Question with vanguard allocation

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Joejoe00
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Question with vanguard allocation

Post by Joejoe00 » Sun Jan 21, 2018 11:32 am

I currently have 100% of my ira in Lifestrategy Growth Fund which is 90% stocks, 10% bonds...im worried about the market topping off and want to keep my earnings in case of a market correction. Would you keep 50% in lifestrategy growth and 50% in lifestrategy conservative? That way if i take a hit it wont be as noticeable. I like the lifestrategy funds: lifestrategy growth 90% stocks, 10% bonds, life stratedy moderate 60% stocks, 40% bonds and lifestrategy conservative 40% stocks, 60% bonds. Im 43 years old. Any advice would help Thnks.

lack_ey
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Re: Question with vanguard allocation

Post by lack_ey » Sun Jan 21, 2018 12:31 pm

You have the allocation wrong. There are four funds in the series:

LifeStrategy Growth (VASGX)
LifeStrategy Moderate Growth (VSMGX)
LifeStrategy Conservative Growth (VSCGX)
LifeStrategy Income (VASIX)

The stock allocations are 80% (not 90%), 60%, 40%, and 20%, with bonds used for the rest. The stocks are 60% US and the bonds are 70% US (USD) market, with the remainder being international (not USD, but the bonds are currency hedged whereas the stocks are not). It's the target date series (target retirement) that has the 90% stock allocation, at least when a few decades away from retirement.

So for starters, you are not taking as much risk as you think you are, being at 80% and not 90%. As a matter of implementation, not like it really matters, but if you want about 60% stocks you could just use the 60% stock fund, LifeStrategy Moderate Growth.


Backing up, as a matter of strategy I would point out a few things.

1. What matters is your current account balance. That's it. What kind of gains you've had, what values you went through, etc. are all irrelevant. Don't think about keeping your earnings. Think about how you would invest X dollars today.

2. Do you consider yourself a more active investor or not? It seems you're taking a fairly neutral position in terms of security selection, but here you're asking a question about timing the market. Do you believe you have market timing ability where others do not? If yes, what's your track record, how good do you think you'd be, and what are your signals for getting in and out? Let's say you reduce risk in anticipation of the market topping out. What happens if you've been waiting three years and it hasn't happened yet? How about five? Eight? Do you ever go back? Or what if the market continues on for four years, then drops 15%, but this doesn't even go below today's levels? Do you keep holding out or wait for it to drop more? What if it drops 10% more? Or what if it turns around and goes back up 5%? What's your call?

3. Just for reference, you've stumbled upon a forum of generally fairly high-to-extreme levels of market timing skepticism. Which I would argue is kind of borne out in the data. Just be prepared for the tar and feathers.

retiredjg
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Re: Question with vanguard allocation

Post by retiredjg » Sun Jan 21, 2018 12:36 pm

Joejoe00 wrote:
Sun Jan 21, 2018 11:32 am
I currently have 100% of my ira in Lifestrategy Growth Fund which is 90% stocks, 10% bonds...im worried about the market topping off and want to keep my earnings in case of a market correction.
This indicates that you are invested too aggressively for your temperament. Maybe you should be using LS Moderate Growth (60% stocks) instead. Of if 50% stocks is what you want, combine Growth and Moderate Growth half and half.

Grt2bOutdoors
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Re: Question with vanguard allocation

Post by Grt2bOutdoors » Sun Jan 21, 2018 12:37 pm

Market timing is a losers game.
Pick an asset allocation you can live with and stay the course through thick and thin. The belief that two funds is better than one suggests to me that your asset allocation is too aggressive. Suggest you move it all into Lifestrategy Moderate Growth and leave it there. At age 43, its a bit conservative, but you have to be comfortable with the risks and its clear you are not comfortable with 80/20.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Joejoe00
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Re: Question with vanguard allocation

Post by Joejoe00 » Sun Jan 21, 2018 12:44 pm

Whats your thought on target funds compared to lifestrategy?

retiredjg
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Re: Question with vanguard allocation

Post by retiredjg » Sun Jan 21, 2018 12:46 pm

They are made up of the same stuff and both are excellent choices. It all depends on whether you want the stock to bond ratio to stay the same or migrate to more bonds over time.

