Funding a Roth IRA for 60+ Years

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FlintHills
Posts: 2
Joined: Sat Sep 22, 2018 5:52 pm

Funding a Roth IRA for 60+ Years

Post by FlintHills » Sat Sep 22, 2018 6:38 pm

Hello-

First time poster and a bit intimidated, but I'm thankful for all the great info that I have learn thus far.

My wife and I are in a fortunate position and I do not anticipate requiring our Roth IRA's to fund our retirements. I am in my 40's now and I believe we will be able to pass our Roth IRA's to our children.

Our IRA's are through Vanguard but they are a bit of a hodgepodge of funds. My initial plan was to exchange the current funds and purchase LifeStrategy Growth (VASGX) with the idea that this would be untouched for 60+ years or more. However, given the long-term outlook, would I be better to purchase a combination of the Total Stock Market Index Fund (VTXAX) and the Total International Stock Index Fund (VTIAX) and eliminate the bond portion? I was thinking:
60% Total Stock Market Index Fund (VTXAX)
40% Total International Stock Index Fund (VTIAX)

I am very risk tolerant and I have yet to sell a fund in the Roth since we set it up 20 years ago.

I have roughly $500K in my account and my wife's is around $150K

Thank you in advance for your advice. If I posted incorrectly, it was purely unintentionally!

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David Jay
Posts: 5781
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Funding a Roth IRA for 60+ Years

Post by David Jay » Sat Sep 22, 2018 7:24 pm

Welcome to the forum!

I love the LS funds. I have our Roth IRAs in LS Growth because they are “legacy” funds, I do not expect that we will need to access those funds in our lifetime.

Nothing wrong with Total Stock and Total International, but I do like having some bonds in the portfolio in order to rebalance when stocks “go on sale”.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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celia
Posts: 8602
Joined: Sun Mar 09, 2008 6:32 am
Location: SoCal

Re: Funding a Roth IRA for 60+ Years

Post by celia » Sat Sep 22, 2018 8:30 pm

One thing to consider is that there is a good chance your heirs will just keep the funds you have in the Roth, unless they have specific plans for the money. So, go ahead and simplify the portfolio, but adding some bonds will show your heirs that it is good to have a mix.

bradpevans
Posts: 355
Joined: Sun Apr 08, 2018 1:09 pm

Re: Funding a Roth IRA for 60+ Years

Post by bradpevans » Sun Sep 23, 2018 8:12 am

FlintHills wrote:
Sat Sep 22, 2018 6:38 pm
Hello-

First time poster and a bit intimidated, but I'm thankful for all the great info that I have learn thus far.

My wife and I are in a fortunate position and I do not anticipate requiring our Roth IRA's to fund our retirements. I am in my 40's now and I believe we will be able to pass our Roth IRA's to our children.

Our IRA's are through Vanguard but they are a bit of a hodgepodge of funds. My initial plan was to exchange the current funds and purchase LifeStrategy Growth (VASGX) with the idea that this would be untouched for 60+ years or more. However, given the long-term outlook, would I be better to purchase a combination of the Total Stock Market Index Fund (VTXAX) and the Total International Stock Index Fund (VTIAX) and eliminate the bond portion? I was thinking:
60% Total Stock Market Index Fund (VTXAX)
40% Total International Stock Index Fund (VTIAX)

I am very risk tolerant and I have yet to sell a fund in the Roth since we set it up 20 years ago.

I have roughly $500K in my account and my wife's is around $150K

Thank you in advance for your advice. If I posted incorrectly, it was purely unintentionally!
So long as you keep adding to the account you can be more aggressive: you are buying the market on an ongoing basis

The composition might well change once they receive they receive it, depending on their age and use of the money

billfromct
Posts: 807
Joined: Tue Dec 03, 2013 9:05 am

Re: Funding a Roth IRA for 60+ Years

Post by billfromct » Sun Sep 23, 2018 9:18 am

I'm planning the same thing with my Roth IRA & pass it down to my kids. I am 69 & am 100% stocks in my Roth IRA. I have told my kids to keep the inherited Roth IRA 100% stocks as well when they start taking minimum required distributions (RMDs) when I pass. They will be probably be taking inherited Roth IRA RMDs for another 40 or so years after I pass.

BTW, I have maxing out my Roth IRA every year since they started in 1998 & only have about $200k in my Roth IRA.

I'll have some of what you've been drinking!

bill

KlangFool
Posts: 10680
Joined: Sat Oct 11, 2008 12:35 pm

Re: Funding a Roth IRA for 60+ Years

Post by KlangFool » Sun Sep 23, 2018 9:28 am

FlintHills wrote:
Sat Sep 22, 2018 6:38 pm
Hello-

First time poster and a bit intimidated, but I'm thankful for all the great info that I have learn thus far.

My wife and I are in a fortunate position and I do not anticipate requiring our Roth IRA's to fund our retirements. I am in my 40's now and I believe we will be able to pass our Roth IRA's to our children.

Our IRA's are through Vanguard but they are a bit of a hodgepodge of funds. My initial plan was to exchange the current funds and purchase LifeStrategy Growth (VASGX) with the idea that this would be untouched for 60+ years or more. However, given the long-term outlook, would I be better to purchase a combination of the Total Stock Market Index Fund (VTXAX) and the Total International Stock Index Fund (VTIAX) and eliminate the bond portion? I was thinking:
60% Total Stock Market Index Fund (VTXAX)
40% Total International Stock Index Fund (VTIAX)

I am very risk tolerant and I have yet to sell a fund in the Roth since we set it up 20 years ago.

I have roughly $500K in my account and my wife's is around $150K

Thank you in advance for your advice. If I posted incorrectly, it was purely unintentionally!
FlintHills,

Stick with the Lifestrategy growth fund. You do not need to rebalance and manage the fund.

<<60% Total Stock Market Index Fund (VTXAX)
40% Total International Stock Index Fund (VTIAX)>>

1) You need to rebalance between those 2 funds. Those are the works that you do not need and you will not be around to manage it for 60 years.

2) It is never a good idea to eliminate the bond fund. The market may just crash right before someone need the money.

KlangFool

ivk5
Posts: 479
Joined: Thu Sep 22, 2016 9:05 am

Re: Funding a Roth IRA for 60+ Years

Post by ivk5 » Sun Sep 23, 2018 10:26 am

billfromct wrote:
Sun Sep 23, 2018 9:18 am
BTW, I have maxing out my Roth IRA every year since they started in 1998 & only have about $200k in my Roth IRA.

I'll have some of what you've been drinking!
OP’s balance may include conversions or mega backdoor.

FlintHills
Posts: 2
Joined: Sat Sep 22, 2018 5:52 pm

Re: Funding a Roth IRA for 60+ Years

Post by FlintHills » Mon Sep 24, 2018 5:07 am

Wow- What great advice!

I think I will stick with the LS Growth. It will be more stable if I do require the Roth to fund my own retirement and I like the set it/forget it mentality.

billfromct-- I did a Roth conversion when I switched jobs which funded the majority of the Roth. I am still adding with the backdoor conversion but it is obviously at a slower rate!

Thanks again for the wonderful advice! I have been impressed with this forum and I appreciate what I have learned here.

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