Help evaluating / managing my portfolio

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Topic Author
liveinaz
Posts: 51
Joined: Thu Oct 06, 2022 10:51 am

Help evaluating / managing my portfolio

Post by liveinaz »

I am pretty new to this forum (joined about a week ago). You guys are awesome and I hope that one day I can learn enough to be able to help others as well.

I am a novice when it comes to anything related to retirement financial stuff. I am looking for any advice on how to best manage this portfolio myself. I am not sure about taxes and how to best manage that as well, but maybe that is a topic for another time.

I am not sure what or how much to put money into…

After reading the post “Delay Social Security to age 70 and spend more money at 62”, I would need to cover 7 years of no SS for my wife. The article says either an annuity, a CD ladder or cash…my thought is maybe keeping some of my portfolio in cash and take out what I need to cover the 7 years (around $194,000) instead of paying for an annuity or being taxed on putting the money into a CD(s). Here is the link to the article: viewtopic.php?t=102609&start=150

I tried to follow the recommended format as best as I could and included some additional information that I thought might be useful.

Emergency Funds: $10,000 about 2 months

Debt: None (house paid off, no car payments, credit cards paid off monthly)

Assets: Home paid off - value $550,000, Cabin paid off value - $275,000

Anticipated Retirement Date: May, 2023

Tax Filing Status: Married Filing Jointly

State of Residence: Arizona

Age: Wife - 63, me – 62

Life Expectancy: Wife - 95, me – 87

Desired Asset Allocation: 60% stocks / 40% Bonds (I think…I am a conservative person, not sure if this allocation is conservative or not)

Approximate size of Portfolio: $594,187 (Wife through Employer $451,550 @ Prudential (403b) and me through employer $142,637 @ Nationwide (457) and $31,000 HSA (not shown or used in calculations below) with Optum)

Pension: $3,900 per month - survivor benefit 100% to wife

Social security Info: Wife - $2,293 @ 63 or $2,691 @ 65 or $3,100 @ 67, Me - $1,817 @ 63 or $2,103 @ 65 or $2452 @ 67 looking at me collecting next May, 2023 and wife possibly waiting until 70.

Monthly Expenses in Retirement: Bare Minimum = $5,400, Comfortable lifestyle = $7,400 per month

Current Retirement Assets (xx% - Fund Name (ticker symbol) - Expense Ratio):

Wife’s work Prudential Retirement (Asset Based Participant Fee of 0.065% is charged annually and deducted quarterly) – Value ~ $451,550

34% ($203,700) Guaranteed Income Fund - 0.00% fee
25% ($143,103) Dodge & Cox Income Fund Class I, Fixed Income - Intermediate Core-Plus Bond (DODIX) – 0.41% fee
2% ($13,211) Delaware Value Fund Institutional Class Large Cap – Value (DDVIX) – 0.68% fee
3% ($17,353) Vanguard Institutional Index Fund Institutional Shares Large Cap – Blend (VINIX) – 0.035% fee
2% ($13,069) American Funds The Growth Fund of America Class R-6 Large Cap – Growth (RGAGX) – 0.30% fee
0.8% ($4,368) Vanguard Selected Value Fund Investor Shares Mid Cap – Value (VASVX) – 0.32% fee
1.3% ($8,676) Vanguard Mid-Cap Index Fund Institutional Shares Mid Cap – Blend (VMCIX) – 0.04% fee
1.3% ($8,730) Vanguard Small-Cap Index Fund Institutional Shares Small Cap – Blend (VSCIX) – 0.04% fee
0.8% ($4,528) Brown Capital Management Small Company Fund Institutional Shares Small Cap – Growth (BCSSX) – 1.05% fee
5.9% ($34,812) American Funds EuroPacific Growth Fund Class R-6 International - Large Growth (RERGX) – 0.46% fee

Other available fund available through Prudential (not invested in this one)
Prudential IncomeFlex Target 60/40 Allocation Fund – 1.55% fee


My work Nationwide Retirement (Asset Based Participant Fee of 0.06% Also, currently using "ProAccount" service with a fee of 0.50%. ProAccount is an add on that I don’t have to use, I just use it to help manage but I am thinking of not using them once I figure this out for myself) – Value ~ $142,637

2% ($13,884) Arizona Fixed Fund – 0.00% fee
1.7% ($9,939) Dodge & Cox International Stock Fund - Class I (DODFX) – 0.62% fee
1.6% ($9,869) EuroPacific Growth Fund(R) - Class R6 (RERGX) – 0.46% fee
2.6% ($15,251) Fidelity 500 Index Fund (FXAIX) – 0.01% fee
2.4% ($14,127) Fidelity Contrafund K6 (FLCNX) – 0.45% fee
1.3% ($6,989) Fidelity International Index Fund (FSPSX) – 0.04% fee
0.8% ($4,197) Fidelity Mid Cap Index Fund (FSMDX) – 0.03% fee
0.5% ($2,771) Fidelity Small Cap Index Fund (FSSNX) – 0.03% fee
1.2% ($7,284) Fidelity U.S. Bond Index Fund (FXNAX) – 0.03% fee
0.5% ($2,837) Franklin Small Cap Value Fund - Class R6 (FRCSX) – 0.63% fee
1.4% ($8,554) JPMorgan Equity Income Fund - Class R6 (OIEJX) – 0.46% fee
2.2% ($13,262) Loomis Sayles Bond Fund - Institutional Class (LSBDX) – 0.67% fee
1.7% ($10,121) Metropolitan West Total Return Bond Fund - Class M (MWTRX) – 0.67% fee
1.4% ($8,513) New World Fund(SM) - Class R6 (RNWGX) – 0.57% fee
0.8% ($4,246) T. Rowe Price Mid-Cap Growth Fund - I Class (RPTIX) – 0.61% fee
0.9% ($5,114) Virtus Duff & Phelps Global Real Estate Securities Fund - Class I (VGISX) – 1.15% fee
0.9% ($5,677) Washington Mutual Investors Fund(SM) - Class R6 (RWMGX) – 0.26% fee

Other available funds through Nationwide (not invested in these)
Capital World Growth and Income Fund(SM) - Class R6 – 0.42% fee
Brown Capital Management Small Company Fund - Institutional Shares – 1.05% fee
The Income Fund of America(R) - Class R6 – 0.25% fee
American Funds 2015 Target Date Retirement Fund - Class R6 - 0.29% fee
American Funds 2020 Target Date Retirement Fund - Class R6 – 0.30% fee
American Funds 2025 Target Date Retirement Fund - Class R6 – 0.31% fee
American Funds 2030 Target Date Retirement Fund - Class R6 – 0.33% fee
Bunch more of these Target Date Retirement Funds…

Thank you,
Philip
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retired@50
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Re: Help evaluating / managing my portfolio

Post by retired@50 »

Welcome to the forum. :happy

A few thoughts...
1. Read the wiki page on expense ratios.
2. Simplify the two workplace accounts by using fewer funds. Consider reading the wiki page on the 3-Fund portfolio.
3. Once each of you retire and have officially severed from the employers, roll those two accounts (403b & 457b) into rollover IRA accounts at your preferred financial custodian (Vanguard or Fidelity or Schwab) so you can avoid the participation fees and higher expense ratios being charged by Nationwide and Prudential.

With the healthy pension ($3,900/mo.) and your Social Security draw at 63, your basic expenses are covered. Pulling some additional money now and then to pay for "nice to have" items shouldn't be a problem, assuming you can keep spending under control.

Regards,
This is one person's opinion. Nothing more.
HomeStretch
Posts: 8767
Joined: Thu Dec 27, 2018 3:06 pm

Re: Help evaluating / managing my portfolio

Post by HomeStretch »

Do you want to have an International allocation?

What is your spouse’s 403(b) Guaranteed Fund’s rate?

For a 60% U.S. equity / 40% fixed income self-managed portfolio, your portfolio could be as simple as:

76% -Spouse 403(b):
60% - VINIX - U.S. Institutional Fund
16% - Guaranteed Fund or DODIX - Dodge & Cox Int. Bond

24% - Your 457:
24% FXNAX - Fidelity Total U.S. Bond Fund

When you retire consider rolling over the employer plans to IRAs to eliminate the admin fees.
Topic Author
liveinaz
Posts: 51
Joined: Thu Oct 06, 2022 10:51 am

Re: Help evaluating / managing my portfolio

Post by liveinaz »

HomeStretch wrote: Tue Oct 11, 2022 6:14 pm Do you want to have an International allocation?

