Help with CDs maturing

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Topic Author
Almost there
Posts: 1128
Joined: Thu Jan 03, 2008 6:06 pm
Location: Arizona USA

Help with CDs maturing

Post by Almost there »

Hi everyone,

I am a single female and have saved approx. $500,000. Next April I will turn 66 and plan on taking SS (approx. $1,200/month) via my ex-husband. Plan on working until I am 70 at which time I will take my full SS benefits (according to SS I will receive $2,300/month). My partner and I own a townhouse equally and owe approx. $100,000 at 4.5%. In order to pay off the mortgage earlier, we add $200 to our regular monthly payment. At this point, we should have it paid off in approx. 9 years.

Federal Tax Bracket: 15% for 2013 (only worked part of the year), 25% for 2014
NJ: Marginal Tax Rate: 3.5%

All my investments are with VG:

Target Retirement 2015 IRA VTXVX 63%
Long Term Exempt (taxable) VWLTX 4%
Intermediate Term (taxable) (Admiral) VWIUX 11%
Total Bond-Roth IRA (Admiral) VBTLX 15%
Life Strategy-Roth IRA VSCGX 7%

Asset Allocation:
My stocks are at 37.2%
Bonds at 62.8%

I have 2 Bank CDs maturing:
Dec 2013: $11,353
Feb 2014: $33,563

Where do I put the CD money? Into my taxable accounts or toward my Roth 401(k) for 2014 etc?

After being unemployed for 2½ years, I starting working in May, and in September started with the company’s 401 (k). In 2015 I will be eligible for matching contribution based upon the company’s prior year EBITDA margin. For now I have chosen VG Target Retirement 2020. I feel that Roth will be preferable unless you give me a better argument. Presently I contribute $50/month.

Your help and thoughts are very much appreciated.

Almost there
Texas hold em71
Posts: 595
Joined: Sat May 18, 2013 11:09 am

Re: Help with CDs maturing

Post by Texas hold em71 »

Have you considered using the CD's for living expenses, increasing the 401(k) contributions and reducing your current taxable income?
WKS360
Posts: 11
Joined: Mon Oct 28, 2013 10:12 am

Re: Help with CDs maturing

Post by WKS360 »

Do you already have your emergency fund built up? Given your history with unemployment, I'd go out 6-9 months for living expenses which might make you sleep better at night as well.

I know these have been mentioned before, but for fixed maturity / duration the bond ETF's over at the Guggenheim do a great job ( Bullet Shares ). Time the maturity with the year you turn 70 and call it a day. Also, maybe park 25% of this in a high interest checking account off the Kasasa Network for peace of mind. I'm pulling in 1.91% off them and love it!
Topic Author
Almost there
Posts: 1128
Joined: Thu Jan 03, 2008 6:06 pm
Location: Arizona USA

Re: Help with CDs maturing

Post by Almost there »

Thank you, Texas hold em71, for your suggestions.
Have you considered using the CD's for living expenses, increasing the 401(k) contributions and reducing your current taxable income?
Right now I don't want to go back and invest in CDs since their rates are too low. The 2 CDs which are maturing paid 3%. I will increase my 401 (k) contributions but I am not sure how to reduce my current taxable income. Since they are tax-exempt accounts, it is not much that I pay on taxes every year.

Almost there
Topic Author
Almost there
Posts: 1128
Joined: Thu Jan 03, 2008 6:06 pm
Location: Arizona USA

Re: Help with CDs maturing

Post by Almost there »

Thank you, WKS 360, for your suggestions:
Do you already have your emergency fund built up? Given your history with unemployment, I'd go out 6-9 months for living expenses which might make you sleep better at night as well.

I know these have been mentioned before, but for fixed maturity / duration the bond ETF's over at the Guggenheim do a great job ( Bullet Shares ). Time the maturity with the year you turn 70 and call it a day. Also, maybe park 25% of this in a high interest checking account off the Kasasa Network for peace of mind. I'm pulling in 1.91% off them and love it!
I don't feel at this time I need to build up my emergency fund. I consider my 2 tax exempt accounts as emergency funds where I have $81K which is more than double my yearly salary. However, I will look into ETFs, however, at this time I would prefer staying with VG. Also, my local bank pays me interest and will look into adding part of the CDs to my checking/saving accounts. I thank you for that advice. At this time, I surely would not have thought about that.

Almost there
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