Wife Retiring hesitant to roll-over funds to Vanguard

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Flymore
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Wife Retiring hesitant to roll-over funds to Vanguard

Post by Flymore » Sat May 19, 2018 3:20 pm

Wife maybe retiring soon.
She's hesitant to roll-over her funds to Vanguard, as I have my funds there and she's worried about all eggs in one place.
We reviewed the performance of her funds, with the company plan and they clearly underperformed the Vanguard funds over past 10 years.
Suggested she look into Swab or Fidelity, but I don't see any problem with her using Vanguard also.

She's usually right. :D
Any thoughts?

thanks

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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by KyleAAA » Sat May 19, 2018 3:26 pm

Both Schwab and Fidelity offer excellent index funds and are far better as actual brokerages. I see no reason to argue the point.

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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by capjak » Sat May 19, 2018 3:28 pm

I use schwab and fidelity and vanguard, just do not want one of them to get locked for a few days when I need my money. I think having more than one is a very reasonable approach.

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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by bengal22 » Sat May 19, 2018 3:44 pm

I agree with wife. I would not have all assets at one place. It maybe an emotional decision but one I can live with.
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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by dm200 » Sat May 19, 2018 3:46 pm

Let her do what she wants. If Anything goes wrong with her money at vanguard, you will be blamed (even if 100% innocent).

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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by FGal » Sat May 19, 2018 3:47 pm

http://jlcollinsnh.com/2012/09/07/stock ... ets-nuked/

The best argument for not really caring about the "eggs in one basket" scenario I've read.

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dm200
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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by dm200 » Sat May 19, 2018 3:48 pm

Does she have to move the money OR can it stay in employer plan?

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Flymore
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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by Flymore » Sat May 19, 2018 6:15 pm

dm200 wrote:
Sat May 19, 2018 3:48 pm
Does she have to move the money OR can it stay in employer plan?
It can stay with the employer plan, (she may yet do that) but I was comparing their funds with Vanguard and over the last 10 years Vanguard outperformed significantly. Because of that, I think she should move it out.

The other reason is with the employer plan she can't pick and choose which funds to withdraw from, she has to take an equal percentage from them all and she can't redirect dividends to her checking account.
A bit strange.


thanks

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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by Malinois000 » Sat May 19, 2018 7:31 pm

I agree with wifey. We have both Schwab and Vanguard. Both are great but I prefer Schwab. The overall diversification argument of your wife is compelling in my view although I wouldn't personally worry about the total at Vanguard.

Happy wife, happy life!

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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by tractorguy » Sat May 19, 2018 8:21 pm

As others have said, you can get equivalent returns if you pick the right funds at Fidelity or Vanguard. If your wife has concerns, why fight it and just give in to her and move her money to one of them. It doesn't sound like her company plan is worth staying with.
Lorne

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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by bondsr4me » Sat May 19, 2018 8:25 pm

FGal wrote:
Sat May 19, 2018 3:47 pm
http://jlcollinsnh.com/2012/09/07/stock ... ets-nuked/

The best argument for not really caring about the "eggs in one basket" scenario I've read.
Thanks for link.
Good to read this.
I know VG has some work to do; ie technology, customer service issues.
I still TRUST VG more than the others.
I do like/use Schwab, Fidelity, TDA.

Don

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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by TimeRunner » Sat May 19, 2018 10:14 pm

It's not a forever choice. I'd use Fido or Schwab for now, and at some point when VG gets on top of their customer service and IT issues, consider moving it over. If you have a local Fido or Schwab office, that's a plus.
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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by UpperNwGuy » Sat May 19, 2018 11:32 pm

Her money. Her choice.

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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by freebeer » Sat May 19, 2018 11:41 pm

Flymore wrote:
Sat May 19, 2018 6:15 pm
...

It can stay with the employer plan, (she may yet do that) but I was comparing their funds with Vanguard and over the last 10 years Vanguard outperformed significantly. Because of that, I think she should move it out...
Are these actively traded funds or ? A lot of 401ks have gotten better about offering low cost options so last 10 years may mean less than whether they have reasonable option(s) now.

