Introducing Myself, Seeking Retirement Advice

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Topic Author
peterwantstosave
Posts: 373
Joined: Fri Nov 24, 2017 8:28 pm

Introducing Myself, Seeking Retirement Advice

Post by peterwantstosave »

Friends,

I've really been enjoying the boards. I thought I'd like to more fully introduce myself and ask for some retirement advice.

Here are my specifics:

Me: 34, Male, Single
Salary: $46,000 year
Monthly Expenses: Approx $1,500-$1,800
No Credit Card Debt, No Car Debt, Own Home Free and Clear

Emergency Fund: $10,000

Credit Union 4800
Regional Bank 2000
Brokerage 3200

I currently have about $27,000 in retirement, scattered across a 403b and different IRAs. I usually invest this in 100% S&P 500 Index funds.

I have about $5,000 in "Hard" Assets: Israel Bonds, Treasury Bonds, Precious Metals

My Home is worth about $110,000.

To get my feet wet, I also purchased VGSTX yesterday

So, total assets:

$10,000 Emergency Fund
$27,000 Retirement (S&P 500 Index Funds)
$5,000 Hard Assets (Bonds, Gold, Silver)
$1,000 Vanguard STAR Fund (Taxable Brokerage Account)
$110,000 Home

$153,000 (or so) net worth

>>

Retirement Options at Work

403b or ROTH 403b

I get a 3% match in my 403b. I've basically put this on autopilot, though I stopped it to build my EF to $10k, which I just completed.

My question is: Should I continue contributing up to the match in the 403b AND also start contributing to the Roth 403b. Should I also continue contributing monthly to the Roth IRA?

I welcome advice about how to organize retirement contributions.

Thank you
MWormwood
Posts: 67
Joined: Fri Sep 23, 2016 11:03 am

Re: Introducing Myself, Seeking Retirement Advice

Post by MWormwood »

1st priority: contribute to 403(b) enough to get maximum match
2nd priority: contribute more to 403(b) or IRA. The tax benefits are basically the same, so it usually comes down to fees and fund choices. If you don't have low fee (say, ER < .1%) index funds in your 403(b), then do the IRA first.

If you post your 403(b) investment options w/fees here, you'll get more specific opinions.
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Peter Foley
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Location: Lake Wobegon

Re: Introducing Myself, Seeking Retirement Advice

Post by Peter Foley »

Even though the long term benefits may be the same, I think there is a real advantage to establishing a Roth IRA early on. One advantage is to meet the withdrawal requirement of having a Roth for 5 years. You are a long way from retirement, but there is no reason not to establish a Roth far in advance. If you decide on a very early retirement it may give you additional options.
Topic Author
peterwantstosave
Posts: 373
Joined: Fri Nov 24, 2017 8:28 pm

Re: Introducing Myself, Seeking Retirement Advice

Post by peterwantstosave »

Thank you.

Here are my options in the 403b. As you can see, I've been putting 100% into Vanguard Total Stock Admiral, so far.


EQUITIES (12)
Baron Small Cap Fund Retail Class (Mutual Funds) Above Average +1.32% $0.00
Media Server File CREF Global Equities R1 (Variable Annuities) Average +0.72% $0.00
Media Server File CREF Growth R1 (Variable Annuities) Above Average +0.65% $0.00
Delaware Small Cap Value Fund Institutional Class (Mutual Funds) Low +0.99% $0.00
Dodge & Cox Stock Fund (Mutual Funds) Low +0.52% $0.00
JPMorgan U.S. Research Enhanced Equity A (Mutual Funds) Above Average +0.6% $0.00
Lazard International Strategic Equity Portfolio Open Class (Mutual Funds) High +1.07% $0.00
Parnassus Core Equity Fund Inv Class Shares (Mutual Funds) Above Average +0.87% $0.00
Vanguard REIT Index Fund Admiral (Mutual Funds) Below Average +0.12% $0.00
Vanguard Total Stock Market Index Fund Admiral (Mutual Funds) Low +0.04% $20,379.43
iShares MSCI EAFE International Index K (Mutual Funds) Average +0.06% $0.00
iShares Russell 2000 Small-Cap Index K (Mutual Funds) Below Average +0.08% $0.00

FIXED INCOME (2)
Media Server File CREF Bond Market R1 (Variable Annuities) Average +0.68% $0.00
Media Server File CREF Inflation-Linked Bond R1 (Variable Annuities) Below Average +0.63% $0.00

