New Member Seeking Financial Review and Constructive Criticism :)

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Topic Author
DeadLoad
Posts: 8
Joined: Tue Aug 14, 2018 3:15 pm

New Member Seeking Financial Review and Constructive Criticism :)

Post by DeadLoad » Thu Apr 11, 2019 5:07 pm

Emergency funds: $8500 – Emergency Fund/Down Payment @ 2.20% Ally Savings - Currently Building...
$3,000 is deposited monthly Est. ~36k-40k by 12/2019

Debt:
Car - $42,000 @ 3.29% - $717/month – Started 7/2018.
Mortgage – 256,000 Principal @ 4.125% - $1,284 + 300 tax + 60 ins= $1644/mo
~$100k in equity

Tax Filing Status: Married Filing Jointly
Tax Rate: 22% Federal, 9.3% State for 2018. 2019 probably be 24% Fed, 9.3% CA
State of Residence: California
Age: Him 28 – Retirement @ 55-57ish & Her 26 – Retirement @ 60ish
Household Income: His Gross 90-120k pending OT Her Gross 71k = Total 160-190k for 2019.
Desired Asset allocation: 90% stocks / 10% bonds
Desired International allocation: ~20-30% of stocks

Current retirement assets

Taxable – None Yet
0 cash (for investing – do not include emergency funds)
0% fund name (ticker symbol) (expense ratio)
0% stock company name (ticker symbol)

Her 401k @ Fidelity – 30%
100% FIAM Blend Target Date 2060+ (ticker symbol) (0.26%)
Total: $7,993.43 / 619.646 Shares
Company match 50% up to 6% (3% total)
Total: $3,632.19

Her 401k Roth @ Fidelity – 1%
100% FIAM Blend Target Date 2060+ (ticker symbol) (0.26%)
Total: $551.54 / 42.755 Shares

His 457(b) Traditional @ Nationwide – 9%
100% Vanguard Target Retirement 2050 Fund - Investor Shares (VFIFX) 0.15%
Total: $3,628.16 / 98.1644 Shares

His 457(b) Roth @ Nationwide – 8%
100% Vanguard Target Retirement 2050 Fund - Investor Shares (VFIFX) 0.15%
Total: $3,307.66 / 89.4930 Shares

His CalPERS Pension – 51% - I do not contribute to SS
Total: $19,994.32
I will receive ~80-100% of my highest paid year depending on how many years I stay after I am eligible to retire.

Total of All Accounts Together = $39,107

Contributions

Current Annual Contributions % of annual income
6.60% = $6,000 his 457(b) Roth ($500/mo)
2.60% = $2,400 his 457(b) ($200/mo)
10.5% = $9,450 his CalPERs Pension (mandatory 10.5% of gross pay without OT)
8.00% = $5,680 her 401k
3.00% = $2,130 her 401k employer match
3.00% = $2,130 her 401k Roth
$0 taxable
= ~$27,800/Annually

Funds available in his 457(b)
Vanguard Target Retirement 2020 Fund - Investor Shares (VTWNX) 0.13%
Vanguard Target Retirement 2025 Fund - Investor Shares (VTTVX) 0.13%
Vanguard Target Retirement 2030 Fund - Investor Shares (VTHRX) 0.14%
Vanguard Target Retirement 2035 Fund - Investor Shares (VTTHX) 0.14%
Vanguard Target Retirement 2040 Fund - Investor Shares (VFORX) 0.14%
Vanguard Target Retirement 2045 Fund - Investor Shares (VTIVX) 0.15%
Vanguard Target Retirement 2050 Fund - Investor Shares (VFIFX) 0.15%
Vanguard Target Retirement 2055 Fund - Investor Shares (VFFVX) 0.15%
Vanguard Target Retirement 2060 Fund - Investor Shares (VTTSX) 0.15%
Vanguard Target Retirement 2065 Fund - Investor Shares (VLXVX) 0.15%
Vanguard Target Retirement Income Inv (VTINX) 0.12%
ALLIANZGI GLOBAL SMALL CAP FUND - INST CLASS (DGSCX) 1.27%
American Funds Capital World Growth & Income - Class R6 (RWIGX) 0.44%
Dodge & Cox International Stock Fund (DODFX) 0.63%
EuroPacific Growth Fund(R) - Class R6 (RERGX) 0.49%
Lazard Emerging Markets Portfolio - Institutional Shares (LZEMX) 1.08%
Vanguard Total International Stock Index Fund Admiral (VTIAX) 0.11%
Hood River Small-Cap Growth Fund - Retirement Shares (HRSIX) 1.09%
JPMorgan Small Cap Value Fund - Class R6 (JSVUX) 0.76%
Vanguard Small-Cap Index Fund - Admiral Shares (VSMAX) 0.05%
Vanguard Mid-Cap Index Fund - Admiral Shares (VIMAX) 0.05%
Vanguard(R) Strategic Equity Fund - Investor Shares (VSEQX) 0.17%
Wells Fargo Discovery Fund - Class R6 (WFDRX) 0.78%
Wells Fargo Special Mid Cap Value Fund - Class R6 (WFPRX) 0.73%
Alger Capital Appreciation Institutional Fund - Class I Shares (ALARX) 1.14%
The Growth Fund of America(R) - Class R6 (RGAGX) 0.33%
The New Economy Fund(R) - Class R6 (RNGGX) 0.45%
Vanguard(R) Institutional Index Fund - Institutional Shares (VINIX) 0.04%
Virtus Ceredex Large-Cap Value Equity Fund - Class I (STVTX) 1.02%
The Income Fund of America(R) - Class R6 (RIDGX) 0.28%
Fidelity Advisor High Income Advantage Fund - Class I (FAHCX) 0.75%
PIMCO Total Return Fund - Institutional Class (PTTRX) 0.55%
Vanguard Total Bond Market Index Fund - Admiral Shares (VBTLX) 0.05%
Vanguard(R) Inflation-Protected Securities Fund - Admiral(TM) Shares (VAIPX) 0.10%