What is your spouse’s 403(b) Guaranteed Fund’s rate?

For a 60% U.S. equity / 40% fixed income self-managed portfolio, your portfolio could be as simple as:

76% -Spouse 403(b):
60% - VINIX - U.S. Institutional Fund
16% - Guaranteed Fund or DODIX - Dodge & Cox Int. Bond

24% - Your 457:
24% FXNAX - Fidelity Total U.S. Bond Fund

When you retire consider rolling over the employer plans to IRAs to eliminate the admin fees.
Thank you...

I have heard that having an international allocation is a good thing, so I guess I should have that?

Spouses 403b guaranteed fund rate...I am unable to find that. It says prior month 0.14%, prior quarter 0.43%, year to date 1.29%, 1 year 1.66%...does that help?

I can move the money into an IRA and would not have fees? Are those the asset based participants fees? Those are like 0.06%...I can move the money somewhere to not pay that at all? Sorry for my ignorance...I was told that those fees are really low...unless you are referring to a different fee?
Topic Author
liveinaz
Posts: 51
Joined: Thu Oct 06, 2022 10:51 am

Re: Help evaluating / managing my portfolio

Post by liveinaz »

retired@50 wrote: Tue Oct 11, 2022 6:14 pm Welcome to the forum. :happy

A few thoughts...
1. Read the wiki page on expense ratios.
2. Simplify the two workplace accounts by using fewer funds. Consider reading the wiki page on the 3-Fund portfolio.
3. Once each of you retire and have officially severed from the employers, roll those two accounts (403b & 457b) into rollover IRA accounts at your preferred financial custodian (Vanguard or Fidelity or Schwab) so you can avoid the participation fees and higher expense ratios being charged by Nationwide and Prudential.

With the healthy pension ($3,900/mo.) and your Social Security draw at 63, your basic expenses are covered. Pulling some additional money now and then to pay for "nice to have" items shouldn't be a problem, assuming you can keep spending under control.

Regards,
Thank you! This forum is addicting.

1 and 2...I will read these...thank you for the links.

3...I can go to one of those Vanguard, Fidelity or Schwab and there are no fees? I guess that is better than the 0.06%....this is what the Nationwide said.. "Pro Account fee is .50%, plus the expense ratio for each fund you are in. There are no front-end or back-end loads on these options since they represent institutional shares, which don’t pay those fees. Institutional shares are a class of mutual fund shares available for institutional investors. Institutional mutual fund shares typically have the lowest expense rations among all of mutual fund’s share classes. Your 457 also has an admin fee of .06%. On your current account balance of $141,828 it would represent an annual fee of $85.10. ASRS negotiated the “extremely” low admin fee with Nationwide."

So I am better moving to Vanguard Fidelity or Schwab still? How do they make their money if they do t charge a fee?

Thank you
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retired@50
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Re: Help evaluating / managing my portfolio

Post by retired@50 »

liveinaz wrote: Tue Oct 11, 2022 6:55 pm 3...I can go to one of those Vanguard, Fidelity or Schwab and there are no fees?

Thank you
Regarding fees, (your fee load can be reduced, not eliminated). You're paying too much in several places. Nationwide and Prudential are not known as low-fee providers, so rolling those accounts to Vanguard or wherever will help reduce the fees.

Paying the 0.50% for the adviser is high as well. Vanguard will provide this service for 0.30% If you stick around here, you may be able to live without the adviser and save this fee by becoming a do-it-yourself investor.

Some examples of high expense ratio funds - DDVIX 0.68% for a Large Cap stock fund. Vanguard has one for 0.04%
RERGX 0.46% Euro Pacific stock fund. Vanguard has a similar international stock fund for 0.11%

My portfolio is at Vanguard, and my dollar weighted average fee level is 0.07% when you consider all the different funds I own.
Your fee level is probably in the .40% to .60% range, which leaves lots of room for improvement.

Regards,
This is one person's opinion. Nothing more.
HomeStretch
Posts: 8767
Joined: Thu Dec 27, 2018 3:06 pm

Re: Help evaluating / managing my portfolio

Post by HomeStretch »

liveinaz wrote: Tue Oct 11, 2022 6:33 pm
HomeStretch wrote: Tue Oct 11, 2022 6:14 pm Do you want to have an International allocation? …
… I have heard that having an international allocation is a good thing, so I guess I should have that? …
An International allocation is a personal choice. Holding it should add diversification to your portfolio. This Vanguard article “why invest internationally” may be helpful:
https://investor.vanguard.com/investor- ... al%20bonds.
Topic Author
liveinaz
Posts: 51
Joined: Thu Oct 06, 2022 10:51 am

Re: Help evaluating / managing my portfolio

Post by liveinaz »

I am confused and maybe I need to learn more...so Prudential charges 0.065% and nationwide charges 0.06% in fees...but I can get a better rate at Vanguard, Fidelity or Schwab?

I am thinking I want to learn to do this myself with the help of this website...
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retired@50
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Re: Help evaluating / managing my portfolio

Post by retired@50 »

liveinaz wrote: Tue Oct 11, 2022 7:56 pm I am confused and maybe I need to learn more...so Prudential charges 0.065% and nationwide charges 0.06% in fees...but I can get a better rate at Vanguard, Fidelity or Schwab?

I am thinking I want to learn to do this myself with the help of this website...
Those fees you mention 0.06%5 (Prudential) and 0.06% (Nationwide) are above and beyond the expense ratios of the mutual funds you choose in those workplace retirement plans. Those fees will be eliminated if/when you rollover those accounts to a low-cost provider like Vanguard, Fidelity or Schwab.

Workplace retirement plans have overhead expenses that are either paid for by the plan participants (workers) or (if you're lucky) the company decides to pay for these costs as a fringe benefit.

Regards,
This is one person's opinion. Nothing more.
HomeStretch
Posts: 8767
Joined: Thu Dec 27, 2018 3:06 pm

Re: Help evaluating / managing my portfolio

Post by HomeStretch »

liveinaz wrote: Tue Oct 11, 2022 7:56 pm I am confused and maybe I need to learn more...so Prudential charges 0.065% and nationwide charges 0.06% in fees...but I can get a better rate at Vanguard, Fidelity or Schwab?

I am thinking I want to learn to do this myself with the help of this website...
For example:

If you use FXNAX in your 457, the fund ER and admin expense/fees combined are .59 (.03 + .06 + .5). In a Fidelity IRA, there are zero fees/admin expenses and the fund ER is .025. The IRA annual investment cost is lower by .565 or $806 (= $142,637 x .565).

If you use VINIX in spouse’s 403(b), the fund ER and admin expense combined are .10 (.035 + .065). In a Vanguard IRA, there are zero fees and the retail fund equivalent VFIAX’s ER is .04. The IRA annual investment cost is lower by .06 or $271 (= $451,550 x .06).

In total, the annual IRA investment costs are $1,077 lower. After 30 years, that’s $32,310 + earnings. If annual earnings were 5%, you would have ~$80k more due to lower investment costs at the end of 30 years.
Topic Author
liveinaz
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Joined: Thu Oct 06, 2022 10:51 am

Re: Help evaluating / managing my portfolio

Post by liveinaz »

Wow...okay thank you it makes more sense...I can get rid of the 0.50% for ProAccount...I thought it would help me make better decisions. But I can see, even without that fee, moving the money to Vanguard, Fidelity or Schwab would still save me money.

Questions: should I roll over the money now with an in service roll over?

On the Vanguard web site there are several options..."personal investors", "retirement plan participants", "institution investors", etc. Which one is the free account?

Is one company Vanguard, Fidelity or Schwab better as far as what they offer or their track record?

Thank you for your time and help with this...
HomeStretch
Posts: 8767
Joined: Thu Dec 27, 2018 3:06 pm

Re: Help evaluating / managing my portfolio

Post by HomeStretch »

liveinaz wrote: Wed Oct 12, 2022 6:36 am Wow...okay thank you it makes more sense...I can get rid of the 0.50% for ProAccount...I thought it would help me make better decisions. But I can see, even without that fee, moving the money to Vanguard, Fidelity or Schwab would still save me money.

Questions: should I roll over the money now with an in service roll over?

On the Vanguard web site there are several options..."personal investors", "retirement plan participants", "institution investors", etc. Which one is the free account?

Is one company Vanguard, Fidelity or Schwab better as far as what they offer or their track record?

