I have been swallowing my fear and diving into this topic for the last 2-3 months. I am planning to enroll in Deferred Comp 457(b) with my next raise, this summer. I am wishing I had enrolled when I began employment at my current place of work (civil servant). My income is low end and I am divorced, so I want to sock away as much as I am capable of without destabilizing my financial recovery.
Emergency funds: Currently at 2 months’ expenses, but plan to have 3mo by enrollment date, and continue from there (my pay is auto-split into checking, set amount for expenses, and remainder into savings, so this should be doable)
Debt: Zero debt, but don’t congratulate me, I’m a recent BK7 (dc 2017). Determined to stay on the right path.
Tax Filing Status: Single
Tax Rate: 15% Federal, 3.07% State
State of Residence: PA
Desired Asset allocation: age -10 so 78% stocks / 22% bonds.
Desired International allocation: I am thinking 20%
Risk Tolerance (I added this): Tbh, I am highly risk-averse. However, I am also patient, and decent in stressful situations. I want to go with a riskier profile (for now) due to my age and the fact that I plan to retire some years away.
Defined Benefit Pension, total account balance (8.8 years of service): $19,300
Outside that, zero.
No employer match, $50/pay to start, beginning summer 2018 (next pay raise). = $1,300/year
Future pay increases I will alternate between either adding an additional $25 to deferred comp, or letting the pay increase go to cash savings. (I typically receive one pay increase per year, occasionally two, although they must be negotiated in contracts and that is very administration-specific)
Great West Aggressive MXAPX 0.0152%
Great West Moderate MXMPX 0.0164%
Great West Conservative MXCPX 0.0143%
EAFE Equity MXINX 0.02%
S&P Mid Cap 400 MXMDX 0.0200%
S&P Large Cap 500 MXVIX 0.0100%
60/40 Balanced Stock & Bond MXSBX? 0.0140%
US Bond MXBIX 0.0200%
Short-Term Investment MXSDX 0.0000%
Great West Stable Value (can’t find ticker?) 0.3050%
Fees: The account already has an annual fee of $24, deducted monthly, which basically negates one of my payments, and a 0.07% asset based fee. Additionally, opting for a managed account or a “help me manage my account” option adds a 0.45% fee.
Proposals - image or code format
click to go to image format - https://imgur.com/a/XwTY7
Code: Select all
Proposal 1 Pct Fund Name ER US St Intl St Bond Cash/Oth 75% GWL Aggressive 71.02% 25.63% 0.07% 3.28% GWL Moderate 43.63% 14.83% 18.96% 22.58% GWL Conservative 23.04% 6.65% 38.23% 32.08% 2% EAFE Equity 1.19% 92.38% 0.00% 6.43% S&P MidCap 400 98.51% 0.72% 0.00% 0.77% S&P LargeCap 500 98.79% 0.99% 0.00% 0.22% Balanced Fund 45.92% 13.47% 34.42% 6.19% 23% US Bond 0.00% 0.00% 99.08% 0.92% Short Term 0.00% 0.00% 91.79% 8.21% Stable Value 100.00% Total/avg 0.02% 53.29% 21.07% 22.84% 2.80% Proposal 2 Pct Fund Name ER US St Intl St Bond Cash/Oth GWL Aggressive 71.02% 25.63% 0.07% 3.28% GWL Moderate 43.63% 14.83% 18.96% 22.58% GWL Conservative 23.04% 6.65% 38.23% 32.08% 22% EAFE Equity 1.19% 92.38% 0.00% 6.43% 55% S&P MidCap 400 98.51% 0.72% 0.00% 0.77% S&P LargeCap 500 98.79% 0.99% 0.00% 0.22% Balanced Fund 45.92% 13.47% 34.42% 6.19% 23% US Bond 0.00% 0.00% 99.08% 0.92% Short Term 0.00% 0.00% 91.79% 8.21% Stable Value 100.00% Total/avg 0.02% 54.44% 20.72% 22.79% 2.05%
1. Before I even discovered what a three-fund portfolio was, that was almost what I’d chosen. However, due to the contents of the funds, the allocations are wonky (Proposal 1), so I also put together Proposal 2 – which uses what I believe are more straightforward, but slightly higher cost funds. I’d personally rather use lower cost even if wonkier percentages to get my target allocations, but do let me know your thoughts.
2. Are these ERs any good? From what little searching I’ve done, they appear on the good side.
3. My deferred comp rep mentioned that some folks use their deferred comp not as a supplement for their retirement/SSA, but to fill the gap between when they actually leave their job and when their (pension/IRA) and SSA kick in. What are your thoughts on the wisdom of this? I would be eligible to retire from my job in 2044 (58yo), but intend to keep working until SS eligible (if able; current disabilities permitting), if that aids your answer.
4. Obviously newbie question, but do I also decrease my international exposure as I age?
p.s. I want to thank you for transcribing all of your videos on the main wiki. Not everyone does, and it matters a great deal that you take the time and effort to do this so that your content is accessible to all.