Looking for assistance simplifying retirement accounts

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bradinsky
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Joined: Sat Jul 21, 2018 6:32 am

Looking for assistance simplifying retirement accounts

Post by bradinsky » Mon Jul 23, 2018 3:27 pm

<t>Good afternoon!<br/>
This is my first attempt to post anywhere on line, so I'll do my best.<br/>
My wife & I are both 65, and we are retired. We've both worked hard & done reasonable well, but I can't help but feel that if I had made better decisions, we'd be in better shape financially. That said, we have our investment accounts with Edward Jones. I feel that there is a fair amount of overlap in the accounts, it's confusing and we mostly feel abandoned by the adviser. He seems to spend most of the time hunting for new clients, and very little watching ours! I have decided to take this on myself, and forgo the adviser. The 3 fund approach looks appealing, and I am trying to learn more about it. I'll share a few details below.<br/>
<br/>
Combined monthly Social Security income is $3000.00. 2017 tax bracket was 25%. This year it will be between 18 - 22%.<br/>
Home is paid for & worth $225K. Property tax is $4200.00 yearly. No other significant bills.<br/>
We have a 1 year emergency fund & additional cash available for investing is $200K.<br/>
At Edward Jones -
Our joint accounts total $27500.00, with $175000.00 in mutual funds, $27000.00 in ETFs, $37000.00 in stocks,
$9000.00 cash & a $27000.00 annuity.
My IRAs total $242000.00 with $106000.00 in mutual funds, $75000.00 in stocks & $61000.00 in ETFs
My wife's IRAs total $95000, with $83000.00 in mutual funds & $12000.00 in EFTs.
There are about 37 mutual funds & ETFs in the above 3 accounts, and 10 individual stocks.

I appreciate any, and all of the sage advice that you may have available. Thank you!!

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FiveK
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Re: Looking for assistance simplifying retirement accounts

Post by FiveK » Mon Jul 23, 2018 5:36 pm

bradinsky wrote:
Mon Jul 23, 2018 3:27 pm
<t>Good afternoon!<br/>
This is my first attempt to post anywhere on line, so I'll do my best.<br/>
My wife & I are both 65, and we are retired. We've both worked hard & done reasonable well, but I can't help but feel that if I had made better decisions, we'd be in better shape financially. That said, we have our investment accounts with Edward Jones. I feel that there is a fair amount of overlap in the accounts, it's confusing and we mostly feel abandoned by the adviser. He seems to spend most of the time hunting for new clients, and very little watching ours! I have decided to take this on myself, and forgo the adviser. The 3 fund approach looks appealing, and I am trying to learn more about it. I'll share a few details below.
bradinsky, welcome to the forum. What you wrote above seems a fine plan!
Combined monthly Social Security income is $3000.00. 2017 tax bracket was 25%. This year it will be between 18 - 22%.<br/>
Home is paid for & worth $225K. Property tax is $4200.00 yearly. No other significant bills.<br/>
Given where the 2017 25% tax bracket starts, that's maybe ~$85K (or more?) spendable after tax. Whatever the exact amount, how does that compare with your spending need/desires?
At Edward Jones -
Our joint accounts total $27500.00, with $175000.00 in mutual funds, $27000.00 in ETFs, $37000.00 in stocks,
$9000.00 cash & a $27000.00 annuity.
My IRAs total $242000.00 with $106000.00 in mutual funds, $75000.00 in stocks & $61000.00 in ETFs
My wife's IRAs total $95000, with $83000.00 in mutual funds & $12000.00 in EFTs.
There are about 37 mutual funds & ETFs in the above 3 accounts, and 10 individual stocks.
You could be well served by talking with Vanguard, Fidelity, or Schwab and having your choice among those help you move all the funds to them from EJ. No tax worries about the IRAs. You may need to take some care on taxes with the taxable account.

Whether to sell at EJ, transfer cash, then buy at V/F/S, or transfer in kind from EJ, then sell and buy at V/F/S, will depend on the charges for the specific fund and stock sales. Understanding those is included in the help you should get from V/F/S in return for moving your investments there.

You may have more questions not addressed above, or even questions about the above, but enough for one go.

ExitStageLeft
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Re: Looking for assistance simplifying retirement accounts

Post by ExitStageLeft » Mon Jul 23, 2018 6:08 pm

Welcome to the forum!