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Sandtrap
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Re: Question with vanguard allocation

Post by Sandtrap » Sun Jan 21, 2018 12:54 pm

Another simple alternative.

LifeStrategy Moderate Growth has an expense ratio of .14
Allocation is 60/40

You could reduce your expense ratio by switching to a "Bogle" 3 Fund portfolio instead of a "fund of funds".
Vanguard Total Stock
Vanguard Total International
Vanguard Total Bond

Also, instead of juggling from one "fund of funds", IE: LifeStrategy, Target Retirement, etc. you can adjust your allocation by changing the percentages of each of the 3 funds. Simple. Done.

Outstanding write up on the 64/40 allocation by Bernstein.
http://web.archive.org/web/20061214061 ... in6040.pdf
R. Ferri on Bernstein's 60/40
http://www.etf.com/sections/index-inve ... nopaging=1

These other options may be useful to you.
j :D

Joejoe00
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Re: Question with vanguard allocation

Post by Joejoe00 » Sun Jan 21, 2018 1:56 pm

You said three? Isnt there four? VG total stock, VG international stock, VG total bond and VG total international bond?

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Sandtrap
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Re: Question with vanguard allocation

Post by Sandtrap » Sun Jan 21, 2018 1:58 pm

Joejoe00 wrote:
Sun Jan 21, 2018 1:56 pm
You said three? Isnt there four? VG total stock, VG international stock, VG total bond and VG total international bond?
Total International Bond is a maybe per "Jack Bogle", though Vanguard really pushes it. Lot's of opinions here on that.

To Bogle or not to Bogle?. . . that is the question. . .

j :D

Joejoe00
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Re: Question with vanguard allocation

Post by Joejoe00 » Sun Jan 21, 2018 2:02 pm

Bottom line, i started a little late for retirement so im trying to "catch up". Trying to be as agressive as i can.

retiredjg
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Re: Question with vanguard allocation

Post by retiredjg » Sun Jan 21, 2018 2:15 pm

Trying to be aggressive when it makes you uncomfortable can be a sure recipe for making bad choices and losing money because of it.

The first bad choice is being too aggressive. Playing "catch up" is often the reason. The second bad choice is selling during a market crash. People who are not comfortable with their AA often do this in spite of their best intentions. Those that don't sell find the market crashes too stressful and can be unbearable to live with and be miserable for years. Health and marriages and families suffer. It's not worth that.

Don't set yourself up for this poor outcome. Pick a stock to bond ratio you can live with comfortably in the good times and the bad times. You do NOT want to go through a crash with gritted teeth and white knuckles. It just lasts too long.

Again - the first 2 sentences in your original post indicate you have gone too aggressive. Otherwise, you would not be asking about adding on the other fund to help you keep your earnings.

Joejoe00
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Re: Question with vanguard allocation

Post by Joejoe00 » Sun Jan 21, 2018 2:17 pm

Makes sense....thank you.

chabil
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Re: Question with vanguard allocation

Post by chabil » Sun Jan 21, 2018 2:44 pm

Joejoe00 wrote:
Sun Jan 21, 2018 11:32 am
I currently have 100% of my ira in Lifestrategy Growth Fund which is 90% stocks, 10% bonds...im worried about the market topping off and want to keep my earnings in case of a market correction. Would you keep 50% in lifestrategy growth and 50% in lifestrategy conservative? That way if i take a hit it wont be as noticeable. I like the lifestrategy funds: lifestrategy growth 90% stocks, 10% bonds, life stratedy moderate 60% stocks, 40% bonds and lifestrategy conservative 40% stocks, 60% bonds. Im 43 years old. Any advice would help Thnks.
I will go with the 3 fund AA as previously mentioned. Life strategy Growth is not only is aggressive in equity it also has international bonds, which you may or may not want. The cost ratio is also higher than VTSAX. It also has not done as well at the Total stock fund in a 10 year trend.
In the 3 fund portfolio, you have your equity, you have your international equity and you have your bond fund. Easier to keep track as to how they are doing, and to re balance if you need to.

