the fees you pay. So, keep them as low as you can to keep more of your money. I'd say transfer your Roth over to Vanguard and pick the target date fund you like. Does your current 401k allow you to roll that old 401k into it? Look into that, and if so roll the old 401k into the current one to get it all in that Vanguard fund.
In case you picked the 2050 fund this way,... You don't have to pick the fund with the date (number) closest to when you think you will retire. You can pick whichever one you think has the best AA for you personal investing goals/plan. Sounds like you haven't quite decided on an AA yet though.
Do you get the 9% employer contribution whether you contribute or not? It sounds that way since you say you don't even contribute to the match, and still get more employer contributions than even you put in there. That's a pretty good deal.
I would have to look up all the Traditional/Roth cut offs again, but I think you're better off, or just fine contributing to the Roth. I don't think you could get your income low enough to ge any deduction from the Traditional, and you're already in the 25% bracket with your salary likely only going up from here on, or hovering in the 25% bracket. So, I think the Roth is just fine, or even the better choice for you there. But, check for yourself there... don't just take my word for it.
Wife, kids, house?? Have you even met the possible wife/mother yet?
I'd say stay single, but I've been burned a couple times by marriage. So, my view and advice is slightly tilted there.
But, I wouldn't start necessarily saving for things that you don't know if they will even happen or not. The house savings is fine... that's a good goal to have. I wouldn't buy something now just to get into something because of interest rates. You may end up hating the little place. Wait until you're ready to buy. Sure, interest rates are good now and have been for a couple years... but, people have had 6,7,8%, and even higher interest rates in the past. If you buy something little now and then a bigger and better home later on, you're still going to end up with whatever the interest rates are at teh time you buy bigger and better. Interest rates going up is not the end of the world.
Yes I can roll the old 401k over. That's no problem. But is Vanguard really the better option? Looking at the past 5 years, when I compare those funds:
YTD: VFIFX = +7.01% TRRMX = +6.57%
1 year: VFIFX = +15.14% TRRMX = +15.92
5 year: VFIFX = +11.96 TRRMX= +14.51
So it appears T Rowe Price would outperform Vanguard and make up for those fees? Or not really?
And yes I picked 2050 because I will be around 65 then, which I figure is a reasonable retirement date. What does AA mean?
The company 401k match is kind of weird. I get 4% match which i am 100% vested in immediately, then I get an additional 5% match which I am vested in after 2 years of service (which I've met). So, in the end, I get a 9% total match, but I only have to put in 5% to get both. Does that make sense?
And no I haven't met the potential wife yet haha. I know it's weird planning for that but it is one of my goals, so I really do want to prepare. You know, just to be ready when/if it happens.
And yes, I've been anti-house-buying for a while now. Two of my friends bought near the peak of the bubble. Both lost around 100k each, and it just hasn't rebounded to anywhere near that. Another friend bought more recently and is doing fine, but had help from his parents and now has a fiance who is chipping in. I'm kind of scared buying myself. What if something happens to me? It just seems too risky. And honestly, if it is too risky for me, I think it's too risky for a lot of people, which really makes you think when the housing bubble was at it's peak, and the government (and lenders) were trying to induce more and more low income people into home ownership. I mean, look at my stats: if I'm not house-ready, how were these people who had much lower incomes/stability than me?
4. Based on my stats, should I continue to do the Roth IRA or Traditional IRA instead?
Single people get into the higher tax brackets real quick. Since you are likely to get married, have some kids, and mortgage interest to deduct then you can have a surprising amount of income and still be in the 15% federal tax bracket. Try playing with some numbers in taxcaster.http://turbotax.intuit.com/tax-tools/ca ... taxcaster/
Unless you are in some unusually high paying career path I would mad out all the deductible retirement accounts first while you are in the federal tax brackets above 15%
Well the 25% bracket starts at $36,251 and above. So, I could use the Traditional IRA (or more 401k) to get taxable income down closer to that. But this would really only make sense if I plan on withdrawing that money in retirement at a lower than 25% rate, correct?
Thank you all for your answers!!