Thank you for your time and help with this...
I use and like Vanguard and Fidelity.
- While Vanguard has better fixed income offerings, I am not recommending them now because of their customer service issues/long processing times and lack of local offices/robust website (which is a pain, for example. if you need a medallion guarantee and then need to mail the paperwork).
- I suggest Fidelity if there is a local office. I also like that Fidelity offers a cash management account (free wires, debit/no-fee ATM card, bill pay), 2% VISA, donor advised fund, etc. Although their money market funds have lower yields (due to higher ER), I am buying short-term T-Bills at Fidelity to get a higher yield. Fidelity will give you a [edit-] $100 $109 bonus to try a new account after depositing $50:
https://www.doctorofcredit.com/fidelity ... posit/amp/

As step 1, consider eliminating the .5 fee in your 457 account. That will drop your investment costs. Also consider simplifying the two retirement accounts perhaps along the lines of what I suggested, above, (which you will need to adjust if you want to add International) which will further reduce your investment costs.
Last edited by HomeStretch on Wed Oct 12, 2022 9:47 am, edited 1 time in total.
Topic Author
liveinaz
Posts: 51
Joined: Thu Oct 06, 2022 10:51 am

Re: Help evaluating / managing my portfolio

Post by liveinaz »

HomeStretch wrote: Wed Oct 12, 2022 8:07 am
liveinaz wrote: Wed Oct 12, 2022 6:36 am Wow...okay thank you it makes more sense...I can get rid of the 0.50% for ProAccount...I thought it would help me make better decisions. But I can see, even without that fee, moving the money to Vanguard, Fidelity or Schwab would still save me money.

Questions: should I roll over the money now with an in service roll over?

On the Vanguard web site there are several options..."personal investors", "retirement plan participants", "institution investors", etc. Which one is the free account?

Is one company Vanguard, Fidelity or Schwab better as far as what they offer or their track record?

Thank you for your time and help with this...
I use and like Vanguard and Fidelity.
- While Vanguard has better fixed income offerings, I am not recommending them now because of their customer service issues/long processing times and lack of local offices/robust website (which is a pain, for example. if you need a medallion guarantee and then need to mail the paperwork).
- I suggest Fidelity if there is a local office. I also like that Fidelity offers a cash management account (free wires, debit/no-fee ATM card, bill pay), 2% VISA, donor advised fund, etc. Although their money market funds have lower yields (due to higher ER), I am buying short-term T-Bills at Fidelity to get a higher yield. Fidelity will give you a $109 bonus to try a new account after depositing $50:
https://www.doctorofcredit.com/fidelity ... posit/amp/

As step 1, consider eliminating the .5 fee in your 457 account. That will drop your investment costs. Also consider simplifying the two retirement accounts perhaps along the lines of what I suggested, above, (which you will need to adjust if you want to add International) which will further reduce your investment costs.
Thank you HomeStretch and Retired@50...

Is it okay to change everything in my current accounts? Meaning I can move everything out of my current allocations to the recommended:

76% -Spouse 403(b):
60% - VINIX - U.S. Institutional Fund
16% - Guaranteed Fund or DODIX - Dodge & Cox Int. Bond

24% - Your 457:
24% FXNAX - Fidelity Total U.S. Bond Fund

So I would only have 3 investments?
homebuyer6426
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Re: Help evaluating / managing my portfolio

Post by homebuyer6426 »

Your spending is quite high (over 3x me and my wife's). But with the combined pension and SS it looks like you can easily afford it. However it might be worth evaluating what parts of that spending are actually worth their value. I'd bet many can be reduced while keeping the same quality of service.
65% Total Stock Market | 30% Consumer Staples | 5% Short Term Reserves
Topic Author
liveinaz
Posts: 51
Joined: Thu Oct 06, 2022 10:51 am

Re: Help evaluating / managing my portfolio

Post by liveinaz »

homebuyer6426 wrote: Wed Oct 12, 2022 8:33 am Your spending is quite high (over 3x me and my wife's). But with the combined pension and SS it looks like you can easily afford it. However it might be worth evaluating what parts of that spending are actually worth their value. I'd bet many can be reduced while keeping the same quality of service.
Thank you. I thought I had our spending nailed down...lol...I have a spreadsheet and even included haircuts and my wife's nails...I don't think there is any way to cut it by 1/3 though...the average would be around $6,400 per month...1/3 of that would be $2,130. health insurance, prescriptions, copays and dentist is going to cost $1,400 per month. But yes, you are correct, there are probably things that can be reduced...I am figuring in around $550 for travel per month since we would like to travel. Thank you!
student
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Re: Help evaluating / managing my portfolio

Post by student »

I think you may want to consider rolling your retirement assets to a IRA to get away from high fees. Note that 403b may have better bankruptcy protection than IRA, but likely not a big issue. https://www.investopedia.com/ask/answer ... ruptcy.asp
Topic Author
liveinaz
Posts: 51
Joined: Thu Oct 06, 2022 10:51 am

Re: Help evaluating / managing my portfolio

Post by liveinaz »

HomeStretch wrote: Wed Oct 12, 2022 8:07 am
liveinaz wrote: Wed Oct 12, 2022 6:36 am Wow...okay thank you it makes more sense...I can get rid of the 0.50% for ProAccount...I thought it would help me make better decisions. But I can see, even without that fee, moving the money to Vanguard, Fidelity or Schwab would still save me money.

Questions: should I roll over the money now with an in service roll over?

On the Vanguard web site there are several options..."personal investors", "retirement plan participants", "institution investors", etc. Which one is the free account?

Is one company Vanguard, Fidelity or Schwab better as far as what they offer or their track record?

Thank you for your time and help with this...
I use and like Vanguard and Fidelity.
- While Vanguard has better fixed income offerings, I am not recommending them now because of their customer service issues/long processing times and lack of local offices/robust website (which is a pain, for example. if you need a medallion guarantee and then need to mail the paperwork).
- I suggest Fidelity if there is a local office. I also like that Fidelity offers a cash management account (free wires, debit/no-fee ATM card, bill pay), 2% VISA, donor advised fund, etc. Although their money market funds have lower yields (due to higher ER), I am buying short-term T-Bills at Fidelity to get a higher yield. Fidelity will give you a $109 bonus to try a new account after depositing $50:
https://www.doctorofcredit.com/fidelity ... posit/amp/

As step 1, consider eliminating the .5 fee in your 457 account. That will drop your investment costs. Also consider simplifying the two retirement accounts perhaps along the lines of what I suggested, above, (which you will need to adjust if you want to add International) which will further reduce your investment costs.
Sorry, this may be a really stupid question...There are several options in opening an account...If I open an account with Fidelity, would it be a Traditional IRA, Roth IRA, or a Fidelity Cash Management Account that I would open?
student
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Re: Help evaluating / managing my portfolio

Post by student »

liveinaz wrote: Wed Oct 12, 2022 9:28 am
HomeStretch wrote: Wed Oct 12, 2022 8:07 am
liveinaz wrote: Wed Oct 12, 2022 6:36 am Wow...okay thank you it makes more sense...I can get rid of the 0.50% for ProAccount...I thought it would help me make better decisions. But I can see, even without that fee, moving the money to Vanguard, Fidelity or Schwab would still save me money.

Questions: should I roll over the money now with an in service roll over?

On the Vanguard web site there are several options..."personal investors", "retirement plan participants", "institution investors", etc. Which one is the free account?

Is one company Vanguard, Fidelity or Schwab better as far as what they offer or their track record?

Thank you for your time and help with this...
I use and like Vanguard and Fidelity.
- While Vanguard has better fixed income offerings, I am not recommending them now because of their customer service issues/long processing times and lack of local offices/robust website (which is a pain, for example. if you need a medallion guarantee and then need to mail the paperwork).
- I suggest Fidelity if there is a local office. I also like that Fidelity offers a cash management account (free wires, debit/no-fee ATM card, bill pay), 2% VISA, donor advised fund, etc. Although their money market funds have lower yields (due to higher ER), I am buying short-term T-Bills at Fidelity to get a higher yield. Fidelity will give you a $109 bonus to try a new account after depositing $50:
https://www.doctorofcredit.com/fidelity ... posit/amp/

As step 1, consider eliminating the .5 fee in your 457 account. That will drop your investment costs. Also consider simplifying the two retirement accounts perhaps along the lines of what I suggested, above, (which you will need to adjust if you want to add International) which will further reduce your investment costs.
Sorry, this may be a really stupid question...There are several options in opening an account...If I open an account with Fidelity, would it be a Traditional IRA, Roth IRA, or a Fidelity Cash Management Account that I would open?
I think it is a rollover IRA. You can get more info https://www.fidelity.com/go/401k-rollover-hub/
HomeStretch
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Re: Help evaluating / managing my portfolio

Post by HomeStretch »

liveinaz wrote: Wed Oct 12, 2022 9:28 am Sorry, this may be a really stupid question...There are several options in opening an account...If I open an account with Fidelity, would it be a Traditional IRA, Roth IRA, or a Fidelity Cash Management Account that I would open?
First you have to find out if the plans allow you and spouse to do in-service rollovers of the full account balances (I don’t know if it’s allowed in a 457 plan). If yes, then decide whether you want to do a rollover now or later. If now, then each of you would need to open a receiving Rollover IRA for the rollovers in. A Fidelity IRA for each of you is a possibility.