Funds available in her 401(k)
ABF LG CAP VAL INST (AADEX) 0.62%
FID 500 INDEX (FXAIX) 0.015%
FID LG CAP GR IDX (FSPGX) 0.035%
FID LG CAP VAL IDX (FLCOX) 0.035%
TRP BLUE CHIP GRTH I (TBCIX) 0.57%
ARIEL FUND INST (ARAIX) 0.72%
FID EXTD MKT IDX (FSMAX) 0.045%
FID MID CAP IDX (FSMDX) 0.025%
J H ENTERPRISE N (JDMNX) 0.66%
MFS MID CAP VALUE R6 (MVCKX) 0.69%
FID SM CAP IDX (FSSNX) 0.025%
LOOMIS SM CAP VAL N (LSCNX) 0.86%
NORTHERN SM CAP VAL (NOSGX) 1.13%
UBS US SM CAP GRTH P (BISCX) 1.35%
FID INTL DISCOVERY K (FIDKX) 0.77%
NVS DEVLP MKTS R5 (GTDIX) 1.07%
COHEN & STEERS RLTY (CSRSX) 0.97%
VANG HEALTHCARE ADM (VGHAX) 0.33%
FIAM BLEND TD 2005 S 0.26%
FIAM BLEND TD 2010 S 0.26%
FIAM BLEND TD 2015 S 0.26%
FIAM BLEND TD 2020 S 0.26%
FIAM BLEND TD 2025 S 0.26%
FIAM BLEND TD 2030 S 0.26%
FIAM BLEND TD 2035 S 0.26%
FIAM BLEND TD 2040 S 0.26%
FIAM BLEND TD 2045 S 0.26%
FIAM BLEND TD 2050 S 0.26%
FIAM BLEND TD 2055 S 0.26%
FIAM BLEND TD 2060 S 0.26%
FIAM BLEND TD INC S 0.26%
OAKMARK EQ & INC INV (OAKBX) 0.88%
PUTNAM STABLE VALUE 0.32%
FID TOTAL BOND (FTBFX) 0.45%
VANG INFL PROT INST (VIPIX) 0.07%
FIMM GOVT CL I (FIGXX) 0.2%


Questions:
1. Should we stick with the target date funds until we get more money in our accounts? Better options within our available funds (3 fund strategy instead?)?

2. Currently trying to save aggressively (3k/mo) for a larger home within 2 years. Should we cut back a little bit and put more away for retirement? We are both very early in our careers with a few good salary increases within 2 years. My plan was to stay on the 3k/month course and use the salary increases to increase retirement contributions.

3. Because of my pension, am I right in thinking of doing mostly Roth contributions? Should we only do enough pre-tax to get her company match and the rest Roth? My thoughts were to keep doing pre-tax to stay more liquid until we move, then go Roth except for her match.

4. We finished off student loans, credit cards etc in January 2019 and started saving Feb 2019. All we have left is the house and car. I’m thinking of putting some money down to refinance her car to free up ~200-300$/month towards the end of the year. Thoughts? My car is paid off.

Thanks in Advanced
Last edited by DeadLoad on Thu Apr 18, 2019 11:37 am, edited 5 times in total.

mega317
Posts: 2900
Joined: Tue Apr 19, 2016 10:55 am

Re: New Member Seeking Financial Review and Constructive Criticism :)

Post by mega317 » Thu Apr 11, 2019 6:43 pm

1. There is really no wrong answer here since the target date funds are reasonably priced. I would use the cheaper individual funds to create a 3 fund portfolio but that's not necessarily better. It would take some effort, though not much if you set up a spreadsheet, to maintain things in balance.

