Retirement Fund Date has Passed-Question

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magicmom
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Retirement Fund Date has Passed-Question

Post by magicmom »

I have Vanguard Target Retirement Fund 2015 and it has begun shifting the allocation to higher bonds than I want at this time. I am 59 but not ready to retire.I am thinking of shifting a portion or all of 2015 to my 2035 fund. Would that be wise at this time? I have looked at the risk and ER and yields and it seems to be ok but wanted to get some other opinions from this trusted community.
Thank you, good to be back, Terri.
randomguy
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Re: Retirement Fund Date has Passed-Question

Post by randomguy »

If this is a tax deferred account, why not just shift it all to say 2025? In the end you need to decide what stock allocation you want and go with it. If we are talking taxable, you might just want to buy some total stock market. You will need a lot less of it.
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David Jay
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Re: Retirement Fund Date has Passed-Question

Post by David Jay »

magicmom wrote:I have Vanguard Target Retirement Fund 2015 and it has begun shifting the allocation to higher bonds than I want at this time. I am 59 but not ready to retire.I am thinking of shifting a portion or all of 2015 to my 2035 fund. Would that be wise at this time? I have looked at the risk and ER and yields and it seems to be ok but wanted to get some other opinions from this trusted community.
Thank you, good to be back, Terri.
If this is a retirement account (IRA, etc.) then sure, select the fund that most aligns with your asset allocation preference. I tell people all the time that they should not select a TR account based on date but rather on your preferred AA.

If this is a taxable account, you will have taxable income as a result of selling the 2015 fund.
Last edited by David Jay on Tue Mar 14, 2017 4:59 pm, edited 1 time in total.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
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David Jay
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Re: Retirement Fund Date has Passed-Question

Post by David Jay »

One other thought - if you don't want the AA to shift, Vanguard has the LifeStrategy family of funds. They use exactly the same underlying funds as the TargetRetirement funds, but the AA never changes, which puts you in control:
LS Conservative is 40/60 (stocks/bonds)
LS Moderate is 60/40
LS Agressive is 80/20
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
PFInterest
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Re: Retirement Fund Date has Passed-Question

Post by PFInterest »

you dont pick the TDF based on the date, you pick it based on the underlying AA.
what is your desired AA?
find the TDF that closest matches (2015-20-25-etcetcetc)

as noted already, if you need something more static, the LS funds are a better pick.
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magicmom
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Re: Retirement Fund Date has Passed-Question

Post by magicmom »

Thank you for your answers. I chose 2015 a while ago based on the current AA (then). Now it is shifting towards a more conservative allocation. I didn't choose it because of the year but because of the allocations.
I like the idea of the Life Strategy Funds and will look into them. I also considered the 2025 as it is closer to what I want. It is a Roth IRA. Thanks again.
emanuel_v19
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Re: Retirement Fund Date has Passed-Question

Post by emanuel_v19 »

I am also interested. Based on this, would there be a fee to change to a TR 2025 or TR 2035 or some other TR date? And assuming you have the fund in a tax-deferred account and there are no Life Strategy options, how do you go about avoiding the asset allocation changes in the TR? Do you keep bumping up the TR date? Or bail out of the TR and find funds that fit your asset allocation within the account? :confused
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magicmom
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Re: Retirement Fund Date has Passed-Question

Post by magicmom »

I don't think there is a fee to do an exchange in my Roth IRA. Of course there would be a difference in share price. I also hold 2035 and my just move it into there but I like to have 3 funds. :)
I hold 2015 2035 and Star.
NYC_Guy
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Re: Retirement Fund Date has Passed-Question

Post by NYC_Guy »

Because it's in a tax-advantaged account, just move into the fund (or funds) that represents your desired AA.

For those that may have this issue in a taxable account (without the ability to use a tax-advantaged account to offset the mix in your taxable accounts), remember that you don't have to sell the entire Target fund to get your desired AA. If the AA has moved from, say, 60% equities to 50% equities and you would like to stay at 60% equities, you could sell just 20% of the Target fund (using highest basis lots) and buy a 100% equities fund to get back to the 60/40 AA.
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