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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by cadreamer2015 » Sun May 20, 2018 6:45 am

We are not concerned about having essentially all of our financial assets at Vanguard. But as others have written, it is your wife's money and she should do what is reasonable to sleep well at night. Fidelity or Schwab are reasonable choices to roll over her 401k investments, as long as one invests in low cost funds.
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Flymore
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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by Flymore » Sun May 20, 2018 7:34 am

freebeer wrote:
Sat May 19, 2018 11:41 pm
Flymore wrote:
Sat May 19, 2018 6:15 pm
...

It can stay with the employer plan, (she may yet do that) but I was comparing their funds with Vanguard and over the last 10 years Vanguard outperformed significantly. Because of that, I think she should move it out...
Are these actively traded funds or ? A lot of 401ks have gotten better about offering low cost options so last 10 years may mean less than whether they have reasonable option(s) now.
It doesn't say actively managed in the prospectus.
State Street S&P500 Index Fund Class k is the fund name.
If you compare this fund with a benchmark for the past 5 years you'll see what I mean.

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Flymore
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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by Flymore » Sun May 20, 2018 7:39 am

tractorguy wrote:
Sat May 19, 2018 8:21 pm
As others have said, you can get equivalent returns if you pick the right funds at Fidelity or Vanguard. If your wife has concerns, why fight it and just give in to her and move her money to one of them. It doesn't sound like her company plan is worth staying with.
One job I had was at Fidelity and didn't like them because it seemed I always was in the wrong fund.

I'm showing her the options and inputs from your posts - yes it's up to her.

Thanks

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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by drg02b » Sun May 20, 2018 8:24 am

While I'd move to VG, you can't go wrong with any of them, just get them out of the subpar employer plan.

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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by dm200 » Sun May 20, 2018 8:31 am

drg02b wrote:
Sun May 20, 2018 8:24 am
While I'd move to VG, you can't go wrong with any of them, just get them out of the subpar employer plan.
Be aware that IRA funds are (or may be) more subject to creditors than employer plans (401l, 403b, etc.).

I learned the hard way when a civil case judgment took $400,000 from IRA funds.

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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by oldcomputerguy » Sun May 20, 2018 8:35 am

My wife also is of the "all eggs in one basket" mindset. We've discussed moving everything to Vanguard in the past, and we concluded that neither of us was comfortable having our entire life savings located where there was a single point of failure.

Right now we have my tIRA and both our Roths at Fidelity, our taxable account at Vanguard, and her 401k at Schwab, and I don't lose any sleep over it. Everything is in low-cost index funds, so it really doesn't matter.
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by oldcomputerguy » Sun May 20, 2018 8:39 am

dm200 wrote:
Sun May 20, 2018 8:31 am
Be aware that IRA funds are (or may be) more subject to creditors than employer plans (401l, 403b, etc.).
I think this varies from state to state. The OP should check to see if such protection exists in his state for IRA funds. (Protection for 401k plans is at a Federal level.)
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by Reb Tevye » Sun May 20, 2018 8:41 am

“Husband of Wife Retiring hesitant to roll-over her funds to Schwab?”

😀
"So, what would have been so terrible if I had a small fortune?"

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dm200
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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by dm200 » Sun May 20, 2018 9:35 am

oldcomputerguy wrote:
Sun May 20, 2018 8:39 am
dm200 wrote:
Sun May 20, 2018 8:31 am
Be aware that IRA funds are (or may be) more subject to creditors than employer plans (401l, 403b, etc.).
I think this varies from state to state. The OP should check to see if such protection exists in his state for IRA funds. (Protection for 401k plans is at a Federal level.)
Very true. Note that there are (or may be) VERY different rules for whether or not you declare bankruptcy. More "protection" if in bankruptcy (seems backwards - )

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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by TBillT » Sun May 20, 2018 9:38 am

Usually there is no reason for an instant decision. I left my 401K in there for about 7 years after retirement before rollover, and my wife is still in hers after retirement. I think we are about ready to rollover hers now though, now that interest rates are up on CD's etc.