2. I would increase retirement savings, but you have to strike a balance. I would also generally advise to hold off buying another house until you know more about your family's needs (like how many kids, schools, commute might change, etc.) but I don't know anything about you. I would also consider waiting on a new larger mortgage until the car is paid off.

3. I don't know enough here to comment.

4. What rate can you get on the car refinance?

ExitStageLeft
Posts: 1312
Joined: Sat Jan 20, 2018 4:02 pm

Re: New Member Seeking Financial Review and Constructive Criticism :)

Post by ExitStageLeft » Thu Apr 11, 2019 6:44 pm

Welcome to the forum! Congrats on paying of the student loan and CC debt.
DeadLoad wrote:
Thu Apr 11, 2019 5:07 pm
...
Questions:
1. Should we stick with the target date funds until we get more money in our accounts? Better options within our available funds (3 fund strategy instead?)?
My preference would be to adopt the three-fund strategy now. You'll trim about 15 basis points off your annual fees. But that's not a huge savings, especially with a small balance. If you don't mind paying the fund managers to do your re-balancing then you could stay with target date funds until you start building a taxable retirement account. At that stage it definitely pays off to have a three-fund portfolio.

2. Currently trying to save aggressively (3k/mo) for a larger home within 2 years. Should we cut back a little bit and put more away for retirement? We are both very early in our careers with a few good salary increases within 2 years. My plan was to stay on the 3k/month course and use the salary increases to increase retirement contributions.
I understand the need for a bigger house, but savings at this stage of your career have so much potential for compound growth. How about you split the difference on the $3k per month and the promotions? Halfsies from each to retirement savings and to the house fund.

3. Because of my pension, am I right in thinking of doing mostly Roth contributions? Should we only do enough pre-tax to get her company match and the rest Roth? My thoughts were to keep doing pre-tax to stay more liquid until we move, then go Roth except for her match.
You're not in a low enough tax bracket that Roth is default preferred. I would stick with tax-deferred savings in the 401k and 457b and max out Roth IRAs every year. See the wiki page on priorirty: https://www.bogleheads.org/wiki/Priorit ... nvestments

4. We finished off student loans, credit cards etc in January 2019 and started saving Feb 2019. All we have left is the house and car. I’m thinking of putting some money down to refinance her car to free up ~200-300$/month towards the end of the year. Thoughts? My car is paid off.
The interest rate is low enough that it isn't urgent to pay off the car loan. It then becomes a question of which gives you better emotional return. I would stick with the scheduled car payments and instead put more into the retirement savings.

Thanks in Advanced

lakpr
Posts: 1144
Joined: Fri Mar 18, 2011 9:59 am

Re: New Member Seeking Financial Review and Constructive Criticism :)

Post by lakpr » Thu Apr 11, 2019 6:46 pm

DeadLoad wrote:
Thu Apr 11, 2019 5:07 pm
Emergency funds: $8500 – Emergency Fund/Down Payment @ 2.20% Ally Savings
$3,000 is deposited monthly for house down payment. Est. ~36k-40k by 12/2019
$8500 is how many months of expenses? Looks to me too anemic, should boost to at least 6 months of expenses
DeadLoad wrote:
Thu Apr 11, 2019 5:07 pm
Debt:
Car - $42,000 @ 3.29% - $717/month – Started 7/2018.
Mortgage – 256,000 Principal @ 4.125% - $1,284 + 300 tax + 60 ins= $1644/mo
~$100k in equity
42 grand for a car, seems expensive! On a combined salary of 160k to 200k, you have spent more than 20% of your salary on a depreciating asset ...
What's done is done, but the 3.29% is quite high interest rate, you should be laser focused on eliminating this debt.
Even at the cost of not contributing anything more to the House Down Payment fund you referenced before.
DeadLoad wrote:
Thu Apr 11, 2019 5:07 pm
Tax Filing Status: Married Filing Jointly
Tax Rate: 22% Federal, 9.3% State for 2018. 2019 probably be 24% Fed, 9.3% CA
State of Residence: California
Age: Him 28 – Retirement @ 55-57ish & Her 26 – Retirement @ 60ish
Household Income: Gross 160k to 190k pending OT.
Desired Asset allocation: 90% stocks / 10% bonds
Desired International allocation: ~20-30% of stocks
I am a firm believer in Age-10 to Age-15 in bonds, 10% bonds is way too small to make any meaningful difference in your allocation. Plus you are looking to retire after only 30 years more working -- you should be in a similar asset allocation as a 35 year old looking to retire at 65.
I suggest 85:15 for you stocks-to-bonds if you are ok with postponing retirement to age 65
Else I suggest 80:20 stocks to bonds if you are looking to actually accomplish the early retirement at 55+ age.
For Her, since she's looking at 35 years more working, she can be more aggressive and actually be 90:10.
DeadLoad wrote:
Thu Apr 11, 2019 5:07 pm
Her 401k @ Fidelity – 30%
100% FIAM Blend Target Date 2060+ (ticker symbol) (0.26%)
Not a bad fund, you can do better if you can do a bit of yearly rebalancing yourself. Contribute in the following proportions to these funds:
DeadLoad wrote:
Thu Apr 11, 2019 5:07 pm
FID 500 INDEX (FXAIX) 0.015% <---- 70%
FID EXTD MKT IDX (FSMAX) 0.045% <---- 15%
Contribute the remaining 15% to ONE of these funds, preferably the latter two. The Fidelity Total bond fund has a higher expense ratio, but is a good fund.
DeadLoad wrote:
Thu Apr 11, 2019 5:07 pm
FID TOTAL BOND (FTBFX) 0.45%
VANG INFL PROT INST (VIPIX) 0.07%
FIMM GOVT CL I (FIGXX) 0.2%
DeadLoad wrote:
Thu Apr 11, 2019 5:07 pm
Her 401k Roth @ Fidelity – 1%
100% FIAM Blend Target Date 2060+ (ticker symbol) (0.26%)
Total: $551.54 / 42.755 Shares
Do not contribute to Roth 401k. You can leave the existing funds be, but do not contribute any more.

