Review and where to go next help please

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Topic Author
RogerH
Posts: 12
Joined: Mon Jun 26, 2017 9:53 pm

Review and where to go next help please

Post by RogerH » Tue Jan 14, 2020 1:45 pm

Emergency funds: 100K sitting in a low interest account at my bank this is about 1.5 years’ worth. I don't know why I have this much here other than not knowing what else to do with it.

Debt: no credit card debt
Mortgage 174K left at 4.375% I’ve been adding extra principal to the payment for the last 1.5 years
Car 9K at .99%

Tax Filing Status: Married Filing Jointly

Tax Rate: 12% Federal, ?% State

State of Residence: Georgia

Age: 50

Desired Asset allocation: ? % stocks / ? % bonds
Desired International allocation: ? % of stocks

Current portfolio:
His 403b from former employer VALIC (soon to roll over to an IRA) I didn’t realize how much they drained me in hidden fees until recently. My conservative estimate is my account is 100K lower than it would have been, but VALIC was the only option in my former system.
107K 30% in social responsible fund ER 1.63%
30% stock index fund ER 1.33
10 % science and tech fund ER 1.99%
30% fixed account (I can only move 20% per year out) earning 1.65%
Her 403b 88K invested like mine above
His Roth 27K invested in VFORX ER .14
Her no current income, so no Roth
Taxable 20K 75% VTI ER .03 25% VXUS ER .09
Pension: His could vary low of 48K per year starting in 4.5 years to 60K or maybe higher if I wait 9.5 years
Hers- 29.5 K starting at age 60(8 years away) extended medical leave keeps her from returning
Social Security: His- at age 70 I’d qualify for about 8.5 K per year
Hers- half of mine at age 72(her age)
We spent 25 years working in a system that does not contribute to SS. I moved to a system that does and after 10 years I’d have a small SS benefit.



House #1 is paid off with a 190K assessed value and brings in a steady 7K to 8K per year after expenses
House #2 is paid off with a value of 250K that we owner finance the sale that brings in 15.6K per year. We have 7 years left then a balloon payment due from the buyer of 200K

My current income is 76K per year
I am about to start a new 457b/403b through Vanguard or Fidelity with my new system starting with at least $500 per month. I have 20 more years before I anticipate needing my non pension funds.


What should I be doing differently or what do I need to do to not have what looks like a hot mess?
Where do I go from here? I’m really not looking to retire from teaching until I’m 60 to 65, which the later I go, it increases the pension and SS.

Would it make sense to retire at 55 from GA, collect my pension and maybe work another 5-10 years in either another SS contributing job or try teaching in Florida since I live right at the border of FL/GA?

bloom2708
Posts: 7104
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: Review and where to go next help please

Post by bloom2708 » Tue Jan 14, 2020 2:14 pm

"Her no current income, so no Roth"

Your wife doesn't need income when married filing jointly. She qualifies under your income.

Take some of your cash and put $6k in for 2019 and $6k for 2020 into her IRA.

Any expense ratio over .5% should be investigated. Move "old" accounts to Vanguard or Fidelity (or your favorite).

If you are unsure about mix of stocks and bonds, go 50-50. International between 0 and 30% seems reasonable. I'm closer to 0%.

If funds are in 403b/Roths/Rollover IRAs, look at your available funds and get rid of the high expense ratio funds. If nothing is good, then do the best you can with an S&P 500 index fund and an Int-Term bond fund.

Bond allocation in 403b/Rollover IRAs. Leave Roth accounts for all stock index funds.

Hopefully others give you some ideas. It is a great time to focus and optimize costs and placement.
"People want confirmation, not advice" Unknown | "We are here to provoke thoughtfulness, not agree with you" Unknown | Four words: Whole food, plant based

ExitStageLeft
Posts: 1798
Joined: Sat Jan 20, 2018 4:02 pm

Re: Review and where to go next help please

Post by ExitStageLeft » Tue Jan 14, 2020 5:57 pm

I would roll the two 403b accounts into traditional IRAs. Put $12k for her into Roth IRAs for 2019 and 2020, coming from the cash. Also make your 2020 contribution (and 2019 too if you haven't yet)

A 60/40 allocation is a good place to be. I would go with 20% to 25% of stocks in international.

