On the way wrote: I have just made the change of lowering my 401k contribution to fully fund my ROTH. I based this decision looking at federal taxes on social security, thinking that I might be able to reduce the amount of social security subjected to tax at retirement. I ran this by a Vanguard CFP and he thought it was a good idea.
Planned retirement age 67
Desired Asset allocation: 70% stocks / 30% bonds - moving this way with small rebalancing and future contributions
Desired International allocation: 10-15% of stocks
Total in all accounts high 6 figures
New annual Contributions
$6,500 Roth IRA
$2,400 H.S.A. over max out of pocket in health care plan.
Duckie wrote:On the way, you want an AA of 70% stocks, 30% bonds (low), with 10-15% of stocks in international (low). I'll pick 15% but I think it should be higher. That breaks down to 49% US stocks, 21% international stocks, and 30% bonds. Here is a possible retirement portfolio:
His 401k -- 98%
39% (VINIX) Vanguard Institutional Index Fund Institutional Shares (0.04%)
10% (VEXMX) Vanguard Extended Market Index Fund Investor Shares (0.28%) Roughly 80% large caps (Institutional Index) plus 20% mid/small caps (Extended Market) makes up the total US stock market.
19% (VGTSX) Vanguard Total International Stock Index Fund Investor Shares (0.22%)
30% (VBTSX) Vanguard Total Bond Market Index Fund Signal Shares (0.10%)
His Roth IRA at Vanguard -- 1%
1% (VGTSX) Vanguard Total International Stock Index Fund Investor Shares (0.22%)
Her Roth IRA at Vanguard -- 1%
1 % (VGTSX) Vanguard Total International Stock Index Fund Investor Shares (0.22%)
Something to think about.
- It's a good idea to fund not only His Roth IRA but to fund Her Roth IRA. Once you get to $10K in the accounts you can buy cheaper admiral shares in both Total Stock and Total International.
- At your age I think you should have at least 40% bonds.
- Is the HSA being used for current medical costs or are all costs paid out of pocket and the HSA is being saved for retirement? See here.
- You wrote: "Desired Asset allocation: 70% stocks / 30% bonds - moving this way with small rebalancing and future contributions"
These are all tax-sheltered accounts. There's no reason to wait to get your AA, especially when going more conservative. Just shift stuff.
- 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. 15% is low.
On the way wrote:I forgot to mention my pension at 65 of $13,800/yr (edited orginal post). Would you lower your bond requirement based on this?
My wife is not employed so I do not think she qualifies for a roth.
I am going to try to set this up by the end of the year (need to save the minimum to open an account).
The HSA is funded at $7,450, with $5,000 going to current medical expenses.
The gradual move started in 2006 from about 85/15 stock/bond ratio to the current 75/25, mostly with new contributions, but in 2012 I started to move money in the small increments. I just felt more comfortable moving slowly.
I count the stable value fund as part of the bond allocation. Is this correct?
Would you count the mortgage prepayment towards the bond allocation?
I know some of my existing funds contain international stocks. Does this contribute to the total international allocation?
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