===================
DeadLoad wrote:
Thu Apr 11, 2019 5:07 pm
His 457(b) Traditional @ Nationwide – 9%
100% Vanguard Target Retirement 2050 Fund - Investor Shares (VFIFX) 0.15%
Total: $3,628.16 / 98.1644 Shares
Excellent choice, also consistent with your desire to retire at 55-57ish. No change here.
DeadLoad wrote:
Thu Apr 11, 2019 5:07 pm
His 457(b) Roth @ Nationwide – 8%
100% Vanguard Target Retirement 2050 Fund - Investor Shares (VFIFX) 0.15%
Total: $3,307.66 / 89.4930 Shares
Same advice as to your wife, do not contribute any more to Roth 401k, but you can leave your existing funds as is.
DeadLoad wrote:
Thu Apr 11, 2019 5:07 pm
His CalPERS Pension – 51%
Total: $19,994.32
Treat this as part of your bond allocation.

DeadLoad wrote:
Thu Apr 11, 2019 5:07 pm
Current Annual Contributions % of annual income
6.60% = $6,000 his 457(b) Roth ($500/mo)
2.60% = $2,400 his 457(b) ($200/mo)
10.5% = $9,450 his CalPERs Pension
8.00% = $5,680 her 401k
3.00% = $2,130 her 401k employer match
3.00% = $2,130 her 401k Roth
$0 taxable
= ~$27,800/Annually
You should stop contributing to Roth 401k, both of you, and instead do this:
$19000 per year to His 401k or 457 plan or a combo (Traditional)
$19000 per year to Her 401k (Traditional)
$9450 per year to His CalPERS pension (I assume this is mandatory contribution?)
$6000 each to respective Roth IRAs.
=====================
Total = $59450 per year.

With a $190k gross income, less $38K through 401k contributions, you are quite far away from the Roth IRA phase out range, you can directly contribute to Roth IRA. Actually with 22% Federal tax bracket and 9.3% state tax bracket, you save 31.3% in taxes total for your 401k contributions. The tax alone will pay for your individual Roth IRAs.

Let's achieve this first for 2019, be car-debt free, I think these should be your near term goals to achieve. Let's come back next year and revisit after you have completed this. To be sure, I am asking for a tall order from you, nearly 60k savings on a 200k salary, that's more than 30% savings rate ... but the secret is to defer as much money into 457/401k tax-deferred, and you will not see much more pinch than your current $27k savings per year.

pkcrafter
Posts: 13280
Joined: Sun Mar 04, 2007 12:19 pm
Location: CA
Contact:

Re: New Member Seeking Financial Review and Constructive Criticism :)

Post by pkcrafter » Thu Apr 11, 2019 8:42 pm

Deadload, your saving rate appears to be good. Recommendations usually start at about 12% to 15% of gross income and you appear to be exceeding that.
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

Topic Author
DeadLoad
Posts: 8
Joined: Tue Aug 14, 2018 3:15 pm

Re: New Member Seeking Financial Review and Constructive Criticism :)

Post by DeadLoad » Thu Apr 11, 2019 9:30 pm

Thank you for the responses thus far. I am working on replies :)

Topic Author
DeadLoad
Posts: 8
Joined: Tue Aug 14, 2018 3:15 pm

Re: New Member Seeking Financial Review and Constructive Criticism :)

