AA balance, 2 accounts, future pension?

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arbutus
Posts: 2
Joined: Mon Jul 17, 2017 10:34 am

AA balance, 2 accounts, future pension?

Post by arbutus » Mon Jul 17, 2017 11:23 am

Hello,

I have been doing a lot of reading. THANK YOU all who have shared your advice and wisdom.

I am 36, married, four kids, oldest is 9, own my home, have an affordable low interest payment on a vehicle, keep vehicles until nobody else wants them either, and enjoy generally inexpensive family fun. I work for the federal government, love what I do, work with a talented and motivated crew, and could easily see myself in my role for the remainder of my career. I am the sole earner, mid $70k gross wages. My federal income taxes are minimal.

I am contributing my 5% in the Roth TSP account. The agency matches in the traditional TSP account. I also have a traditional IRA and Roth IRA with Fidelity. I am currently contributing a budgeted amount every two weeks to the Roth IRA. My savings each paycheck including the agency match is about 16% of my wage. I don't have much saved - approximately $70,000 + whatever mimimal amount FERS totals. I am not including Social Security in any of my retirement planning, if it's there we will decide what to do with it, but I think we will be above whatever means tests are applied. Family health history says that both my wife and I could die at 50 from cancer or heart disease or live to 100 in our own home.


All that said, I have three questions:

1) I read in the wiki that pensions could/should be counted as a bond % when in retirement.
What about before retirement? Should the (very good) possibility of drawing from FERS 30 years from now affect my AA?

2) For those of you with multiple accounts - in my case TSP and Fidelity - do you recommend splitting up the AA within each account stocks and bonds, or have stocks in one account and bonds + stocks in another?

Currently total AA is
27% C Fund
27% S Fund
37% FUSVX
9% FTIGX

3) Within TSP, what ratio of C to S is a good approximation of the US market?

Any and all advice is welcome. Thank you.

CppCoder
Posts: 543
Joined: Sat Jan 23, 2016 9:16 pm

Re: AA balance, 2 accounts, future pension?

Post by CppCoder » Mon Jul 17, 2017 1:02 pm

arbutus wrote: 1) I read in the wiki that pensions could/should be counted as a bond % when in retirement.
What about before retirement? Should the (very good) possibility of drawing from FERS 30 years from now affect my AA?
I'm in a corporate DB pension plan. I don't consider it in my AA for a few reasons. First, megacorp could discontinue/change the plan. Second, I can't use it to rebalance. Third, what if I don't work there until retirement? I don't want to rebalance my portfolio based on a job change. I suppose, you could, if you really wanted to, try to adjust your AA based on the current vested amount of your pension. If anything, I maybe soft adjust my AA in that I take more risk (higher stock percentage) than I might if I had no pension plan.

2) For those of you with multiple accounts - in my case TSP and Fidelity - do you recommend splitting up the AA within each account stocks and bonds, or have stocks in one account and bonds + stocks in another?
Think of the portfolio as one unit and invest in different locations based on tax efficiency of the account:

https://www.bogleheads.org/wiki/Tax-eff ... _placement

Currently total AA is
27% C Fund
27% S Fund
37% FUSVX
9% FTIGX

3) Within TSP, what ratio of C to S is a good approximation of the US market?

Any and all advice is welcome. Thank you.
C is S&P 500 and S is Dow Completion index. Total U.S. market can be approximated by 80:20 C:S. FYI, you can buy FSTVX at Fidelity instead of FUSVX if you are looking for total market funds. Also, if you are looking to add bonds to your portfolio, I would highly recommend looking at the G fund before a typical bond mutual fund.

arbutus
Posts: 2
Joined: Mon Jul 17, 2017 10:34 am

Re: AA balance, 2 accounts, future pension?

Post by arbutus » Mon Jul 17, 2017 8:01 pm

Thank you CPP. I worked for a mega corp, and my pension was portable, vested after three years. When I left I rolled into the traditional IRA savings account I have.

Thanks as well for the tax efficient savings link. At this time I don't plan to open any additional retirement savings accounts (not in the budget) and what I have is tax advantaged.

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