If you don’t want to do a rollover now but want to try out Fidelity now, consider opening a Cash Management Account (which has brokerage capabilities so you can invest in money market funds, buy T-Bills, etc.). But if you drop the .5 fee and move into the lower-ER plan choices now, it doesn’t seem urgent to rollover your employer plans while employed. But, if allowed, you can certainly choose to do so.

If that’s complicated, then do nothing until/if you need a brokerage account for IRAs.
HomeStretch
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Re: Help evaluating / managing my portfolio

Post by HomeStretch »

liveinaz wrote: Wed Oct 12, 2022 8:21 am
HomeStretch wrote: Wed Oct 12, 2022 8:07 am
liveinaz wrote: Wed Oct 12, 2022 6:36 am Wow...okay thank you it makes more sense...I can get rid of the 0.50% for ProAccount...I thought it would help me make better decisions. But I can see, even without that fee, moving the money to Vanguard, Fidelity or Schwab would still save me money.

Questions: should I roll over the money now with an in service roll over?

On the Vanguard web site there are several options..."personal investors", "retirement plan participants", "institution investors", etc. Which one is the free account?

Is one company Vanguard, Fidelity or Schwab better as far as what they offer or their track record?

Thank you for your time and help with this...
I use and like Vanguard and Fidelity.
- While Vanguard has better fixed income offerings, I am not recommending them now because of their customer service issues/long processing times and lack of local offices/robust website (which is a pain, for example. if you need a medallion guarantee and then need to mail the paperwork).
- I suggest Fidelity if there is a local office. I also like that Fidelity offers a cash management account (free wires, debit/no-fee ATM card, bill pay), 2% VISA, donor advised fund, etc. Although their money market funds have lower yields (due to higher ER), I am buying short-term T-Bills at Fidelity to get a higher yield. Fidelity will give you a $109 bonus to try a new account after depositing $50:
https://www.doctorofcredit.com/fidelity ... posit/amp/

As step 1, consider eliminating the .5 fee in your 457 account. That will drop your investment costs. Also consider simplifying the two retirement accounts perhaps along the lines of what I suggested, above, (which you will need to adjust if you want to add International) which will further reduce your investment costs.
Thank you HomeStretch and Retired@50...

Is it okay to change everything in my current accounts? Meaning I can move everything out of my current allocations to the recommended:

76% -Spouse 403(b):
60% - VINIX - U.S. Institutional Fund
16% - Guaranteed Fund or DODIX - Dodge & Cox Int. Bond

24% - Your 457:
24% FXNAX - Fidelity Total U.S. Bond Fund

So I would only have 3 investments?
Yes, unless you want to add an International fund.

There are no tax consequences to changing holdings in tax deferred accounts.

You and spouse will also want to change how new plan contributions are being allocated to reflect your new fund choices. I think you are both still working and contributing since you mentioned in-service distributions in an earlier post.
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retired@50
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Re: Help evaluating / managing my portfolio

Post by retired@50 »

liveinaz wrote: Wed Oct 12, 2022 6:36 am Questions: should I roll over the money now with an in service roll over?
Since you are planning to retire in less than a year, I'd wait to move the account until you're no longer employed. The process can sometimes prove to be a bit of a hassle, so going through it twice might be less than ideal.

If you can eliminate the 0.50% advisory fee now, that will be the lion's share of the savings you can achieve. Then, look into other funds offered in your plan, paying special attention to the expense ratios and whether or not the fund appears to be a broadly diversified index fund.

Post the list of available choices in the workplace plans if you want help choosing among the funds offered. If you go this route, be sure to include full fund names, ticker symbols, and expense ratios.

Regards,
This is one person's opinion. Nothing more.
student
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Re: Help evaluating / managing my portfolio

Post by student »

HomeStretch wrote: Wed Oct 12, 2022 9:59 am
liveinaz wrote: Wed Oct 12, 2022 9:28 am Sorry, this may be a really stupid question...There are several options in opening an account...If I open an account with Fidelity, would it be a Traditional IRA, Roth IRA, or a Fidelity Cash Management Account that I would open?
First you have to find out if the plans allow you and spouse to do in-service rollovers of the full account balances (I don’t know if it’s allowed in a 457 plan). If yes, then decide whether you want to do a rollover now or later. If now, then each of you would need to open a receiving Rollover IRA for the rollovers in. A Fidelity IRA for each of you is a possibility.

If you don’t want to do a rollover now but want to try out Fidelity now, consider opening a Cash Management Account (which has brokerage capabilities so you can invest in money market funds, buy T-Bills, etc.). But if you drop the .5 fee and move into the lower-ER plan choices now, it doesn’t seem urgent to rollover your employer plans while employed. But, if allowed, you can certainly choose to do so.

If that’s complicated, then do nothing until/if you need a brokerage account for IRAs.
Since OP plans to retire in May 2023, they can probably wait to do the rollover when they retire.

OP: Is your 457 a governmental one? (If you wife is a teacher at a public school, then it is likely a governmental one, which has flexibility.)
student
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Re: Help evaluating / managing my portfolio

Post by student »

retired@50 wrote: Wed Oct 12, 2022 10:12 am
liveinaz wrote: Wed Oct 12, 2022 6:36 am Questions: should I roll over the money now with an in service roll over?
Since you are planning to retire in less than a year, I'd wait to move the account until you're no longer employed. The process can sometimes prove to be a bit of a hassle, so going through it twice might be less than ideal.

Regards,
I agree.
Topic Author
liveinaz
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Re: Help evaluating / managing my portfolio

Post by liveinaz »

retired@50 wrote: Wed Oct 12, 2022 10:12 am
liveinaz wrote: Wed Oct 12, 2022 6:36 am Questions: should I roll over the money now with an in service roll over?
Since you are planning to retire in less than a year, I'd wait to move the account until you're no longer employed. The process can sometimes prove to be a bit of a hassle, so going through it twice might be less than ideal.

If you can eliminate the 0.50% advisory fee now, that will be the lion's share of the savings you can achieve. Then, look into other funds offered in your plan, paying special attention to the expense ratios and whether or not the fund appears to be a broadly diversified index fund.

Post the list of available choices in the workplace plans if you want help choosing among the funds offered. If you go this route, be sure to include full fund names, ticker symbols, and expense ratios.

Regards,
Thank you...great idea to wait.

I will eliminate the 0.50% advisory fee today!

YES! I would love help choosing...The available choices are listed in my 1st or main post...under the ones that I am currently enrolled in or have money in are a list of other available funds.
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retired@50
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Re: Help evaluating / managing my portfolio

Post by retired@50 »

liveinaz wrote: Wed Oct 12, 2022 10:35 am ...
YES! I would love help choosing...The available choices are listed in my 1st or main post...under the ones that I am currently enrolled in or have money in are a list of other available funds.
I tend to agree with HomeStretch who posted above about which funds to use. I guess I overlooked this post earlier. :shock:

If you want to add an international stock fund to your asset mix, then the 457 plan has a good choice. It appears you're already using it a little bit.

1.3% ($6,989) Fidelity International Index Fund (FSPSX) – 0.04% fee

And finally, yes, it really can be as simple as using a couple of funds in each plan. When you're using broadly diversified funds that hold hundreds of stocks there isn't any need to hold more funds, they just tend to overlap and are duplicative.