GUARANTEED (2)
Media Server File TIAA Stable Value $0.00
Media Server File TIAA Traditional $0.00

MONEY MARKET (1)
Media Server File TIAA-CREF Money Market Fund - Retirement Class (Mutual Funds) +0.39% $0.00

MULTI-ASSET (11)
Media Server File CREF Social Choice R1 (Variable Annuities) Average +0.65% $0.00
JP Morgan Smart Retirement 2055 Fund A Class (Mutual Funds) Above Average +0.89% $0.00
JPMorgan Smart Retirement 2020 Fund Class A (Mutual Funds) Average +0.81% $0.00
JPMorgan Smart Retirement 2025 Fund Class A (Mutual Funds) Average +0.84% $0.00
JPMorgan Smart Retirement 2030 Fund Class A (Mutual Funds) Average +0.86% $0.00
JPMorgan Smart Retirement 2035 Fund Class A (Mutual Funds) Average +0.88% $0.00
JPMorgan Smart Retirement 2040 Fund Class A (Mutual Funds) Average +0.89% $0.00
JPMorgan Smart Retirement 2045 Fund Class A (Mutual Funds) Average +0.89% $0.00
JPMorgan Smart Retirement 2050 Fund Class A (Mutual Funds) Above Average +0.89% $0.00
JPMorgan Smart Retirement Income Fund Class A (Mutual Funds) Below Average +0.72% $0.00
JPMorgan SmartRetirement 2060 Fund Class A (Mutual Funds) +0.9% $0.00

REAL ESTATE (1)
Media Server File TIAA Real Estate (Variable Annuities) Low +0.85% $0.00
Click on any fund name for a link to the current prospectus and statement of additional information.


*Dollar amounts have been rounded up and are approximate, based on current fund prices, and are subject to change.
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CyclingDuo
Posts: 4026
Joined: Fri Jan 06, 2017 9:07 am

Re: Introducing Myself, Seeking Retirement Advice

Post by CyclingDuo »

peterwantstosave wrote: Thu Dec 21, 2017 4:07 pm Thank you.

Here are my options in the 403b. As you can see, I've been putting 100% into Vanguard Total Stock Admiral, so far.


EQUITIES (12)
Baron Small Cap Fund Retail Class (Mutual Funds) Above Average +1.32% $0.00
Media Server File CREF Global Equities R1 (Variable Annuities) Average +0.72% $0.00
Media Server File CREF Growth R1 (Variable Annuities) Above Average +0.65% $0.00
Delaware Small Cap Value Fund Institutional Class (Mutual Funds) Low +0.99% $0.00
Dodge & Cox Stock Fund (Mutual Funds) Low +0.52% $0.00
JPMorgan U.S. Research Enhanced Equity A (Mutual Funds) Above Average +0.6% $0.00
Lazard International Strategic Equity Portfolio Open Class (Mutual Funds) High +1.07% $0.00
Parnassus Core Equity Fund Inv Class Shares (Mutual Funds) Above Average +0.87% $0.00
Vanguard REIT Index Fund Admiral (Mutual Funds) Below Average +0.12% $0.00
Vanguard Total Stock Market Index Fund Admiral (Mutual Funds) Low +0.04% $20,379.43
iShares MSCI EAFE International Index K (Mutual Funds) Average +0.06% $0.00
iShares Russell 2000 Small-Cap Index K (Mutual Funds) Below Average +0.08% $0.00

FIXED INCOME (2)
Media Server File CREF Bond Market R1 (Variable Annuities) Average +0.68% $0.00
Media Server File CREF Inflation-Linked Bond R1 (Variable Annuities) Below Average +0.63% $0.00

You have some pretty decent choices in there. Good for you on investing everything so far in the Total Stock Market Admiral Shares. The Blackrock iShares for International would give you low cost, international exposure as well. The CREF Bond Market Fund would be a great bond fund choice.