I would do the following:
1) Move as much as you can from both 403b accounts in traditional IRAs.
2) Open Roth IRA for her and fund it for 2019 and 2020.
3) Fund his Roth IRA for 2020.
4) Balance portfolio for three-fund simplicity as below.
5) keep transferring from Fixed Account each year.

Taxable $20k
5.77% Vanguard Total Stock Market VTI
1.92% Vanguard Total International VXUS

His Old 403b $24k
9.23% Fixed Account

His tIRA $83k
23.33% Vanguard Total Bond Index VBTLX
8.59% Vanguard Total Stock Index VTSAX

His 457b $0k
0% Total Stock Market Index Fund

His New 403b $0k
0% Total Stock Market Index Fund

His Roth IRA $33k
12.69% Vanguard Total Stock Index VTSAX

Her 403b $16k
6.15% Fixed Account

Her tIRA $72k
13.08% Vanguard Total International VTIAX
14.61% Vanguard Total Stock Index VTSAX

Her Roth IRA $12k

4.62% Vanguard Total Stock Index VTSAX

Topic Author
RogerH
Posts: 12
Joined: Mon Jun 26, 2017 9:53 pm

Re: Review and where to go next help please

Post by RogerH » Tue Jan 14, 2020 9:36 pm

Thank you, that is a lot to digest. I'll look into opening a Roth for my wife this week.

User avatar
Watty
Posts: 18115
Joined: Wed Oct 10, 2007 3:55 pm

Re: Review and where to go next help please

Post by Watty » Tue Jan 14, 2020 10:16 pm

RogerH wrote:
Tue Jan 14, 2020 1:45 pm
Social Security: His- at age 70 I’d qualify for about 8.5 K per year
Hers- half of mine at age 72(her age)
Check out this web site to get a suggested Social Security claiming strategy.

https://opensocialsecurity.com/

I can't think of any reason that it would make sense for her to wait until she is 72 to start Social Security. Is there something special that makes you want to do that?
RogerH wrote:
Tue Jan 14, 2020 1:45 pm
What should I be doing differently or what do I need to do to not have what looks like a hot mess?
Where do I go from here? I’m really not looking to retire from teaching until I’m 60 to 65, which the later I go, it increases the pension and SS.
I might have missed but if your pension is not one of those that is instead of Social Security then working longer might not increase your SS much if any. The reason is that Social Security is calculated using your highest 35 years of inflation adjusted earning. This means that once you have 35 years of paying into Social Security then the 36th year will just replace a lower earnings year in the 35 years that are used in the calculation. If you did not have some low earnings years the 36th(and later) year might might not mean much. I think the last year I worked increased my Social Security something like $5 a month. :annoyed

One thing to do is to work on figuring out what your expenses will be in retirement. Unless you want enjoy working then you might be able to retire earlier if you want to.
RogerH wrote:
Tue Jan 14, 2020 1:45 pm
100K sitting in a low interest account at my bank this is about 1.5 years’ worth. I don't know why I have this much here other than not knowing what else to do with it.

Debt: no credit card debt
Mortgage 174K left at 4.375%
You can decide if it is a good option or not but one thing you could do would be to call your lender and ask if they will "recast your mortage"(Google this) if you make a large prepayment. The are not required to do this but they often will for a couple of hundred dollar fee. The way this works is if you pay the loan down by 33%(or whatever makes sense) then your required mortage payment will be reduced by the same percentage. The interest rate and length of the loan will stay the same. Getting a risk free tax free 4.375% return is not all that bad.

Topic Author
RogerH
Posts: 12
Joined: Mon Jun 26, 2017 9:53 pm

Re: Review and where to go next help please

Post by RogerH » Wed Jan 15, 2020 7:46 am

I based my SS off the charts they publish. I spent 25 years in a system that did NOT pay into social security so for those 25 years my pay in their eyes is $0 and my wife is in the same situation. Since she is medically unable to go back to work, she has no SS income and has to wait until I'm at 70 years old to collect. If I do 10 years in my current system then I'd get a small SS check(smaller than most due to WEP). So, each year over the 10 adds to the SS total and also adds 2% more to my teacher retirement total.

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