Joejoe00
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Re: Question with vanguard allocation

Post by Joejoe00 » Sun Jan 21, 2018 2:57 pm

So you would go:
1. Vanguard total stock market index fund (VTSAX)
2. Vanguard total international stock index fund (VGTSX)
3. Vanguard total us bond market index fund (VBMFX)

Allocate assets as per market?

RRAAYY3
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Re: Question with vanguard allocation

Post by RRAAYY3 » Sun Jan 21, 2018 3:01 pm

Joejoe00 wrote:
Sun Jan 21, 2018 2:57 pm
So you would go:
1. Vanguard total stock market index fund (VTSAX)
2. Vanguard total international stock index fund (VGTSX)
3. Vanguard total us bond market index fund (VBMFX)

Allocate assets as per market?
Admiral Shares to reduce costs even more ... 3 fund is wonderfully boring / easy to “manage”

PFInterest
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Re: Question with vanguard allocation

Post by PFInterest » Sun Jan 21, 2018 3:02 pm

Just pick moderate growth. To be agressive as you say to make a difference, you need to save more first. 20% gain on 5K IRA contribution is great and all....but if you save another 10K you crushed that....

Joejoe00
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Re: Question with vanguard allocation

Post by Joejoe00 » Sun Jan 21, 2018 3:05 pm

Can you pick your asset allocation with admirl shares?

TwstdSista
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Re: Question with vanguard allocation

Post by TwstdSista » Sun Jan 21, 2018 3:09 pm

Joejoe00 wrote:
Sun Jan 21, 2018 3:05 pm
Can you pick your asset allocation with admirl shares?
Yes -- just split up the funds as per your own person asset allocation. for example:

50% VTSAX (Total Stock)
20% VTIAX (Total International)
30% VTBLX (Total Bond)

But using your own allocations. (you can also include International bonds if you choose....)

ETA: the above percentages are not a recommendation, merely an example which adds up to 100%
Last edited by TwstdSista on Sun Jan 21, 2018 3:12 pm, edited 1 time in total.

retiredjg
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Re: Question with vanguard allocation

Post by retiredjg » Sun Jan 21, 2018 3:09 pm

Joejoe00 wrote:
Sun Jan 21, 2018 2:57 pm
So you would go:
1. Vanguard total stock market index fund (VTSAX)
2. Vanguard total international stock index fund (VGTSX)
3. Vanguard total us bond market index fund (VBMFX)

Allocate assets as per market?
You would need to pick a stock to bond ratio. And pick how much of your stocks should be in international.

We don't know enough about your situation to help you with that decision though.

Joejoe00
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Re: Question with vanguard allocation

Post by Joejoe00 » Sun Jan 21, 2018 3:14 pm

Age 43
Salary 52,000 per year
Ira balance: 75,500
Home paid off
Cars paid off
No credit card balance

retiredjg
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Re: Question with vanguard allocation

Post by retiredjg » Sun Jan 21, 2018 3:22 pm

Lots of good news there - no debt and no mortgage or car payment. :happy

Married or single? If married, does your spouse have income? Does spouse have any accounts?

Do you have a retirement plan available at work?

Will you be getting SS?

Is that a Roth IRA or a traditional IRA?

Joejoe00
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Re: Question with vanguard allocation

Post by Joejoe00 » Sun Jan 21, 2018 3:24 pm

Spouse stay at home mom....no 401k at work. Yes will be getting SS

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dwickenh
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Re: Question with vanguard allocation

Post by dwickenh » Sun Jan 21, 2018 3:25 pm

Hello,

You are way ahead of many people your age just by having no payments on the house and car.


Here is something to help you decide on an asset allocation based on possible losses at each allocation.

https://personal.vanguard.com/us/insigh ... llocations

Study this and then decide how much in stocks and how much in bonds.

Dan
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

Joejoe00
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Re: Question with vanguard allocation

Post by Joejoe00 » Sun Jan 21, 2018 3:35 pm

I guess i just feel behind becuase i started a bit late. See some guys on here that have like 200,000 in their ira at age 32.