My wife and I just went through the fees she pays for a couple IRA accounts with Edward Jones. She was shocked to see that they are taking over 2% each year from her assets. We will be moving her over to Vanguard today. We will be making use of the lazy three-fund portfolio. The returns have been acceptable, almost justifying the 1% AUM fee. But we are on board with the Boglehead philosophy and will be managing our own portfolio.

bradinsky
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Joined: Sat Jul 21, 2018 6:32 am

Re: Looking for assistance simplifying retirement accounts

Post by bradinsky » Mon Jul 23, 2018 6:55 pm

Hi!
Thank you for the response. I believe that, along with our SS, if we can withdraw $30 - 35K per year, we should be I pretty good shape. This will be my first year in retirement, so I know I have much to adjust to. The good thing is that my wife & I are fairly thrifty, and don’t want for much. After some surgery, we hope to travel around the country. After that, not too many plans. Thank you again!

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FiveK
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Re: Looking for assistance simplifying retirement accounts

Post by FiveK » Mon Jul 23, 2018 7:30 pm

bradinsky wrote:
Mon Jul 23, 2018 6:55 pm
I believe that, along with our SS, if we can withdraw $30 - 35K per year, we should be I pretty good shape. This will be my first year in retirement....
Ah, so no pension? I had assumed it was a pension that put you in the 25% bracket for 2017.

With a total invested balance of $275K + $242K + $95K = $612K, withdrawing $30K-$35K/yr is a 4.9%-5.7% withdrawal ratio. That's a little higher than the 4% number often used as a "safe" withdrawal ratio.

That gives you even more reason to avoid paying the high EJ fees.

Also, if either or both of you have not yet started receiving SS, it might be worthwhile delaying that.

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Peter Foley
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Re: Looking for assistance simplifying retirement accounts

Post by Peter Foley » Mon Jul 23, 2018 7:50 pm

I agree with the suggestion to move to Vanguard, Fidelity, or Schwab. If you live in a larger city and want in person meetings from time to time, Schwab has local offices.

I have used Schwab for a number of years so I have direct experience with the following: If you are going to make a transfer it is easier to work with the company receiving the transfer than the company losing the account.

The following is something to think about as you move to simplify your portfolio. First establish an asset allocation plan that reflects your tolerance for risk, your need to take risk and your ability to take risk. For most people your age the range would be from 40% stock mutual funds to 60% stock mutual funds with the remainder in bond funds or their equivalent.

When considering portfolios, here is a summary of some of the more simplified portfolios that are often mentioned on the forum:

Passive (Many of these are 3 fund portfolios – some Target Retirement funds are 4 funds (3 funds plus International Bonds)

Target Date Retirement funds – Note: not all take the same risk( 2020 Funds: T. Rowe Price AA 71/26, Vanguard 64/36, Fidelity 49/42)
Life Strategies funds

Active – meaning that you make adjustments to maintain your desired asset allocation

2 fund strategy: Vanguard total stock market and Vanguard total bond market
Also Couch Potato portfolio: Vanguard Index 500 + Vanguard Short term Government Bond

3 Fund portfolio: Portfolio most often recommended by Bogleheads and combined with age in bonds
• Vanguard Total Stock Market Index Fund (VTSMX)
• Vanguard Total International Stock Index Fund (VGTSX)
• Vanguard Total Bond Market Fund (VBMFX)

Bill Schultheis' "Lazy Portfolio" in fact, consists of these three funds in equal proportions.

Advantages - per Taylor Larimore, author, The Boglehead's Guide to Investing
ADVANTAGES OF THE THREE-FUND INDEX PORTFOLIO
• Diversification. Over 10,000 world-wide securities.
• Contains every style and cap-size.
• Very tax-efficient.
• No manager risk.
• No style drift.
• No overlap.
• Low turnover.
• Avoids "front running."
• Easy to rebalance.
• Never under-performs the market (less worry).
• Mathematically certain to out-perform most investors.
• Simplicity "


Core four portfolio – Rick Ferri
3 fund portfolio + REITs

It would be nice to know your "marginal" tax rate or your projected taxable income.

bradinsky
Posts: 15
Joined: Sat Jul 21, 2018 6:32 am

Re: Looking for assistance simplifying retirement accounts

Post by bradinsky » Mon Jul 23, 2018 8:51 pm

FiveK wrote:
Mon Jul 23, 2018 7:30 pm
bradinsky wrote:
Mon Jul 23, 2018 6:55 pm
I believe that, along with our SS, if we can withdraw $30 - 35K per year, we should be I pretty good shape. This will be my first year in retirement....
Ah, so no pension? I had assumed it was a pension that put you in the 25% bracket for 2017.