Regards,
This is one person's opinion. Nothing more.
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Duckie
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Re: Help evaluating / managing my portfolio

Post by Duckie »

liveinaz wrote: Tue Oct 11, 2022 5:47 pm Anticipated Retirement Date: May, 2023

Tax Filing Status: Married Filing Jointly

State of Residence: Arizona

Age: Wife - 63, me – 62

Desired Asset Allocation: 60% stocks / 40% Bonds)
Wife’s work Prudential Retirement
The best options of those listed are:
  • Vanguard Institutional Index Fund (VINIX) – 0.035%
  • Guaranteed Income Fund - 0.00%
My work Nationwide Retirement
The best options in this accounts are:
  • Fidelity 500 Index Fund (FXAIX) – 0.01% fee
  • Fidelity International Index Fund (FSPSX) – 0.04% (only developed markets, will do for now)
  • Fidelity U.S. Bond Index Fund (FXNAX) – 0.03%
Also, currently using "ProAccount" service with a fee of 0.50%.
Drop this.
liveinaz wrote: Tue Oct 11, 2022 6:33 pm I have heard that having an international allocation is a good thing, so I guess I should have that?
International stocks are not required but many people have between 20% and 40% of stocks in international. That means if you have a 60% stock allocation, 20% of 60% would be 12% international stocks.
I can move the money into an IRA and would not have fees?
You would have fund expense ratios but not extra fees if you roll your employment plan assets into Rollover IRAs at a low-cost brokerage like Fidelity, Schwab, or Vanguard.
I can move the money somewhere to not pay that at all? Sorry for my ignorance...I was told that those fees are really low...unless you are referring to a different fee?
<snip>
I am confused and maybe I need to learn more...so Prudential charges 0.065% and nationwide charges 0.06% in fees...but I can get a better rate at Vanguard, Fidelity or Schwab?
Those are employer plan fees. Once you roll the money out, those fees stop. They are low (except the 0.50% one).
liveinaz wrote: Wed Oct 12, 2022 6:36 am should I roll over the money now with an in service roll over?
No. You are planning to retire in about seven months. There is no point trying to roll things over now. Wait until you quit.
On the Vanguard web site there are several options..."personal investors", "retirement plan participants", "institution investors", etc. Which one is the free account?
You would be a personal investor. Don't think of it as "free". The fund expense ratio you pay is what pays the fund to operate. That covers the people doing the work and everything else for that particular fund. You are paying, you're just not paying additional fees.
Is one company Vanguard, Fidelity or Schwab better as far as what they offer or their track record?
They're all good. Vanguard is currently having issues (not the funds themselves, but customer support). I recommend you go with Fidelity. They have many Fidelity low-cost index funds and other companies' ETFs available without transaction fees plus local offices you can walk into. Schwab also has local offices and low-cost index funds but not as many.

Also, consider opening and funding Roth IRAs for both of you. That would be $7,000 each for 2022. It may be useful to get the five-year clock started.
_____________________________________

The following example has an AA of 60% stocks, 40% bonds, with 20% of stocks in international. That breaks down to 48% US stocks, 12% international stocks, and 40% bonds/fixed. By the end of the year you could have something like this:

His Nationwide 457b -- $143K -- 24%
10% (FSPSX) Fidelity International Index Fund (0.04%)
14% (FXNAX) Fidelity U.S. Bond Index Fund (0.03%)

Her Prudential 403b -- $452K -- 74%
48% (VINIX) Vanguard Institutional Index Fund Institutional Shares (0.04%)
26% (N/A) Guaranteed Income Fund (paying 1.29%)

His Roth IRA at Fidelity -- $7K -- 1%
1% (FTIHX) Fidelity Total International Index Fund (0.06%)

Her Roth IRA at Fidelity -- $7K -- 1%
1% (FTIHX) Fidelity Total International Index Fund (0.06%)

Just some possibilities.
Last edited by Duckie on Fri Oct 14, 2022 4:20 pm, edited 1 time in total.
Topic Author
liveinaz
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Re: Help evaluating / managing my portfolio

Post by liveinaz »

Duckie wrote: Wed Oct 12, 2022 5:44 pm
liveinaz wrote: Tue Oct 11, 2022 5:47 pm Anticipated Retirement Date: May, 2023

Tax Filing Status: Married Filing Jointly

State of Residence: Arizona

Age: Wife - 63, me – 62

Desired Asset Allocation: 60% stocks / 40% Bonds)
Wife’s work Prudential Retirement
The best options of those listed are:
  • Vanguard Institutional Index Fund (VINIX) – 0.035%
  • Guaranteed Income Fund - 0.00%
My work Nationwide Retirement
The best options in this accounts are:
  • Fidelity 500 Index Fund (FXAIX) – 0.01% fee
  • Fidelity International Index Fund (FSPSX) – 0.04% (only developed markets, will do for now)
  • Fidelity U.S. Bond Index Fund (FXNAX) – 0.03%
Also, currently using "ProAccount" service with a fee of 0.50%.
Drop this.
liveinaz wrote: Tue Oct 11, 2022 6:33 pm I have heard that having an international allocation is a good thing, so I guess I should have that?
International stocks are not required but many people have between 20% and 40% of stocks in international. That means if you have a 60% stock allocation, 20% of 60% would be 12% international stocks.
I can move the money into an IRA and would not have fees?
You would have fund expense ratios but not extra fees if you roll your employment plan assets into Rollover IRAs at a low-cost brokerage like Fidelity, Schwab, or Vanguard.
I can move the money somewhere to not pay that at all? Sorry for my ignorance...I was told that those fees are really low...unless you are referring to a different fee?
<snip>
I am confused and maybe I need to learn more...so Prudential charges 0.065% and nationwide charges 0.06% in fees...but I can get a better rate at Vanguard, Fidelity or Schwab?
Those are employer plan fees. Once you roll the money out, those fees stop. They are low (except the 0.50% one).
liveinaz wrote: Wed Oct 12, 2022 6:36 am should I roll over the money now with an in service roll over?
No. You are planning to retire in about seven months. There is no point trying to roll things over now. Wait until you quit.
On the Vanguard web site there are several options..."personal investors", "retirement plan participants", "institution investors", etc. Which one is the free account?
You would be a personal investor. Don't think of it as "free". The fund expense ratio you pay is what pays the fund to operate. That covers the people doing the work and everything else for that particular fund. You are paying, you're just not paying additional fees.
Is one company Vanguard, Fidelity or Schwab better as far as what they offer or their track record?
They're all good. Vanguard is currently having issues (not the funds themselves, but customer support). I recommend you go with Fidelity. They have many Fidelity low-cost index funds and other companies' ETFs available without transaction fees plus local offices you can walk into. Schwab also has local offices and low-cost index funds but not as many.

Also, consider opening and funding Roth IRAs for both of you. That would be $7,000 each for 2022. It may be useful to get the five-year clock started.
_____________________________________

The following example has an AA of 60% stocks, 40% bonds, with 20% of stocks in international. That breaks down to 48% US stocks, 12% international stocks, and 40% bonds/fixed. By the end of the year you could have something like this:

His Nationwide 457b -- $143K -- 19%
10% (FSPSX) Fidelity International Index Fund (0.04%)
9% (FXNAX) Fidelity U.S. Bond Index Fund (0.03%)

Her Prudential 403b -- $594K -- 79%
48% (VINIX) Vanguard Institutional Index Fund Institutional Shares (0.04%)
31% (N/A) Guaranteed Income Fund (paying 1.29%)

His Roth IRA at Fidelity -- $7K -- 1%
1% (FTIHX) Fidelity Total International Index Fund (0.06%)

Her Roth IRA at Fidelity -- $7K -- 1%
1% (FTIHX) Fidelity Total International Index Fund (0.06%)

Just some possibilities.
Wow, thank you! So I do have a couple questions...

1) You mentioned funding ROTH IRAs and what I don't understand is "It may be useful to get the five-year clock started...what is the five-year clock?

2) At the very end of your post, you gave an example of some funds that we should maybe use. You broke them down by "His and Hers" at Fidelity...wouldn't we just combine them all into one and not have it broken out into two separate IRAs? Is there an advantage to having them separate? We do file married filing jointly...

3) So if I am understanding this correctly, we keep the Prudential and Nationwide accounts and setup as mentioned until we retire in May 2023. Create two accounts at Fidelity now for Roth IRA's and fund them with $7,000 each (so move that money from Prudential now)?

Thank you!
iragg
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Re: Help evaluating / managing my portfolio

Post by iragg »

OP - FIRST, read the Wiki

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

SECOND, re-read the Wiki ...

Lots of open questions which to me seem more important than your AA (asset allocation):

1. Is your pension COLA'd?
2. What's your health plan coverage now and in future and are these costs included in your calculation?
3. WHat about old-age / retirement home - can you afford it? Have you budgeted for it?
4. What exactly did you include in your budget? Is this a future retired budget or a current one? Do you effectgively tracking income and expenses?