Post by DeadLoad » Fri Apr 12, 2019 1:17 am

mega317 wrote:
Thu Apr 11, 2019 6:43 pm
2. I would increase retirement savings, but you have to strike a balance. I would also generally advise to hold off buying another house until you know more about your family's needs (like how many kids, schools, commute might change, etc.) but I don't know anything about you. I would also consider waiting on a new larger mortgage until the car is paid off.
We have lived in the area long enough to know where and how much to buy. But I agree on getting rid of the car loan prior to moving.
4. What rate can you get on the car refinance?
Not sure yet as I haven’t looked into it in depth yet. I got the loan solo before we had gotten rid of my wife’s student loan debt and our other debt. I would imagine her and I together could cut the % by ½.
ExitStageLeft wrote:
Thu Apr 11, 2019 6:44 pm
Welcome to the forum! Congrats on paying of the student loan and CC debt.
Thanks!
DeadLoad wrote:
Thu Apr 11, 2019 5:07 pm
...
Questions:
2. Currently trying to save aggressively (3k/mo) for a larger home within 2 years. Should we cut back a little bit and put more away for retirement? We are both very early in our careers with a few good salary increases within 2 years. My plan was to stay on the 3k/month course and use the salary increases to increase retirement contributions.
I understand the need for a bigger house, but savings at this stage of your career have so much potential for compound growth. How about you split the difference on the $3k per month and the promotions? Halfsies from each to retirement savings and to the house fund.
I wouldn’t mind splitting the savings with the house fund. We are trying to live off of my income and save her income. Any OT we get cash flows home repairs, bigger ticket items, etc. We could dial that part of our lives down a bit to throw some more at retirement as well. Our goal was to shoot for 15% of our income saved outside of my mandatory 10.5% pension for a total of 25.5%. Still too little?
3. Because of my pension, am I right in thinking of doing mostly Roth contributions? Should we only do enough pre-tax to get her company match and the rest Roth? My thoughts were to keep doing pre-tax to stay more liquid until we move, then go Roth except for her match.
You're not in a low enough tax bracket that Roth is default preferred. I would stick with tax-deferred savings in the 401k and 457b and max out Roth IRAs every year. See the wiki page on priorirty: https://www.bogleheads.org/wiki/Priorit ... nvestments
I understand the best tax base would be 15% however this link: https://www.bogleheads.org/wiki/Traditional_versus_Roth
• “If you expect to have higher marginal rates than your current marginal rate for most of your career, prefer a Roth.
• If you will have a traditional account or a pension large enough to meet your expected retirement expenses (and you expect to take that pension shortly after retiring), prefer a Roth.[3]
My pension should cover our retirement needs and with other withdrawals I’m guessing we wont be any lower than 22%. That was my Roth reasoning.