[With a total invested balance of $275K + $242K + $95K = $612K, withdrawing $30K-$35K/yr is a 4.9%-5.7% withdrawal ratio. That's a little higher than the 4% number often used as a "safe" withdrawal ratio.

That gives you even more reason to avoid paying the high EJ fees.

Also, if either or both of you have not yet started receiving SS, it might be worthwhile delaying that.]

Hi FiveK!
We have an additional $210K that will be added to our investments that will be moved from EdJ. That should give us a little over $800K. Also, based on lack of cash flow in the past, my wife started SS @ 62 & I started last year @ 65. I really didn’t want to touch any of our savings, so we went that route. As far as the 25% bracket, we closed down a business last year, so the proceeds pushed us up to 25%

bradinsky
Posts: 15
Joined: Sat Jul 21, 2018 6:32 am

Re: Looking for assistance simplifying retirement accounts

Post by bradinsky » Mon Jul 23, 2018 8:54 pm

Sorry about messing up the post format. I’m trying to get the hang of it

bradinsky
Posts: 15
Joined: Sat Jul 21, 2018 6:32 am

Re: Looking for assistance simplifying retirement accounts

Post by bradinsky » Tue Jul 24, 2018 9:13 am

Good morning!
My wife & I have an appointment with Charles Schwab next week. This may sound terrible, but I'm anxious to move away from EJ as soon as possible. Based on the Three Fund Portfolio concept, can someone please give me an idea as to which funds at Schwab are comparable, or replicate Vanguards funds? I feel as though I am imposing on the forum members, but after visiting for multiple weeks before actually joining, I know that there are many financially astute members & a wealth of knowledge here. Thank you!!

RickBoglehead
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Re: Looking for assistance simplifying retirement accounts

Post by RickBoglehead » Tue Jul 24, 2018 9:27 am

Since you're evaluating whether Schwab is a good place to move your funds, I'd suggest asking the question of the adviser that you're going to meet with. If they poo-poo the 3 fund idea, you've gotten a pretty strong yellow/red flag. If they say "you can buy those Vanguard funds from us" or "here are the comparable Schwab funds", then you get a different feeling.

Regardless, do NOTHING during your visit. Listen, take notes, but do nothing until you've had time to digest the info.

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Stinky
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Location: Sweet Home Alabama

Re: Looking for assistance simplifying retirement accounts

Post by Stinky » Tue Jul 24, 2018 10:06 am

bradinsky wrote:
Mon Jul 23, 2018 3:27 pm

There are about 37 mutual funds & ETFs in the above 3 accounts, and 10 individual stocks.
Other responses above have given you excellent advice. I wanted to focus on one sentence from your original post.

Having 37 mutual funds and 10 individual stocks would drive me NUTS. There's a lot of "diversification" there, but I'm sure that there is a ton of overlap amongst the positions. Your record keeping is much harder than it needs to be.

My advice - as you move toward a new home for your assets, think about paring down substantially the number of positions you have. In taxable accounts, try to harvest capital losses and take capital gains to offset them against each other. Even getting the number of positions cut in half will still leave you with about 25, but you've got to start somewhere.

Welcome to the forum! Lots of really smart people are here to give you advice and feedback. Keep us posted on your progress toward simplification, reduction of your fees, and more control over your assets.
It's a GREAT day to be alive - Travis Tritt

viz
Posts: 91
Joined: Fri May 04, 2018 11:22 pm

Re: Looking for assistance simplifying retirement accounts

Post by viz » Tue Jul 24, 2018 10:20 am

bradinsky wrote:
Tue Jul 24, 2018 9:13 am
Good morning!
My wife & I have an appointment with Charles Schwab next week. This may sound terrible, but I'm anxious to move away from EJ as soon as possible. Based on the Three Fund Portfolio concept, can someone please give me an idea as to which funds at Schwab are comparable, or replicate Vanguards funds?
https://www.bogleheads.org/wiki/Three-fund_portfolio
Look for section "Other than Vanguard, Boglehead-style"