While on the surface with just your pension+ SS u will cover the bare bones expenses, and you can probably wait for DW to reach 70 before taking SS (given u think she will live to 95), at that point u should indeed be OK, ideally not touching your portfolio at all until its really necessary. Think about your relatives and at what ages they likely needed more help/a nursing or retirement home - that's probably a good first approximation of how long you have that your portfolio can be relatively more aggressive, but I am not sure 60/40 tilt to equities at your age is that prudent, especially since its not a very large portfolio - assuming you manage not to touch it until DW is 70 it may last, but u need to run scenarios.

Do the work, there are no shortcuts, and as many here will tell you, they ran the numbers dozens if not hundreds of times and still are unsure, but its the planning that's essential.

Good luck!
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Re: Help evaluating / managing my portfolio

Post by retired@50 »

liveinaz wrote: Thu Oct 13, 2022 10:04 am
Duckie wrote: Wed Oct 12, 2022 5:44 pm Just some possibilities.
Wow, thank you! So I do have a couple questions...

1) You mentioned funding ROTH IRAs and what I don't understand is "It may be useful to get the five-year clock started...what is the five-year clock?

2) At the very end of your post, you gave an example of some funds that we should maybe use. You broke them down by "His and Hers" at Fidelity...wouldn't we just combine them all into one and not have it broken out into two separate IRAs? Is there an advantage to having them separate? We do file married filing jointly...

3) So if I am understanding this correctly, we keep the Prudential and Nationwide accounts and setup as mentioned until we retire in May 2023. Create two accounts at Fidelity now for Roth IRA's and fund them with $7,000 each (so move that money from Prudential now)?

Thank you!
I'm not Duckie, but I may be able to assist with your questions above...

1. There are a couple of peculiar rules about distributions (i.e. withdrawals) from Roth IRAs. Instead of trying to go over the details here, I'd suggest you read the Roth IRA wiki page. That way, you'll fully understand the pros and cons of Roth accounts. Be sure to read the "Distributions" section of the linked wiki page.

2. No combining of his and hers IRAs. The I stands for Individual, so each account is linked to a single Social Security Number. There is no such thing as a "Joint" or "Marital" IRA. When you rollover your workplace plans from Prudential and Nationwide, you'll each also get your own Rollover IRA. You can establish each other as account beneficiaries, if you haven't done so already.

3. To fund the Roth IRA(s) it would be best to use earnings from your paycheck(s) between now and the time you retire. Moving the money from one of your workplace plans would be considered a conversion and would create a taxable event you'd probably rather avoid.

Regards,
This is one person's opinion. Nothing more.
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calmaniac
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Re: Help evaluating / managing my portfolio

Post by calmaniac »

Agree with your current plans for high-earner wife to delay claiming Social Security until 70 and for you to take SS per your personal situation and proclivities.
≈63yo. AA 75/25: 30% TSM, 19% value (VFVA/AVUV), 18% foreign LC, 8% emerging, 25% GFund/VBTIX. Fed pensions now ≈60% of expenses. Taking SS @age 70--> pension+SS ≈100% of expenses. What me worry?
Topic Author
liveinaz
Posts: 51
Joined: Thu Oct 06, 2022 10:51 am

Re: Help evaluating / managing my portfolio

Post by liveinaz »

retired@50 wrote: Thu Oct 13, 2022 11:16 am
liveinaz wrote: Thu Oct 13, 2022 10:04 am
Duckie wrote: Wed Oct 12, 2022 5:44 pm Just some possibilities.
Wow, thank you! So I do have a couple questions...

1) You mentioned funding ROTH IRAs and what I don't understand is "It may be useful to get the five-year clock started...what is the five-year clock?

2) At the very end of your post, you gave an example of some funds that we should maybe use. You broke them down by "His and Hers" at Fidelity...wouldn't we just combine them all into one and not have it broken out into two separate IRAs? Is there an advantage to having them separate? We do file married filing jointly...

3) So if I am understanding this correctly, we keep the Prudential and Nationwide accounts and setup as mentioned until we retire in May 2023. Create two accounts at Fidelity now for Roth IRA's and fund them with $7,000 each (so move that money from Prudential now)?

Thank you!
I'm not Duckie, but I may be able to assist with your questions above...

1. There are a couple of peculiar rules about distributions (i.e. withdrawals) from Roth IRAs. Instead of trying to go over the details here, I'd suggest you read the Roth IRA wiki page. That way, you'll fully understand the pros and cons of Roth accounts. Be sure to read the "Distributions" section of the linked wiki page.

2. No combining of his and hers IRAs. The I stands for Individual, so each account is linked to a single Social Security Number. There is no such thing as a "Joint" or "Marital" IRA. When you rollover your workplace plans from Prudential and Nationwide, you'll each also get your own Rollover IRA. You can establish each other as account beneficiaries, if you haven't done so already.

3. To fund the Roth IRA(s) it would be best to use earnings from your paycheck(s) between now and the time you retire. Moving the money from one of your workplace plans would be considered a conversion and would create a taxable event you'd probably rather avoid.

Regards,
Thank you...you guys have been a tremendous help. you can probably tell by my responses and questions that I know very little. So thank you!

That make sense sort of...lol...it seems weird that if we roll over our money from our individual accounts they need to stay with the social security numbers and we can't just combine them into one big IRA...but maybe there are rules or something that I am not aware of...

On item #3, it looks like we can put $7k each into a Roth...so I just opened an account at Fidelity like yesterday...it is a traditional IRA account. Do I need to open a new account for me and one for my wife in order to put the full $14k ($7k each) or do I just open one account and would I be able to fund it with $14K? Maybe a weird question....
Topic Author
liveinaz
Posts: 51
Joined: Thu Oct 06, 2022 10:51 am

Re: Help evaluating / managing my portfolio

Post by liveinaz »

iragg wrote: Thu Oct 13, 2022 10:41 am OP - FIRST, read the Wiki

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

SECOND, re-read the Wiki ...

Lots of open questions which to me seem more important than your AA (asset allocation):

1. Is your pension COLA'd?
2. What's your health plan coverage now and in future and are these costs included in your calculation?
3. WHat about old-age / retirement home - can you afford it? Have you budgeted for it?
4. What exactly did you include in your budget? Is this a future retired budget or a current one? Do you effectgively tracking income and expenses?

While on the surface with just your pension+ SS u will cover the bare bones expenses, and you can probably wait for DW to reach 70 before taking SS (given u think she will live to 95), at that point u should indeed be OK, ideally not touching your portfolio at all until its really necessary. Think about your relatives and at what ages they likely needed more help/a nursing or retirement home - that's probably a good first approximation of how long you have that your portfolio can be relatively more aggressive, but I am not sure 60/40 tilt to equities at your age is that prudent, especially since its not a very large portfolio - assuming you manage not to touch it until DW is 70 it may last, but u need to run scenarios.

Do the work, there are no shortcuts, and as many here will tell you, they ran the numbers dozens if not hundreds of times and still are unsure, but its the planning that's essential.

Good luck!
Thank you!

I will read the main page from the link you sent...then re-read per your suggestion.

1) COLA pension - no...they very rarely give a COLA (I believe they did a year or two ago, but maybe 10 years before that...)

2) We will get healthcare from the Arizona State Retirement System at a reduced rate of like $875 per month and then add medicare in two years. We have a HSA with around $32,000 to help offset medical. Dental insurance through Delta is free (we get a stipend or like $260 per month to cover that).

3) Old age, retirement home, long term care since we have a home and a cabin paid off, we were thinking of doing a reverse mortgage or sell one or both...is that a good plan?

4) The budget is probably a bit on the heavy side. It is in retirement which might be a little more than right now since we will be traveling. I included even my wife getting her nails done. I have it in an excel spreadsheet, but I have not been able to figure out how to add it here. It seems like when I try to add it it removes the columns and nothing seems to line up...

I am thinking that I will need to cover around $2,000 per month or take that much out of the IRAs to cover our expenses...either that or cut back on stuff...
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retired@50
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Location: Living in the U.S.A.

Re: Help evaluating / managing my portfolio

Post by retired@50 »

liveinaz wrote: Thu Oct 13, 2022 12:11 pm ...but maybe there are rules or something that I am not aware of...
I suggest you spend some time getting to know the rules for IRAs. (Both Roth and Traditional).

Being unaware can be costly, not to mention a headache with the IRS.