4. We finished off student loans, credit cards etc in January 2019 and started saving Feb 2019. All we have left is the house and car. I’m thinking of putting some money down to refinance her car to free up ~200-300$/month towards the end of the year. Thoughts? My car is paid off.
The interest rate is low enough that it isn't urgent to pay off the car loan. It then becomes a question of which gives you better emotional return. I would stick with the scheduled car payments and instead put more into the retirement savings. Thanks for the help!
Thanks in Advanced
lakpr wrote:
Thu Apr 11, 2019 6:46 pm
DeadLoad wrote:
Thu Apr 11, 2019 5:07 pm
Emergency funds: $8500 – Emergency Fund/Down Payment @ 2.20% Ally Savings
$3,000 is deposited monthly for house down payment. Est. ~36k-40k by 12/2019
$8500 is how many months of expenses? Looks to me too anemic, should boost to at least 6 months of expenses.
$8500 is just what we have saved since we started in February. Our jobs are very stable and we would feel comfortable with 12-15k saved for 4-5 months worth.
DeadLoad wrote:
Thu Apr 11, 2019 5:07 pm
Debt:
Car - $42,000 @ 3.29% - $717/month – Started 7/2018.
Mortgage – 256,000 Principal @ 4.125% - $1,284 + 300 tax + 60 ins= $1644/mo
~$100k in equity
42 grand for a car, seems expensive! On a combined salary of 160k to 200k, you have spent more than 20% of your salary on a depreciating asset ...
What's done is done, but the 3.29% is quite high interest rate, you should be laser focused on eliminating this debt. Even at the cost of not contributing anything more to the House Down Payment fund you referenced before.
Yes, a mistake we made buying a new Toyota. On the plus side, it’s a vehicle we will own for at least 15 years (assuming accident free). My thoughts were to continue saving for the year and either A) Pay the car off completely in December, B) pay down 20k and refi, or C) continue status quo but increase the monthly payment slightly.
DeadLoad wrote:
Thu Apr 11, 2019 5:07 pm
Tax Filing Status: Married Filing Jointly
Tax Rate: 22% Federal, 9.3% State for 2018. 2019 probably be 24% Fed, 9.3% CA
State of Residence: California
Age: Him 28 – Retirement @ 55-57ish & Her 26 – Retirement @ 60ish
Household Income: Gross 160k to 190k pending OT.
Desired Asset allocation: 90% stocks / 10% bonds
Desired International allocation: ~20-30% of stocks
I am a firm believer in Age-10 to Age-15 in bonds, 10% bonds is way too small to make any meaningful difference in your allocation. Plus you are looking to retire after only 30 years more working -- you should be in a similar asset allocation as a 35 year old looking to retire at 65.
I suggest 85:15 for you stocks-to-bonds if you are ok with postponing retirement to age 65
Else I suggest 80:20 stocks to bonds if you are looking to actually accomplish the early retirement at 55+ age.
For Her, since she's looking at 35 years more working, she can be more aggressive and actually be 90:10.
My thoughts on 90:10 stocks to bonds for me is the thought of the 457(b) just being “extra”. Thus I could go a little aggressive until I’m 35. I agree with her 401k though.
DeadLoad wrote:
Thu Apr 11, 2019 5:07 pm
Her 401k @ Fidelity – 30%
100% FIAM Blend Target Date 2060+ (ticker symbol) (0.26%)
Not a bad fund, you can do better if you can do a bit of yearly rebalancing yourself. Contribute in the following proportions to these funds:
DeadLoad wrote:
Thu Apr 11, 2019 5:07 pm
FID 500 INDEX (FXAIX) 0.015% <---- 70%
FID EXTD MKT IDX (FSMAX) 0.045% <---- 15%
Contribute the remaining 15% to ONE of these funds, preferably the latter two. The Fidelity Total bond fund has a higher expense ratio, but is a good fund.
DeadLoad wrote:
Thu Apr 11, 2019 5:07 pm
FID TOTAL BOND (FTBFX) 0.45%
VANG INFL PROT INST (VIPIX) 0.07%
FIMM GOVT CL I (FIGXX) 0.2%
Gotcha, I will look into these options. Thank you
DeadLoad wrote:
Thu Apr 11, 2019 5:07 pm
Her 401k Roth @ Fidelity – 1%
100% FIAM Blend Target Date 2060+ (ticker symbol) (0.26%)
Total: $551.54 / 42.755 Shares
Do not contribute to Roth 401k. You can leave the existing funds be, but do not contribute any more.

===================
DeadLoad wrote:
Thu Apr 11, 2019 5:07 pm
His 457(b) Traditional @ Nationwide – 9%
100% Vanguard Target Retirement 2050 Fund - Investor Shares (VFIFX) 0.15%
Total: $3,628.16 / 98.1644 Shares
Excellent choice, also consistent with your desire to retire at 55-57ish. No change here.
Gotcha, thank you.
DeadLoad wrote:
Thu Apr 11, 2019 5:07 pm
His 457(b) Roth @ Nationwide – 8%
100% Vanguard Target Retirement 2050 Fund - Investor Shares (VFIFX) 0.15%
Total: $3,307.66 / 89.4930 Shares
Same advice as to your wife, do not contribute any more to Roth 401k, but you can leave your existing funds as is.
DeadLoad wrote:
Thu Apr 11, 2019 5:07 pm
His CalPERS Pension – 51%
Total: $19,994.32
Treat this as part of your bond allocation.
Okay
DeadLoad wrote:
Thu Apr 11, 2019 5:07 pm
Current Annual Contributions % of annual income
6.60% = $6,000 his 457(b) Roth ($500/mo)
2.60% = $2,400 his 457(b) ($200/mo)
10.5% = $9,450 his CalPERs Pension
8.00% = $5,680 her 401k
3.00% = $2,130 her 401k employer match
3.00% = $2,130 her 401k Roth
$0 taxable
= ~$27,800/Annually
You should stop contributing to Roth 401k, both of you, and instead do this:
$19000 per year to His 401k or 457 plan or a combo (Traditional)
$19000 per year to Her 401k (Traditional)
$9450 per year to His CalPERS pension (I assume this is mandatory contribution?) Yes, mandatory 10.5%.
$6000 each to respective Roth IRAs.
Continue to do this even though I may never be in a tax rate less than 22%? I will have to run the numbers to be 100% sure.
=====================
Total = $59450 per year.
With a $190k gross income, less $38K through 401k contributions, you are quite far away from the Roth IRA phase out range, you can directly contribute to Roth IRA. Actually with 22% Federal tax bracket and 9.3% state tax bracket, you save 31.3% in taxes total for your 401k contributions. The tax alone will pay for your individual Roth IRAs.
Let's achieve this first for 2019, be car-debt free, I think these should be your near term goals to achieve. Let's come back next year and revisit after you have completed this. To be sure, I am asking for a tall order from you, nearly 60k savings on a 200k salary, that's more than 30% savings rate ... but the secret is to defer as much money into 457/401k tax-deferred, and you will not see much more pinch than your current $27k savings per year.
I like this near term goal. I will run the #s to see what they look like.
pkcrafter wrote:
Thu Apr 11, 2019 8:42 pm
Deadload, your saving rate appears to be good. Recommendations usually start at about 12% to 15% of gross income and you appear to be exceeding that.
Thanks for the reassurance. I was thinking I was waaaaay off even doing at least 15% right this second. Still have a ways to go, just don’t want to maximize what time I have left.

