~ Portfolio Advice: *Retiring Georgia Teacher

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Topic Author
KingEdward57
Posts: 6
Joined: Mon Jun 29, 2015 11:26 pm
Location: Atlanta

~ Portfolio Advice: *Retiring Georgia Teacher

Post by KingEdward57 »

*June 30, 2015
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Greetings. I'm a Georgia public school teacher preparing for retirement in the summer of 2018.
My hope is to be getting the financial house in order and would be grateful for any advice/input.


Annual Teacher Income: $73,000
Side Job: $20,000
Rental Income: $41,000 (rent collections less expenses @ 3 Atlanta properties)

[Upon retirement I'll be eligible for the TRSG pension (@ Teacher Retirement System of GA)
which will provide 60% of my highest salary ($73,000 x 0.6), resulting in $43,800].

Emergency cash: $40,000

Debt: $31,000 Loan balance for primary residence - - to be paid off prior to retirement
[3 rental properties are already paid off]

Tax Filing Status: Single

State of Residency: Georgia

Tax Rates: Federal/28% ... State/6%

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Age: 57

Desired Asset Allocation: 40% domestic; 10% international; 50% fixed income

Taxable accounts: VTWNX - Vanguard Retirement Fund 2020

Traditional IRA - VTWNX $4,037 (1%)
Rollover IRA - VTWNX $91,202 (21.8%)
Roth IRA - VTWNX $89,513 (21.42%)

Current 403(b) account: (Self-directed brokerage account @ TDAmeritrade)
VTWNX - $148,000 (28.53%)
Cash - $6,000 (8.68%)

Prior 403(b): VALIC - 'Moderate Growth Lifestyle Fund' - $77,777 (18.66%)
(subject to 5% transfer penalty if moved prior to retirement)

New contributions: For 3 remaining years, $23,000/yr into current 403(b) -and- $6500/yr @ Roth IRA.
(home loan balance @ $31,000 to be paid off)

Available funds: All IRA accounts are held w/ VANGUARD.

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:?: Here are a few questions: :oops:

* What do you think of my current asset allocation?
* Should I perhaps be more aggressive due to the guaranteed teacher retirement?
* Should I alter the fund selection based on projected retirement date (2018)?
* Should I stick with VTWNX for any current cash [and upcoming (3) years' contributions] ...
or at some point begin transitioning to more of a 50/50 allocation?

Am also in the process of putting together realistic estimates for what future expenses (upon retirement) will be.
Know that I'm grateful for any and all suggestions/comments. CHEERS! :moneybag

Edward
(Atlanta teacher, year 28!)

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Lafder
Posts: 4127
Joined: Sat Aug 03, 2013 7:56 pm
Location: East of the Rio Grande

Re: ~ Portfolio Advice: *Retiring Georgia Teacher

Post by Lafder »

Welcome!

My plan is to be at 50/50 in retirement as well. With your rental income and teacher pension, that feels plenty aggressive as well as plenty conservative to me. You need to sort out what you will sleep well at night with :)

VTWNX is Target Retirement 2020, it looks like it is currently at 60/40, and it has International Stock and Bonds as well. For simplicity, using a since target date fund works.

Keep in mind if you have 10 of 50% International, that is 20% of your stock portfolio is International. That is within the 20-40 range and I am fine with that.

Are you sure that is your AA ? It seems the TD 2020 has 30% International stock, and 25% International Bonds ?

How much is in your taxable account ?

When you retire, you will be able to roll your Valic account to Vanguard and can either use the same fund or a more bond heavy fund. Also by then, the 2020 fund may have shifted to more bonds. They list themselves as targeting 2016-2020 retirement dates.

I would feel strange suggesting you unsimplify and sell your target date fund and buy the individual sub funds so you can rebalance and adjust your AA more easily. But it certainly is a possibility. I would stick to the target date fund for simplicity. And in a way, you are getting the more aggressive of 60/40 for now ! Luckily much of your invested money is retirement accounts so you can change your mind about which funds to hold without a tax consequences.

Yes you absolutely need to figure out what your expenses will be. That will be a good indication if your income from rentals and pension will cover it, versus how much of your other savings you will need to spend. You will have to take RMDs at some point, but you can always invest in taxable if you are not needing the income.

Do you have a will and estate plans in place ?

lafder
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FelixTheCat
Posts: 2035
Joined: Sat Sep 24, 2011 12:39 am

Re: ~ Portfolio Advice: *Retiring Georgia Teacher

Post by FelixTheCat »

You are doing well. Pension + Rental Income is more than your job income.

Asset allocation (to me) is how you sleep at night. Can you afford to lose 25% of your money (50% of stocks) in a bad market and still sleep well?

You could make your portfolio a little more tax efficient. Stock funds in taxable and Bond funds in tax deferred accounts.
Felix is a wonderful, wonderful cat.
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Watty
Posts: 28860
Joined: Wed Oct 10, 2007 3:55 pm

Re: ~ Portfolio Advice: *Retiring Georgia Teacher

Post by Watty »

Some more information would help.

Is your pension inflation adjusted?

Will you be getting Social Security in addition to the pension? If so how much? If you were widowed at any time or divorced after ten years you might be eligible for their social security too.

When you add in the values of your properties then it looks likely that you will leave a pretty good estate someday so part of your asset allocation might depend on you estate planning goals. For example if you plan on leaving part of it to a young relative then you might want to invest part of it with an asset allocation that is appropriate for someone their age like a 2050 target retirement fund.
Topic Author
KingEdward57
Posts: 6
Joined: Mon Jun 29, 2015 11:26 pm
Location: Atlanta

Re: ~ Portfolio Advice: *Retiring Georgia Teacher

Post by KingEdward57 »

Thanks so much, Lafder, Felix and Watty:
Great advice from all of you ... & I'll check over the weekend on some of the missing pieces you spotted,
especially those regarding Social Security and whether or not pension is adjusted @ inflation, etc.
I'm not sure myself.

Again, you've given me some things to research and maybe reconsider.
Thx so much!

King Edward
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