TwstdSista
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Re: Question with vanguard allocation

Post by TwstdSista » Sun Jan 21, 2018 3:45 pm

You can't compare yourself to other people, and especially not to random people on the internet. The past is the past, all you can do is move forward. Find an asset allocation that allows you to SWAN (sleep well at night).

Check out https://www.bogleheads.org/wiki/Asset_allocation as well as Target Date funds. The TD funds will show you what Vanguard thinks is an appropriate allocation for your particular expected retirement date. Also check out the TD funds for 5 and 10 years later to your date, and maybe even 5-10 years earlier.

Come up with an allocation you are comfortable with and then stick to it. In fact, a TD fund might just be perfect, then you will be less likely fiddle with the numbers. (Keep in mind that during the 2008 correction, the stock market lost approximately 50% of its value. I kept this in mind when determining my own AA).

epictetus
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Re: Question with vanguard allocation

Post by epictetus » Sun Jan 21, 2018 3:52 pm

the moderate growth lifestrategy fund would probably be ideal for you.
one decision. one fund.
wonderful diversification. low cost.
buy it. that's it. you are done

it sounds like you are trying to talk yourself into being more aggressive than you really are re: stock allocation.

if you have 80% in stocks be prepared for your account balance to go down by 40% at any time and stay there for awhile
if you have 60% in stocks be prepared for your account balance to go down by 30% at any time and stay there for awhile

whatever percentage you allocate to stocks plan on your account balance going down by half that much at any time and staying there for awhile.

the advantage of lifestrategy is less temptation to tinker, change directions based on fear/greed/panic/etc

Bogle has a rule of thumb of "age in bonds." that is a rule of thumb, not a hard and fast rule.

by the "age in bonds" rule of thumb the lifestrategy moderate would be about where you should be.

trying to make up for lost time by going more heavy into equities than you can tolerate during a downturn is a recipe for disaster.

and lots/most of us know that first hand :happy

hope this is helpful
Focus on what you can control

Joejoe00
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Re: Question with vanguard allocation

Post by Joejoe00 » Sun Jan 21, 2018 4:03 pm

Thank you greatly appreciated for ur input...one other question...what is the average return for an IRA? Currently have been averaging 10.3%.

retiredjg
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Re: Question with vanguard allocation

Post by retiredjg » Sun Jan 21, 2018 4:14 pm

Joejoe00 wrote:
Sun Jan 21, 2018 3:24 pm
Spouse stay at home mom....no 401k at work. Yes will be getting SS
Thanks for the updates.

We understand why you feel the need to catch up. But catch up decisions are one of the things that can lead to doing stupid stuff and we'd like to help you avoid that. :happy

The answer is not to be too aggressive. The answer is to save more and to save longer. That is the painful truth. Anything else is a shortcut that may backfire. You really cannot afford a backfire. It could be devastating.

I'd like to suggest that about 75% stocks and 25% bonds is a good place for you to be for a few years. In my opinion, "age in bonds" is a conservative allocation and "age minus 20" in bonds is an aggressive allocation. So 57% stock/43% bonds would be conservative and 77% stocks and 23% bonds would be aggressive. Using that logic, you could be at 75/25 for a few years before you start being what I would consider "too aggressive".

Again, these are opinions, not facts. Others might suggest something else. In fact most companies' target funds might be somewhat more aggressive than that. But your discomfort with what you thought was a 90/10 allocation in the LS Growth fund leads me to believe my suggestion may not be too far off for you.


Yes, some guys have $200k in retirement savings at 32, but this is unusual. Those folks that do have $200k in savings at 32 usually have a lot of debt and a much higher salary. You cannot compare your situation to theirs.

I think you are a little behind in retirement savings, but your lack of mortgage and debt goes A VERY LONG way in making up for that. There is no need to panic at this point.

BTW...is that IRA a Roth IRA or traditional IRA?

Does your wife have any retirement accounts?

Do you have an emergency fund?

retiredjg
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Re: Question with vanguard allocation

Post by retiredjg » Sun Jan 21, 2018 4:15 pm

Joejoe00 wrote:
Sun Jan 21, 2018 4:03 pm
Thank you greatly appreciated for ur input...one other question...what is the average return for an IRA? Currently have been averaging 10.3%.
It depends entirely on how the money is invested.