I’m glad I made a post. This forced me to see everything on paper in one place. I’m enjoying all the help thus far. I am new to all of this and will continue to read more as I go. Looking forward to more advice.
-Deadload

Topic Author
DeadLoad
Posts: 8
Joined: Tue Aug 14, 2018 3:15 pm

Re: New Member Seeking Financial Review and Constructive Criticism :)

Post by DeadLoad » Mon Apr 15, 2019 12:32 am

Spent the day reading different topics and trying to gain more knowledge. So far I have changed all of the Roth contributions to pre-tax contributions. I stumbled upon this thread: viewtopic.php?f=1&t=275993&p=4442030#p4442030 It seems some do recommend going with the Roth 457(b) vs traditional 457(b) if there is a pension in the mix. I did a little more digging to see what my pension distributions would be if my salary remains the same for the remainder of my career (no promotions etc), year 2049 up to 2054 (ages 58 up to 63) and distributions are: 100k-110k annually + whatever my better half makes until her retirement.

1) Does this change anything or should I continue with lakpr's plan?
2) At what point during my/my wife's career would we switch to 401k/457 roth, if at all?
3) Should I do 457 Roth but and do 401k traditional or vice versa?

ExitStageLeft
Posts: 1312
Joined: Sat Jan 20, 2018 4:02 pm

Re: New Member Seeking Financial Review and Constructive Criticism :)

Post by ExitStageLeft » Mon Apr 15, 2019 12:31 pm

DeadLoad wrote:
Mon Apr 15, 2019 12:32 am
Spent the day reading different topics and trying to gain more knowledge. So far I have changed all of the Roth contributions to pre-tax contributions. I stumbled upon this thread: viewtopic.php?f=1&t=275993&p=4442030#p4442030 It seems some do recommend going with the Roth 457(b) vs traditional 457(b) if there is a pension in the mix. I did a little more digging to see what my pension distributions would be if my salary remains the same for the remainder of my career (no promotions etc), year 2049 up to 2054 (ages 58 up to 63) and distributions are: 100k-110k annually + whatever my better half makes until her retirement.

1) Does this change anything or should I continue with lakpr's plan?
2) At what point during my/my wife's career would we switch to 401k/457 roth, if at all?
3) Should I do 457 Roth but and do 401k traditional or vice versa?
It's still pretty far into the future, but a reasonable supposition would be that your tax bracket in retirement won't be a whole lot different than it is now. If you don't anticipate the RMDs that will be required at age 70 then it could even be higher. So having a good mix of Roth and tax-deferred will give you options.

I think that saving most in tax-deferred for now is reasonable, as long as you are saving some in Roth. The Investment Priority wiki page has a basic recommendation that is about 3.5:1 ratio of tax-deferred to Roth. Assuming you'll have some years in retirement to do additional Roth conversions then you'll be able to minimize your tax burden along the way. For now I wouldn't have Roth savings be any more than 25% of total savings. Monitor and adjust over the years as your retirement horizon becomes closer and things become a little clearer.

Thegame14
Posts: 844
Joined: Mon May 07, 2018 11:53 am

Re: New Member Seeking Financial Review and Constructive Criticism :)

Post by Thegame14 » Mon Apr 15, 2019 12:38 pm

income is great for your ages, retirement could be better, you should aim to max out your 401K's as you get a tax break now. that car loan is a beast, why wasn't a $20K car enough? emergency fund needs to be 6 months exp at least, and aim for more if possible, I know you are working on it. Main advice is try to avoid the lifestyle creeps as you earn more, don't need to get spending more because you earn more....

lakpr
Posts: 1144
Joined: Fri Mar 18, 2011 9:59 am

Re: New Member Seeking Financial Review and Constructive Criticism :)

Post by lakpr » Mon Apr 15, 2019 12:44 pm

DeadLoad wrote:
Mon Apr 15, 2019 12:32 am
Spent the day reading different topics and trying to gain more knowledge. So far I have changed all of the Roth contributions to pre-tax contributions. I stumbled upon this thread: viewtopic.php?f=1&t=275993&p=4442030#p4442030 It seems some do recommend going with the Roth 457(b) vs traditional 457(b) if there is a pension in the mix. I did a little more digging to see what my pension distributions would be if my salary remains the same for the remainder of my career (no promotions etc), year 2049 up to 2054 (ages 58 up to 63) and distributions are: 100k-110k annually + whatever my better half makes until her retirement.