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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by oldcomputerguy » Sun May 20, 2018 9:43 am

TBillT wrote:
Sun May 20, 2018 9:38 am
Usually there is no reason for an instant decision. I left my 401K in there for about 7 years after retirement before rollover, and my wife is still in hers after retirement. I think we are about ready to rollover hers now though, now that interest rates are up on CD's etc.
In fact I struggled with my decision at retirement of whether to leave the money in my 401k or roll it out. Finally I chose to roll it out to an IRA, based on two factors: (1) the company I was leaving was being acquired by another company just as I left; and (2) I got a look at the options in the acquiring company's 401k and decided they were horrible.

If I could have left my money in the options I had (which were all index funds including Fidelity S&P500 Institutional), I likely would have done so. As it is, I'm in good fund choices where I am, and my state has protection laws for traditional IRAs, so I don't lose sleep over my decision.
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by Big Dog » Sun May 20, 2018 9:56 am

one anecdote: my mom had accounts at several brokerages, including Vanguard and Schwab. All were PoD/ToD. (When she died, Schwab was a PIA to get the accounts transferred. Vanguard made it happen within a few days of receiving a certified death certificate.) Schwab said it would go faster if I opened an account with them -- uh, no thanks to that marketing blackmail. But after a couple of weeks, I finally relented an opened an account at Schwab to receive the stock transfer. Fortunately, they had the cost-basis correct. Then I promptly closed it and transfer everything to Vanguard.

But to be fair, the full service Neuberger was the absolute worst in stock transfers.

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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by drk » Sun May 20, 2018 10:11 am

Flymore wrote:
Sun May 20, 2018 7:34 am
It doesn't say actively managed in the prospectus.
State Street S&P500 Index Fund Class k is the fund name.
If you compare this fund with a benchmark for the past 5 years you'll see what I mean.
Just to confirm, you mean SSSYX? I think you're accidentally comparing price change rather than total return. Here's its total return chart compared to Vanguard 500 Index:

Image

The issue is that you're comparing apples and oranges in terms of funds. State Street has a habit of making large capital gains distributions from its index funds, whereas Vanguard makes none for funds with an ETF share class. By ignoring reinvested distributions, State Street's fund will appear to severely lag its Vanguard complement.

I still think she should do whatever she wants with the roll-over, but that fund's underperformance shouldn't force the issue.

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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by Ged » Sun May 20, 2018 10:14 am

dm200 wrote:
Sun May 20, 2018 9:35 am
oldcomputerguy wrote:
Sun May 20, 2018 8:39 am
dm200 wrote:
Sun May 20, 2018 8:31 am
Be aware that IRA funds are (or may be) more subject to creditors than employer plans (401l, 403b, etc.).
I think this varies from state to state. The OP should check to see if such protection exists in his state for IRA funds. (Protection for 401k plans is at a Federal level.)
Very true. Note that there are (or may be) VERY different rules for whether or not you declare bankruptcy. More "protection" if in bankruptcy (seems backwards - )
I think this is the only argument for leaving a 401K at an employer. It should be noted that there are stories out there that the failure of a company can result in inability to access 401K funds for significant period of time. These accounts can be frozen until a company bankruptcy is discharged. That risk is probably much greater than the risk of failure of Fido, Vanguard, etc. leading to inability to access accounts.

https://thelawdictionary.org/article/im ... -bankrupt/

You should investigate your state's laws on the protection of retirement accounts. It varies a lot. You need to weigh the variety of risks and costs. It's not a simple slam dunk.

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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by Watty » Sun May 20, 2018 10:16 am

One thing to watch out for is that the inheritance rules for a retirement plan may be different and possibly much worse than for an IRA and it may vary by the details of the plan so she would need to look into of that. This will not be in the glossy literature that the HR department hands out so she would need to wade through detailed plan document. Even if her plan is OK now the plan may be changed 10 or 20 years from now.

For example here a wiki on some of the issues with the TSP plan which is basically a federal employee 401k like retirement plan. The problem is that in some situations the heir may be forced to withdraw all the money from a TSP and pay taxes on it in a high tax bracket. There have been posts by people that found themself in that situation when they inherited a parents TSP and in some cases they could have saved a six figure of amount of taxes if their parents had rolled the TSP money out to an IRA.

https://www.bogleheads.org/wiki/TSP_estate_planning

I do not agree with it but a reasonable case can be made for having your money with different companies and she can do fine at many of the major companies as long as she stays away from high cost financial advisors.