Greater risk produces greater returns as well as greater drops and longer recoveries in a market crash.

Joejoe00
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Re: Question with vanguard allocation

Post by Joejoe00 » Sun Jan 21, 2018 4:29 pm

Fyi its a traditional ira... only have about 7,000 in savings.

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badbreath
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Re: Question with vanguard allocation

Post by badbreath » Sun Jan 21, 2018 5:15 pm

your wife can have a tIRA ( spousal IRA) also which may help you save more

www.investopedia.com/articles/retirement/03/021903.asp

We really should do something in the wiki on this option
“While money can’t buy happiness, it certainly lets you choose your own form of misery.” Groucho Marx

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Rowan Oak
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Re: Question with vanguard allocation

Post by Rowan Oak » Sun Jan 21, 2018 8:32 pm

Joejoe00 wrote:
Sun Jan 21, 2018 3:35 pm
I guess i just feel behind becuase i started a bit late. See some guys on here that have like 200,000 in their ira at age 32.
I think most of us felt behind at some point and many still do. The important thing is you're ready now. You may look back one day and be thankful you began at the young age of 43.

I have found that in addition to the great advice you get here it really helps to read the right books early on. These books may provide the foundation you need to weather the storm when it comes.

These are a great start:

Jack Bogle's "The Little Book of Common Sense Investing, 10th Anniversary Edition"
"Little Book of Common Sense Investing--10th Anniversary Edition" A Gem

"If You Can" - William Bernstein, Ph.D., M.D. (very short and worth your time)

https://www.etf.com/docs/IfYouCan.pdf

"If You Can: How Millennials Can Get Rich Slowly"-- A Gem

"The Simple Path to Wealth" by JL Collins
"The Simple Path to Wealth" -- A Gem

Also, the Boglehead wiki is a great place to learn. Start here - Getting started
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger

retiredjg
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Re: Question with vanguard allocation

Post by retiredjg » Mon Jan 22, 2018 8:47 am

It appears you are in the 12% tax bracket. You have an emergency fund, paid for home and cars and no debt.

We don't know how much you are able to save each year, but you already know it needs to be as much as possible. You can put $5,500 into an IRA for you and another $5,500 into an IRA for your wife. At age 50, that number goes up some. If you can save more than that $11k each year, you can save for retirement in what is called a "taxable account" which is just an ordinary account that does not have some kind of tax-advantage.

The question is what kind of IRA?

If you use traditional IRA, that reduces your taxable income now. The lower your income, the lower your taxes now, but also the more "Saver's Credit" you can get on your Federal taxes. Are you already doing the Saver's Credit? If not, you should look into it because you could get money back on your taxes which means you can save more. Here is some information.

https://www.bogleheads.org/wiki/Saver%27s_credit


If, instead, you use Roth IRA, that can have some advantages too - in retirement, you would not pay tax on the money coming out of Roth IRA. If for some reason you cannot use the Saver's Credit, Roth IRA might be preferable.

Saving some in Roth IRA and some in traditional IRA is also considered a good idea.

As for what to invest in, using a Target fund is a good idea for many reasons. It rebalances itself and all you have to do is add money. The target funds migrate slowly toward more bonds so that is done for you by the fund instead of you doing it yourself over time. One other good thing about the all in one funds (like target funds and the LifeStrategy series) is that during a crash, you won't see one fund doing much more poorly than another fund. Some people find this less scary.

On the other hand, using individual funds will work just as well and they are a little lower cost. There is more work for you to do though. Every year or so, you would need to check to be sure your percentages are still on or near your target. If you have too much of something, you would sell some of it it and buy the thing you have too little of.

If you decide to use the individual funds and if you decide to use a stock to bond ratio of 75/25, you would sell what you currently have and buy these 3 funds (or you could buy 4 funds including the international bond fund):

53% VTSAX (Total Stock)
22% VTIAX (Total International)
25% VTBLX (Total Bond)

I also like the 50/20/30 allocation posted earlier by TwstdSista.

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Re: Question with vanguard allocation

Post by retiredjg » Mon Jan 22, 2018 9:01 am

Cost difference.....at your present level of about $75,500, the extra cost of using a LifeStrategy fund(s) or a target fund is about $75 a year. It boils down to about $10 extra for every $10k you have invested.