Regards,
This is one person's opinion. Nothing more.
Topic Author
liveinaz
Posts: 51
Joined: Thu Oct 06, 2022 10:51 am

Re: Help evaluating / managing my portfolio

Post by liveinaz »

retired@50 wrote: Thu Oct 13, 2022 12:41 pm
liveinaz wrote: Thu Oct 13, 2022 12:11 pm ...but maybe there are rules or something that I am not aware of...
I suggest you spend some time getting to know the rules for IRAs. (Both Roth and Traditional).

Being unaware can be costly, not to mention a headache with the IRS.

Regards,
Agreed...I have to spend a lot of time looking at all of this stuff...which I have been putting my nose into it and trying to learn what I can with all of your help...
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Duckie
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Re: Help evaluating / managing my portfolio

Post by Duckie »

liveinaz wrote: Thu Oct 13, 2022 10:04 am 1) You mentioned funding ROTH IRAs and what I don't understand is "It may be useful to get the five-year clock started...what is the five-year clock?
There are three five-year clock rules when it comes to Roth IRAs, but only one affects you. You each need to have a Roth IRA that has existed for five years before the earnings can be withdrawn tax-free. That's why you should start now, before you need to withdraw.

Here's a table, originally posted by KAWill in 2010, showing taxes/penalties on withdrawals. The assets come out in order, 1 to 4 by year converted.
  • Roth IRA Distribution Table

    UNDER AGE 59.5
    FIVE YEAR CONVERSION HOLDING PERIOD NOT MET
    1-Contributions: Tax-No; Penalty-No
    2-Conversions: Tax-No; Penalty-Yes (Taxable Portion)
    3-Conversions: Tax-No; Penalty-No (Nontaxable Portion)
    4-Earnings: Tax-Yes; Penalty-Yes

    UNDER AGE 59.5
    FIVE YEAR CONVERSION HOLDING PERIOD MET
    1-Contributions: Tax-No; Penalty-No
    2-Conversions: Tax-No; Penalty-No (Taxable Portion)
    3-Conversions: Tax-No; Penalty-No (Nontaxable Portion)
    4-Earnings: Tax-Yes; Penalty-Yes

    OVER AGE 59.5
    LESS THAN FIVE YEARS SINCE OPENING FIRST ROTH IRA
    1-Contributions: Tax-No; Penalty-No
    2-Conversions: Tax-No; Penalty-No (Taxable Portion)
    3-Conversions: Tax-No; Penalty-No (Nontaxable Portion)
    4-Earnings: Tax-Yes; Penalty-No


    OVER AGE 59.5
    FIVE YEARS OR MORE SINCE OPENING FIRST ROTH IRA
    All Distributions Are Qualified -- No taxes, no penalties
You are over age 59.5 but do not have any Roth IRAs yet. That means you would have to pay taxes on any earnings you withdraw until you've owned the Roth IRAs for five years. So get started.
At the very end of your post, you gave an example of some funds that we should maybe use. You broke them down by "His and Hers" at Fidelity...wouldn't we just combine them all into one and not have it broken out into two separate IRAs? Is there an advantage to having them separate? We do file married filing jointly...
You have no choice. They HAVE to be separate. IRAs are "individual". A taxable account is allowed to be joint, a tax-sheltered account is not.
So if I am understanding this correctly, we keep the Prudential and Nationwide accounts and setup as mentioned until we retire in May 2023. Create two accounts at Fidelity now for Roth IRA's and fund them with $7,000 each (so move that money from Prudential now)?
No. You will fund the two Roth IRAs with your current income or savings. Do not withdraw money from a retirement account. That would be a taxable conversion.
liveinaz wrote: Thu Oct 13, 2022 12:11 pm it looks like we can put $7k each into a Roth...so I just opened an account at Fidelity like yesterday...it is a traditional IRA account. Do I need to open a new account for me and one for my wife in order to put the full $14k ($7k each) or do I just open one account and would I be able to fund it with $14K?
A Traditional IRA is not a Roth IRA. Do not mix them up. You open one Roth IRA for yourself and she opens one Roth IRA for herself. Then you contribute $7000 to each Roth IRA. If you can't afford $7,000 each start with at least $1,000 each to get the clock going.

What do you expect your joint modified AGI to be for 2022? If it is too high (over $204,000) your direct contribution to Roth IRAs is reduced or eliminated, but you still can contribute through the backdoor method. This information is crucial. Let us know if you are over the $204,000 limit because it massively changes what we recommend.
Topic Author
liveinaz
Posts: 51
Joined: Thu Oct 06, 2022 10:51 am

Re: Help evaluating / managing my portfolio

Post by liveinaz »

Duckie wrote: Thu Oct 13, 2022 3:29 pm
liveinaz wrote: Thu Oct 13, 2022 10:04 am 1) You mentioned funding ROTH IRAs and what I don't understand is "It may be useful to get the five-year clock started...what is the five-year clock?
There are three five-year clock rules when it comes to Roth IRAs, but only one affects you. You each need to have a Roth IRA that has existed for five years before the earnings can be withdrawn tax-free. That's why you should start now, before you need to withdraw.

Here's a table, originally posted by KAWill in 2010, showing taxes/penalties on withdrawals. The assets come out in order, 1 to 4 by year converted.
  • Roth IRA Distribution Table

    UNDER AGE 59.5
    FIVE YEAR CONVERSION HOLDING PERIOD NOT MET
    1-Contributions: Tax-No; Penalty-No
    2-Conversions: Tax-No; Penalty-Yes (Taxable Portion)
    3-Conversions: Tax-No; Penalty-No (Nontaxable Portion)
    4-Earnings: Tax-Yes; Penalty-Yes

    UNDER AGE 59.5
    FIVE YEAR CONVERSION HOLDING PERIOD MET
    1-Contributions: Tax-No; Penalty-No
    2-Conversions: Tax-No; Penalty-No (Taxable Portion)
    3-Conversions: Tax-No; Penalty-No (Nontaxable Portion)
    4-Earnings: Tax-Yes; Penalty-Yes

    OVER AGE 59.5
    LESS THAN FIVE YEARS SINCE OPENING FIRST ROTH IRA
    1-Contributions: Tax-No; Penalty-No
    2-Conversions: Tax-No; Penalty-No (Taxable Portion)
    3-Conversions: Tax-No; Penalty-No (Nontaxable Portion)
    4-Earnings: Tax-Yes; Penalty-No


    OVER AGE 59.5
    FIVE YEARS OR MORE SINCE OPENING FIRST ROTH IRA
    All Distributions Are Qualified -- No taxes, no penalties
You are over age 59.5 but do not have any Roth IRAs yet. That means you would have to pay taxes on any earnings you withdraw until you've owned the Roth IRAs for five years. So get started.
At the very end of your post, you gave an example of some funds that we should maybe use. You broke them down by "His and Hers" at Fidelity...wouldn't we just combine them all into one and not have it broken out into two separate IRAs? Is there an advantage to having them separate? We do file married filing jointly...
You have no choice. They HAVE to be separate. IRAs are "individual". A taxable account is allowed to be joint, a tax-sheltered account is not.
So if I am understanding this correctly, we keep the Prudential and Nationwide accounts and setup as mentioned until we retire in May 2023. Create two accounts at Fidelity now for Roth IRA's and fund them with $7,000 each (so move that money from Prudential now)?
No. You will fund the two Roth IRAs with your current income or savings. Do not withdraw money from a retirement account. That would be a taxable conversion.
liveinaz wrote: Thu Oct 13, 2022 12:11 pm it looks like we can put $7k each into a Roth...so I just opened an account at Fidelity like yesterday...it is a traditional IRA account. Do I need to open a new account for me and one for my wife in order to put the full $14k ($7k each) or do I just open one account and would I be able to fund it with $14K?
A Traditional IRA is not a Roth IRA. Do not mix them up. You open one Roth IRA for yourself and she opens one Roth IRA for herself. Then you contribute $7000 to each Roth IRA. If you can't afford $7,000 each start with at least $1,000 each to get the clock going.

What do you expect your joint modified AGI to be for 2022? If it is too high (over $204,000) your direct contribution to Roth IRAs is reduced or eliminated, but you still can contribute through the backdoor method. This information is crucial. Let us know if you are over the $204,000 limit because it massively changes what we recommend.
Okay Thank you!

Argh...I think I maybe messed up...

So I do have a ROTH at Nationwide (my account not my wife's) I put $850 every paycheck (bi-weekly). It says year to date I have contributed $8,150 to the Roth...I thought I could only contribute $7,000 per year? I am surprised it allowed my to go over. I currently have $10,740 in the Roth so I must have opened it last year.