In fact, all three I bolded and underlined for you are standard members of the Boglehead favorite Three Fund Portfolio:

https://www.bogleheads.org/wiki/Three-fund_portfolio

Maybe a bit odd that you get one from Vanguard, one from Blackrock, and one from TIAA-CREF, but that doesn't matter. They would work well together and give you the Three Fund within your 403b.
"Save like a pessimist, invest like an optimist." - Morgan Housel
Topic Author
peterwantstosave
Posts: 373
Joined: Fri Nov 24, 2017 8:28 pm

Re: Introducing Myself, Seeking Retirement Advice

Post by peterwantstosave »

Thanks very much for recommending these three. Any recommendations about the percentage breakdown? 40/40/20?

Peter
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CyclingDuo
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Re: Introducing Myself, Seeking Retirement Advice

Post by CyclingDuo »

peterwantstosave wrote: Thu Dec 21, 2017 4:27 pm Thanks very much for recommending these three. Any recommendations about the percentage breakdown? 40/40/20?

Peter
Hey, Peter. If we go with the Vanguard Target Fund for your age (the 2045 Target Fund), they have the balance set at this right now:

54% in US Stocks (Vanguard Total Stock Market in your 403b)
36% in International Stocks (iShares International Index in your 403b)
10% in Bonds (CREF Bond Fund in your 403b)

Not a bad model to follow, but you could go with whatever asset allocation you feel comfortable with - even if it was 1/3rd, 1/3rd, 1/3rd. As you age, the allocation will slowly change to increase the bonds.

40/40/20 would work as well if you would feel comfortable with that.
"Save like a pessimist, invest like an optimist." - Morgan Housel
Topic Author
peterwantstosave
Posts: 373
Joined: Fri Nov 24, 2017 8:28 pm

Re: Introducing Myself, Seeking Retirement Advice

Post by peterwantstosave »

Thank you CyclingDuo

I think I'll go for 54/36/10

Should I shift the existing funds, as well as the future contributions? I assume so.

Appreciatively, Peter
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CyclingDuo
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Re: Introducing Myself, Seeking Retirement Advice

Post by CyclingDuo »

peterwantstosave wrote: Thu Dec 21, 2017 4:51 pm Thank you CyclingDuo

I think I'll go for 54/36/10

Should I shift the existing funds, as well as the future contributions? I assume so.

Appreciatively, Peter
Depending on your provider - or your HR - you can go online and add the additional two funds, then move things around yourself to get the asset allocation balance you want in one fell swoop.

Or you can redirect the next coming months to have 100% of your contribution go into the iShares International until it hits 35%, then change to have 100% go to the CREF Bond Fund until you hit 10%. Then after that, you would change all contributions once again to have things go in 55/35/10.

Either way works and gets you to your desired AA. It's a non-taxable event, so we'd probably opt to do it online in one fell swoop. It's pretty easy to do add or subtract the mutual fund choices, and do a rebalance these days with our online accounts.
"Save like a pessimist, invest like an optimist." - Morgan Housel
Topic Author
peterwantstosave
Posts: 373
Joined: Fri Nov 24, 2017 8:28 pm

Re: Introducing Myself, Seeking Retirement Advice

Post by peterwantstosave »

Thank you, Cycling Duo.

Happy Holidays to everyone!

P
trueson1
Posts: 126
Joined: Mon Mar 13, 2017 11:40 am

Re: Introducing Myself, Seeking Retirement Advice

Post by trueson1 »

Welcome Peter,

You are off to a great start! Wish I was where you are now when I was 34. Sound advice from knowledgeable investors. Stay the course and you will be fine. Set it up and keep it on auto pilot.

As suggested give consideration to Roths and if allowed by your plan look into mega backdoor Roth (see threads on this site).
Topic Author
peterwantstosave
Posts: 373
Joined: Fri Nov 24, 2017 8:28 pm

Re: Introducing Myself, Seeking Retirement Advice

Post by peterwantstosave »

Thank you, trueson1

Wondering: Should I contribute to all three: 403b and Roth 403b, and Roth IRA? (Right now I am only contributing to pre-tax 403b and Roth IRA, should I also be contributing to my Roth 403b?)

Employer match is only 3% and I am pretty sure it is only in the pre-tax 403b.

As always, I welcome any advice you may have for me!