Some people would happily pay that to have someone else manage their portfolio. Others would not. There are good arguments on both sides of this question so do what you are most comfortable with. Either choice qualifies as "low cost".

Joejoe00
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Re: Question with vanguard allocation

Post by Joejoe00 » Mon Jan 22, 2018 5:47 pm

Im not understanding the SAVERS CREDIT...can anyone explain it to me in laymens terms? I am already deducting my 5500 per year from my traditional ira. Thnks

TwstdSista
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Re: Question with vanguard allocation

Post by TwstdSista » Mon Jan 22, 2018 6:24 pm

Joejoe00 wrote:
Mon Jan 22, 2018 5:47 pm
Im not understanding the SAVERS CREDIT...can anyone explain it to me in laymens terms? I am already deducting my 5500 per year from my traditional ira. Thnks
The savers credit applies to lower income earners. There are three tiers of the credit, but it only applies if your 2017 income is $62000 or less (married filing joint), $46500 or less (head of household) or $31000 or less (single). If your income qualifies, you can get a credit of 50%, 20% or 10% of your contribution on your tax return. (subject to limits)

The tiers and credit are explained here: https://www.irs.gov/retirement-plans/pl ... ers-credit.

Joejoe00
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Re: Question with vanguard allocation

Post by Joejoe00 » Mon Jan 22, 2018 6:30 pm

Is the savers credit ontop of the 5500 you deduct from your ira contribution? I currently make 52,000 per year and file joint with wife...wife does not work.

TwstdSista
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Re: Question with vanguard allocation

Post by TwstdSista » Mon Jan 22, 2018 6:35 pm

If it is a traditional IRA contribution, then yes. You would subtract the $5500 from your income.

The Savers Credit limit is $2000 each for a married couple, so if your 2017 AGI falls between $40,001 - $62,000 you would fall in the 10% range. And 10% of $2000 is $200, so you would get a credit of $200 on your return.

You can double this by also contributing to a spousal IRA for your wife. Deposit at least $2000, and she will also be eligible for the 10% credit, another $200.

retiredjg
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Re: Question with vanguard allocation

Post by retiredjg » Wed Jan 24, 2018 11:37 am

JoeJoe00, I'm not sure the saver's credit is going to help you much, but let's take a look.

Look at your tax returns for this year (if started or done) and last year. Your AGI is the adjusted gross income - the last line on the front of Form 1040 and Form 1040A.

Since you are married filing jointly, you can get some benefit from the saver's credit if that number (for 2017) is under $62k which it will be because your salary is $52k. It appears your AGI will be in the range of $40,001 and $62,000 so your credit (from the IRS link) will be 10% of what you put into IRA up to $2,000. If you save $5,500 in IRA, you get a credit of $200 (they only give you credit for the first $2000 in contributions).

Notice that if you can't save more in IRA but split it between your IRA and Her IRA, you get a credit of $400 instead of just $200.

If your AGI should happen to be near that $40,001 number and put more in tIRA to get your AGI under the $40,001, you would get a credit of 20% instead of 10%.

If nothing you do will get that number below $40,001, I'd use Roth IRA, instead of tIRA. It does not matter what type of IRA you use as long as your AGI is not over $62k (for 2017).

I've never done the saver's credit, but this is how I understand it works. If you have more questions, you could start anew thread just about the saver's credit.

If you have been contributing to IRA for several years, I don't see any reason why you could not amend your tax returns and get money back. I'm not sure how far back you can amend - 3 years comes to mind, but that's a guess.

retiredjg
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Re: Question with vanguard allocation

Post by retiredjg » Wed Jan 24, 2018 11:51 am

This is the form you would fill out to get the tax credit. https://www.irs.gov/pub/irs-pdf/f8880.pdf. There should be forms available on the internet for previous years if you decide to amend previous year's taxes.

livesoft
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Re: Question with vanguard allocation

Post by livesoft » Wed Jan 24, 2018 12:44 pm

What about your spouse's IRA? I think you listed only your IRA. She should have her own IRA since she is eligible to have one.
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Re: Question with vanguard allocation