1) Does this change anything or should I continue with lakpr's plan?
2) At what point during my/my wife's career would we switch to 401k/457 roth, if at all?
3) Should I do 457 Roth but and do 401k traditional or vice versa?
At your young age, and California location, defer defer defer. Both 457 and 401k should go into traditional. Invest the tax savings into Roth and taxable. When you are ready to retire, get out of CA and save 9.3% on your deferred money!

Topic Author
DeadLoad
Posts: 8
Joined: Tue Aug 14, 2018 3:15 pm

Re: New Member Seeking Financial Review and Constructive Criticism :)

Post by DeadLoad » Mon Apr 15, 2019 4:51 pm

ExitStageLeft wrote:
Mon Apr 15, 2019 12:31 pm
I think that saving most in tax-deferred for now is reasonable, as long as you are saving some in Roth. The Investment Priority wiki page has a basic recommendation that is about 3.5:1 ratio of tax-deferred to Roth. Assuming you'll have some years in retirement to do additional Roth conversions then you'll be able to minimize your tax burden along the way. For now I wouldn't have Roth savings be any more than 25% of total savings. Monitor and adjust over the years as your retirement horizon becomes closer and things become a little clearer.
Got it. Funding 2 Roth IRAs puts us at 20% of if we end up saving 60k/yr which is close to your recommendation of no more than 25% as Roth for now.
Thegame14 wrote:
Mon Apr 15, 2019 12:38 pm
income is great for your ages, retirement could be better, you should aim to max out your 401K's as you get a tax break now. that car loan is a beast, why wasn't a $20K car enough? emergency fund needs to be 6 months exp at least, and aim for more if possible, I know you are working on it. Main advice is try to avoid the lifestyle creeps as you earn more, don't need to get spending more because you earn more....
Thank you. I knew we could definitely use a little more retirement so my goal was to get us on the right path at the beginning of our careers. The car could of course be a lot lower. My thoughts on it were that this vehicle statistically holds 70% of its value after 3 years of ownership (not a huge loss if we needed to sell within that time frame), it is big enough for our planned family (minimum 2 kids, potential for 3), and long term ownership (12+ years) and reliability is very achievable (thanks Toyota). Other than that our only other goal is to get a bigger house but still be no more than 25-30% take home for housing costs.
lakpr wrote:
Mon Apr 15, 2019 12:44 pm
At your young age, and California location, defer defer defer. Both 457 and 401k should go into traditional. Invest the tax savings into Roth and taxable. When you are ready to retire, get out of CA and save 9.3% on your deferred money!
Haha, I was just talking with some coworkers about changing states once in retirement.

I will look into opening some Roth IRAs.

Thegame14
Posts: 844
Joined: Mon May 07, 2018 11:53 am

Re: New Member Seeking Financial Review and Constructive Criticism :)

Post by Thegame14 » Mon Apr 15, 2019 10:20 pm

DeadLoad wrote:
Mon Apr 15, 2019 4:51 pm
Thegame14 wrote:
Mon Apr 15, 2019 12:38 pm
income is great for your ages, retirement could be better, you should aim to max out your 401K's as you get a tax break now. that car loan is a beast, why wasn't a $20K car enough? emergency fund needs to be 6 months exp at least, and aim for more if possible, I know you are working on it. Main advice is try to avoid the lifestyle creeps as you earn more, don't need to get spending more because you earn more....
Thank you. I knew we could definitely use a little more retirement so my goal was to get us on the right path at the beginning of our careers. The car could of course be a lot lower. My thoughts on it were that this vehicle statistically holds 70% of its value after 3 years of ownership (not a huge loss if we needed to sell within that time frame), it is big enough for our planned family (minimum 2 kids, potential for 3), and long term ownership (12+ years) and reliability is very achievable (thanks Toyota). Other than that our only other goal is to get a bigger house but still be no more than 25-30% take home for housing costs.
lakpr wrote:
Mon Apr 15, 2019 12:44 pm

Seems like the cart before the horse, you have no kids now but are buying a vehicle for a planned 3 kids, even if you started trying now, by the time your third is born the car will be like 8-10 year old or older, most people dont think of buying a bigger car until child two is on the way....

Again ID max out the 401K's to save the taxes now, I also like the idea of taking those tax savings and putting that amount into a roth. I just worry with a car purchase that makes no sense, that your biggest issue is going to be as you earn more you will keep wanting to spend more and that will be your biggest challenge IMO... IE you get a raise, now you think you can buy an even bigger house then you thought before, or another new car etc....It can be easy to live on the west coast and make $250K plus in income and still live paycheck to paycheck buying a 1M house, two car loans, 2 kids in day care, eating out, etc...

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