My other question is, I just set up my Fidelity account and tried to open a Roth under my wifes name...do I need to set up a separate Fidelity account and can they be merged or viewed together?
User avatar
Duckie
Posts: 9008
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Re: Help evaluating / managing my portfolio

Post by Duckie »

liveinaz wrote: Thu Oct 13, 2022 5:02 pm So I do have a ROTH at Nationwide (my account not my wife's) I put $850 every paycheck (bi-weekly). It says year to date I have contributed $8,150 to the Roth...I thought I could only contribute $7,000 per year? I am surprised it allowed my to go over. I currently have $10,740 in the Roth so I must have opened it last year.
There is a difference between a Roth 401k which is an employer plan and a Roth IRA which is a personal account. Your 401k has a $20,500 employee deferral limit plus an extra $6,500 being over age 50 for a total of $27,000 for 2022. A personal IRA has a $6,000 contribution limit plus an extra $1,000 being over age 50 for a total of $7,000 for 2022.
I just set up my Fidelity account and tried to open a Roth under my wifes name...do I need to set up a separate Fidelity account and can they be merged or viewed together?
She needs her own account. They cannot be merged. I think they can be viewed, but I don't know how to set that up. First have her open the Roth IRA at Fidelity then figure out how to view it.

You didn't answer the question about income. Will you be above $204,000 for 2022 or not? I'm not being nosy. If you are above the limit you can't contribute to Roth IRAs directly.
Topic Author
liveinaz
Posts: 51
Joined: Thu Oct 06, 2022 10:51 am

Re: Help evaluating / managing my portfolio

Post by liveinaz »

Duckie wrote: Thu Oct 13, 2022 6:03 pm
liveinaz wrote: Thu Oct 13, 2022 5:02 pm So I do have a ROTH at Nationwide (my account not my wife's) I put $850 every paycheck (bi-weekly). It says year to date I have contributed $8,150 to the Roth...I thought I could only contribute $7,000 per year? I am surprised it allowed my to go over. I currently have $10,740 in the Roth so I must have opened it last year.
There is a difference between a Roth 401k which is an employer plan and a Roth IRA which is a personal account. Your 401k has a $20,500 employee deferral limit plus an extra $6,500 being over age 50 for a total of $27,000 for 2022. A personal IRA has a $6,000 contribution limit plus an extra $1,000 being over age 50 for a total of $7,000 for 2022.
I just set up my Fidelity account and tried to open a Roth under my wifes name...do I need to set up a separate Fidelity account and can they be merged or viewed together?
She needs her own account. They cannot be merged. I think they can be viewed, but I don't know how to set that up. First have her open the Roth IRA at Fidelity then figure out how to view it.

You didn't answer the question about income. Will you be above $204,000 for 2022 or not? I'm not being nosy. If you are above the limit you can't contribute to Roth IRAs directly.
Thank you...Sorry, forgot our AGI in around $140k so I think we are safe there?

With my Roth 401k, I'm guessing that I don't need to set up a Roth up at Fidelity for myself or should I still do that to get the "five year clock" started? Can I move that over to Fidelity when we retire?

[/quote]There is a difference between a Roth 401k which is an employer plan and a Roth IRA which is a personal account. Your 401k has a $20,500 employee deferral limit plus an extra $6,500 being over age 50 for a total of $27,000 for 2022. A personal IRA has a $6,000 contribution limit plus an extra $1,000 being over age 50 for a total of $7,000 for 2022.
This is great (I think)...someone (maybe you) provided a link to a wiki on Roth IRA and I did not see this there.

Thank you!
Topic Author
liveinaz
Posts: 51
Joined: Thu Oct 06, 2022 10:51 am

Re: Help evaluating / managing my portfolio

Post by liveinaz »

I have another question related to the funds I am in and what is being recommended...

With my current funds and allocations, so probably like everyone else over the past year I have lost a lot due to the economy, war, inflation, etc. etc...do I just keep everything where it is at until I (or the economy) recover? I read that right now it is best to do nothing...or should I move everything to the 3 or 4 funds?

Thank you!
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Duckie
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Re: Help evaluating / managing my portfolio

Post by Duckie »

liveinaz wrote: Fri Oct 14, 2022 4:08 am Sorry, forgot our AGI in around $140k so I think we are safe there?
You're safe.
With my Roth 401k, I'm guessing that I don't need to set up a Roth up at Fidelity for myself or should I still do that to get the "five year clock" started?
To get the clocks started you each need to open a Roth IRA and contribute at least a little money now.
Can I move that over to Fidelity when we retire?
When you retire you may roll your employer Roth 401k into a Rollover IRA at Fidelity.
liveinaz wrote: Fri Oct 14, 2022 4:43 am With my current funds and allocations, so probably like everyone else over the past year I have lost a lot due to the economy, war, inflation, etc. etc...do I just keep everything where it is at until I (or the economy) recover? I read that right now it is best to do nothing...or should I move everything to the 3 or 4 funds?
It's only a year and it wouldn't kill you to leave them alone, but I would simplify both employer plans now. Not only do many of your funds have high expense ratios, the ability to manage the accounts is difficult because of the number of funds you own.
iragg
Posts: 21
Joined: Wed Dec 25, 2019 11:13 am

Re: Help evaluating / managing my portfolio

Post by iragg »

liveinaz wrote: Thu Oct 13, 2022 12:40 pm
Thank you!

I will read the main page from the link you sent...then re-read per your suggestion.

1) COLA pension - no...they very rarely give a COLA (I believe they did a year or two ago, but maybe 10 years before that...)

2) We will get healthcare from the Arizona State Retirement System at a reduced rate of like $875 per month and then add medicare in two years. We have a HSA with around $32,000 to help offset medical. Dental insurance through Delta is free (we get a stipend or like $260 per month to cover that).

3) Old age, retirement home, long term care since we have a home and a cabin paid off, we were thinking of doing a reverse mortgage or sell one or both...is that a good plan?

4) The budget is probably a bit on the heavy side. It is in retirement which might be a little more than right now since we will be traveling. I included even my wife getting her nails done. I have it in an excel spreadsheet, but I have not been able to figure out how to add it here. It seems like when I try to add it it removes the columns and nothing seems to line up...

I am thinking that I will need to cover around $2,000 per month or take that much out of the IRAs to cover our expenses...either that or cut back on stuff...
Sorry for the belated response, I was away :)

1. If the pension isn't COLA'd you need to figure out how many real dollars you will have from here on out. With current US inflation, this might be a very small sum. So you need inflation assumptions, and even a 1% change over the next 30 years means a lot.

2. Good on the healthcare - you seem to be in good shape. The HSA is great but 32K won't get you very far even if it isn't something major, but then again you will have Medicare so hopefully it lasts.

3. Reverse mortgage depends on the details, but generally not a great bargain ... no free gifts. Probably best to downsize (you ought not have any capital gains tax on the sale of your home) once markets are robust and use the difference to build up your portfolio.

4. Travel is an acquired skill + its health dependent, so you'd want to knock out the faraway places first. However, you can often get 90% of the experiences for 40-50% of the cost if you plan ahead, travel in the off-season, etc. so this is worth really exploring and drilling down into rather than putting a number in your Excel. Talk about where you will travel in the next 3-5 years and try to budget that to see if its realistic. Many places now you can go virtally or via 4K movies, and while its not the same, it can be far cheaper.

You need to figure out how your expenses will change due to retirement - can you cook more at home, do you still NEED that 12$ Starbucks once a week, etc. Since I retired, we eat at home 99% of the time, we eat very very well, but we are smart about it - we eat produce in season, we buy stuff on sale and sock it away in an extra freezer, we bought a whole cow with some friends so we got a ton of meat for maybe 1/3 of what it would cost us, etc.

However, DW LOVES her coffee, so we bought an "expensive" coffee machine that does it all including steam your milk. The machine was ~600$, but now a cup of great premium coffee at the push of a button in our own kitchen is ~60-75 cents (espresso < latte), and since she consumes 2-3 cups/day, after nearly 3 years we are WAY ahead. We also bake our own bread (healthier and ~40% of the cost of inferior supermarket bread), have a large pantry stocked with rice, legumes, etc. I have improved as a cook (something I always enjoyed but had no time for when I worked).

What I am trying to say is that you should look at the big items in your budget and really figure out how to cut them down. The more you save today, the more options and less stress down the road.

Good luck!
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