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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by bikechuck » Sun May 20, 2018 10:25 am

FGal wrote:
Sat May 19, 2018 3:47 pm
http://jlcollinsnh.com/2012/09/07/stock ... ets-nuked/

The best argument for not really caring about the "eggs in one basket" scenario I've read.
I like Mr. Collins and have learned a lot from his writings but I do not feel that this piece of his addresses my concerns with having all of my investments in one place. I worry that any company could become the target of a cyber attack or simply experience a systems failure that is difficult to recover from. While things would most likely eventually get sorted out, it could limit my access to my funds when I need them. I will always have my funds distributed between at least two investment providers and one or two banks.

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dm200
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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by dm200 » Sun May 20, 2018 10:29 am

My opinion is that the bigger risk is temporary (short term) lack of access vs an actual loss of meltdown.

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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by PFInterest » Sun May 20, 2018 10:38 am

Flymore wrote:
Sat May 19, 2018 3:20 pm
Wife maybe retiring soon.
She's hesitant to roll-over her funds to Vanguard, as I have my funds there and she's worried about all eggs in one place.
We reviewed the performance of her funds, with the company plan and they clearly underperformed the Vanguard funds over past 10 years.
Suggested she look into Swab or Fidelity, but I don't see any problem with her using Vanguard also.

She's usually right. :D
Any thoughts?

thanks
so first you are barking up the wrong tree. looking at past to predict the future is a fools errand.
if she has good normal index funds in her employer plan with low fees then she doesnt have to do anything.
also dont forget about future backdoor rIRA if needed.
also if important asset protection also matters if moving to an IRA.
you should show her the wiki page on all eggs in one basket and why that doesnt really matter for these large companies vs something like bernie maddoff.

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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by Earl Lemongrab » Sun May 20, 2018 2:04 pm

drk wrote:
Sun May 20, 2018 10:11 am
Flymore wrote:
Sun May 20, 2018 7:34 am
It doesn't say actively managed in the prospectus.
State Street S&P500 Index Fund Class k is the fund name.
If you compare this fund with a benchmark for the past 5 years you'll see what I mean.
Just to confirm, you mean SSSYX? I think you're accidentally comparing price change rather than total return.
Yeah, State Street index funds are very good. Megacorp has them and they track their benchmark well.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by Flymore » Sun May 20, 2018 5:57 pm

Information on fund comparison has been passed along to the wife.

Still doesn't like that with her current plan, she can't select which fund(s) to withdraw from - it has to be a percentage of the entire portfolio.

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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by tibbitts » Sun May 20, 2018 6:00 pm

Flymore wrote:
Sat May 19, 2018 3:20 pm
Wife maybe retiring soon.
She's hesitant to roll-over her funds to Vanguard, as I have my funds there and she's worried about all eggs in one place.
We reviewed the performance of her funds, with the company plan and they clearly underperformed the Vanguard funds over past 10 years.
Suggested she look into Swab or Fidelity, but I don't see any problem with her using Vanguard also.

She's usually right. :D
Any thoughts?

thanks
My thought is that no wonder - she keeps reading the horror stories about Vanguard brokerage accounts on Bogleheads. Sadly Vanguard has eliminated (new) mutual fund accounts and now all they have are those sub-par brokerage accounts.

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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by arcticpineapplecorp. » Sun May 20, 2018 6:59 pm

why don't you have your wife read the following:

https://www.bogleheads.org/wiki/Vanguard_safety

The answer addresses the question, "What if Vanguard went broke?" I'm assuming that's why your wife is concerned with putting all her eggs in one Vanguard basket. Reading the link above should put her mind at ease.
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Re: Wife Retiring hesitant to roll-over funds to Vanguard

Post by Big Dog » Sun May 20, 2018 7:06 pm

Sadly Vanguard has eliminated (new) mutual fund accounts and now all they have are those sub-par brokerage accounts.
I've been a long-time Vanguard fund holder and see no real difference since I moved all to the brokerage accounts. Of course, we are buy-and-hold with few transactions per year.

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