ExitStageLeft
Posts: 798
Joined: Sat Jan 20, 2018 4:02 pm

Re: Looking for assistance simplifying retirement accounts

Post by ExitStageLeft » Tue Jul 24, 2018 12:58 pm

viz wrote:
Tue Jul 24, 2018 10:20 am
bradinsky wrote:
Tue Jul 24, 2018 9:13 am
Good morning!
My wife & I have an appointment with Charles Schwab next week. This may sound terrible, but I'm anxious to move away from EJ as soon as possible. Based on the Three Fund Portfolio concept, can someone please give me an idea as to which funds at Schwab are comparable, or replicate Vanguards funds?
https://www.bogleheads.org/wiki/Three-fund_portfolio
Look for section "Other than Vanguard, Boglehead-style"
Sorry to butt in here, but the wiki has a nice linkable index that allows you to post the URL of the specific section. Thus you can link directly to the section you have in mind.

This link gets you to the page:
https://www.bogleheads.org/wiki/Three-fund_portfolio

And this link gets you to the exact section:
https://www.bogleheads.org/wiki/Three-f ... head-style

viz
Posts: 91
Joined: Fri May 04, 2018 11:22 pm

Re: Looking for assistance simplifying retirement accounts

Post by viz » Tue Jul 24, 2018 7:59 pm

ExitStageLeft wrote:
Tue Jul 24, 2018 12:58 pm
viz wrote:
Tue Jul 24, 2018 10:20 am
bradinsky wrote:
Tue Jul 24, 2018 9:13 am
Good morning!
My wife & I have an appointment with Charles Schwab next week. This may sound terrible, but I'm anxious to move away from EJ as soon as possible. Based on the Three Fund Portfolio concept, can someone please give me an idea as to which funds at Schwab are comparable, or replicate Vanguards funds?
https://www.bogleheads.org/wiki/Three-fund_portfolio
Look for section "Other than Vanguard, Boglehead-style"
Sorry to butt in here, but the wiki has a nice linkable index that allows you to post the URL of the specific section. Thus you can link directly to the section you have in mind.

This link gets you to the page:
https://www.bogleheads.org/wiki/Three-fund_portfolio

And this link gets you to the exact section:
https://www.bogleheads.org/wiki/Three-f ... head-style
Thanks, I didn't know that. Also, I was trying to respond using my phone

bradinsky
Posts: 15
Joined: Sat Jul 21, 2018 6:32 am

Re: Looking for assistance simplifying retirement accounts

Post by bradinsky » Sun Aug 19, 2018 2:25 pm

Good afternoon everybody!
My wife & I just left our previous adviser at EJ, and moved all of our accounts to Schwab.The move went better that we anticipated, and we believe we are ready to self manage. Strictly business - no funny stuff occurred & they charged us $95 per account to close. Schwab has agreed to compensate us for those closing charges. To make everyone smile(?), EJ sold off the proprietary type funds that couldn’t be transferred, and we still ended up with 61 total individual stocks, mutual funds & ETF’s at Schwab. Wow! The challenge now is to sell off the existing stocks & funds, and create a simple 3-4 fund portfolio. For tax purposes, we will probably need to wait until early next year to sell off some of the existing joint account holdings.
My wife’s IRA is at $100k, mine is $250k, our joint account is $250k & we have an additional $200k that we would also like to invest. Along with that, we have a emergency fund that amounts to $200k. That amount may be too much, but that is what we feel comfortable with, at this point. We have come to the conclusion that we would like to begin with a 55% stock & 45% bond portfolio. I know that the bonds should be in the tax advantaged accounts. Based on our 3 accounts, we would like your opinion on how to structure the allocations amoung the accounts. The way I see it, there would be just about enough room in both IRA accounts to hold the bonds, and that would put all of the SWTSX & SWISX in the joint taxable accounts. I’m not sure that sounds right. I think that taking the first step is a little frightening, and I’m just looking for a little guidance & reassurance that we are moving in the right direction.
This is such a wonderful forum, with a wealth of knowledge, and I thank you all for allowing us to participate!

Brad

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