Post by boglefannyc » Wed Jan 24, 2018 1:32 pm

Joejoe00 wrote:
Sun Jan 21, 2018 3:14 pm
Age 43
Salary 52,000 per year
Ira balance: 75,500
Home paid off
Cars paid off
No credit card balance
Joejoe00 wrote:
Sun Jan 21, 2018 3:35 pm
I guess i just feel behind becuase i started a bit late. See some guys on here that have like 200,000 in their ira at age 32.
You are way ahead of me when I was your age. On this forum, it is too easy to feel left behind :D

Joejoe00
Posts: 45
Joined: Sun Jan 21, 2018 11:22 am

Re: Question with vanguard allocation

Post by Joejoe00 » Wed Jan 24, 2018 4:09 pm

Do i just give that form to my tax person or can i just send it in on my own? And how many years can i go back? Thnks

TwstdSista
Posts: 515
Joined: Thu Nov 16, 2017 4:03 am

Re: Question with vanguard allocation

Post by TwstdSista » Wed Jan 24, 2018 4:17 pm

Your tax person should know about the Saver's Credit -- but mention it to them, so it doesn't get lost. You have three years to amend your tax return, so I believe only 2015 and 2016 are amendable currently (2015 will expire on tax day this April).

Joejoe00
Posts: 45
Joined: Sun Jan 21, 2018 11:22 am

Re: Question with vanguard allocation

Post by Joejoe00 » Wed Jan 24, 2018 4:22 pm

Thank you, i never heard of savers credit...i usually just deduct my 5500 per year for my ira contribution.

TwstdSista
Posts: 515
Joined: Thu Nov 16, 2017 4:03 am

Re: Question with vanguard allocation

Post by TwstdSista » Wed Jan 24, 2018 4:33 pm

Don't forget the spousal IRA for your wife. Twice the deduction and twice the Saver's Credit!

RudyS
Posts: 968
Joined: Tue Oct 27, 2015 10:11 am

Re: Question with vanguard allocation

Post by RudyS » Wed Jan 24, 2018 4:38 pm

Why are you using a "tax person"? Have you thought about Turbotax or equivalent? Your situation seems pretty simple, and I'm concerned that a "tax person" would not have come up with savers credit. If someone used some tax software in forms mode rather than interview mode I guess it's possible, but still shouldn't happen. There might be other credits you are missing, like for any educational expenses. I hope I am not diverting the thread, but we want to save you money!

retiredjg
Posts: 31523
Joined: Thu Jan 10, 2008 12:56 pm

Re: Question with vanguard allocation

Post by retiredjg » Wed Jan 24, 2018 4:57 pm

If you have a tax person, I'm wondering why the tax person has not yet noticed that you are eligible for the saver's credit.

They could overlook a Roth IRA contribution because those are not reported on your taxes. However, your traditional IRA contributions ARE reported on your taxes. Any professional tax person SHOULD notice your AGI and your IRA contribution and realize you are eligible. That's their job. I can see how it might get overlooked once, but not several times.


I think you might be able to amend 2014, 2015, and 2016 but you need to find out. If you can amend 2014, that opportunity will expire on tax day this year. If you can't go back to 2014, then the opportunity to amend 2015 will expire on tax day.

Make your tax person (or the company if you go to someone like H&R Block) amend the tax returns with no charge to you (other than maybe charging for the additional form if they would have charged for it in the first place). Get in there now and get it done before they get busy.

Consider that you need to do your own taxes. It can be pretty simple once you learn a little bit. Is there some reason you think your taxes are complicated?

retiredjg
Posts: 31523
Joined: Thu Jan 10, 2008 12:56 pm

Re: Question with vanguard allocation

Post by retiredjg » Wed Jan 24, 2018 5:05 pm

If you don't mind sharing, what kind of tax service are you using?

retiredjg
Posts: 31523
Joined: Thu Jan 10, 2008 12:56 pm

Re: Question with vanguard allocation

Post by retiredjg » Wed Jan 24, 2018 5:14 pm

Here is some information on how to file an amended return.

https://www.irs.com/articles/how-amend- ... de-mistake

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