P
marklar13
Posts: 123
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Re: Introducing Myself, Seeking Retirement Advice

Post by marklar13 »

peterwantstosave wrote: Fri Dec 22, 2017 2:26 pm Wondering: Should I contribute to all three: 403b and Roth 403b, and Roth IRA? (Right now I am only contributing to pre-tax 403b and Roth IRA, should I also be contributing to my Roth 403b?)
I think you probably want to prioritize in the following order:
  • 403b up to match
  • Roth IRA
  • 403b up to max
Here's the short wiki entry on prioritizing investments: https://www.bogleheads.org/wiki/Priorit ... nvestments. I *think* that based on your income, it would make sense for you to do Roth 403b contributions if available to you.
feehater
Posts: 233
Joined: Fri Jul 14, 2017 10:14 am

Re: Introducing Myself, Seeking Retirement Advice

Post by feehater »

One exception to the usual Roth vs Traditional debate that might affect you, is that the traditional 403b lowers your taxable income, which might make it low enough to qualify for the saver's credit. That might give you more bang for your buck if you can qualify for it.
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Peter Foley
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Location: Lake Wobegon

Re: Introducing Myself, Seeking Retirement Advice

Post by Peter Foley »

I would look into the stable value fund as an alternative to a bond fund. If it is low cost and pays over 2% (or slightly above the rate of inflation) it is not a bad place to park money to reduce risk to you level of tolerance.
Topic Author
peterwantstosave
Posts: 373
Joined: Fri Nov 24, 2017 8:28 pm

Re: Introducing Myself, Seeking Retirement Advice

Post by peterwantstosave »

Friends,

Just an update to say that I've submitted my 403b rebalance and also my future allocation request. The portfolio is set to automatically rebalance on my birthday every year:

CREF Bond Market R1 10%
Vanguard Total Stock Market Index Fund Admiral 55%
iShares MSCI EAFE International Index K 35%

The Bogleheads are great and I am very thankful

Peter
Topic Author
peterwantstosave
Posts: 373
Joined: Fri Nov 24, 2017 8:28 pm

Re: Introducing Myself, Seeking Retirement Advice

Post by peterwantstosave »

And I set up AIP in my new Schwab Roth IRA.

The bond allocation is a bit higher than I'd like ($100 min), but I'll take it for the benefit of automated Roth investing:

197.91/458.33 Total Stock Ind SWTSX
160.41/458.33 Intl Stock Ind SWISX
100/458.33 Aggregate Bond SWAGX

I *think* the 55/35/10 in my 403b and the above allocation in my Roth will work quite well.

Thank you all

Peter
Topic Author
peterwantstosave
Posts: 373
Joined: Fri Nov 24, 2017 8:28 pm

Re: Introducing Myself, Seeking Retirement Advice

Post by peterwantstosave »

Updated to get a bit closer to my desired allocation, now it's basically 56 Total Stock, 22 INTL Stock & 22 Bond)

258.33 SWTSX
100 SWAGX
100 SWISX

Wish I could automatically do 55/35/10 in my Sch IRA, but I'll take the passively indexed automatic simplicity of the above.

Thank you again.
peterwantstosave wrote: Tue Dec 26, 2017 11:28 am And I set up AIP in my new Schwab Roth IRA.

The bond allocation is a bit higher than I'd like ($100 min), but I'll take it for the benefit of automated Roth investing:

197.91/458.33 Total Stock Ind SWTSX
160.41/458.33 Intl Stock Ind SWISX
100/458.33 Aggregate Bond SWAGX

I *think* the 55/35/10 in my 403b and the above allocation in my Roth will work quite well.

Thank you all

Peter
Topic Author
peterwantstosave
Posts: 373
Joined: Fri Nov 24, 2017 8:28 pm

Re: Introducing Myself, Seeking Retirement Advice

Post by peterwantstosave »

For those interested, just wanted to post an update.

Decided to move everything I could to Vanguard. May eventually use Prime MM instead of Cred Union, but I don't mind having a brick and mortar place for emer cash.

Emergency Fund: Credit Union Savings (3 Months)
Retirement: 403b (55 VTSAX/35 Blackrock Intl/10 Cref Bond) + Vanguard Roth IRA (100% VTI)
Taxable: 100% VTI

(I have a mess of other IRAs that I am in the process of consolidating to Vanguard, but goal is for new money to be contributed each month as shown above. Will plan to level up to respective mutual funds and then respective admiral funds. No Intl in Taxable, prefer the ease and simplicity of VTI in Taxable and have some Intl in 403b

LOVE the simplicity of the above and THANK YOU Bogleheads.

For what it's worth for newbies: Schwab helped me learn the theory, but Vanguard is where it's at.
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