Investment planning for newlyweds!

[MrNarwhal]

My wife and I are back from our honeymoon, and ready to put our financial house in order!

Emergency funds:
$50k total savings/checking
$50k federal money market VMFXX

Debt:
$40k student loans: $30k @ 5.x%, $10k @ 4.x%

Tax Filing Status: will be Married Filing Jointly

State of Residence: MN

Age: 30/29

Retirement assets:
$45k 401k ($37k Roth) - 2060 Target Date w/0.055% expense ratio
$160k 401k ($120k Roth) - 2060 Target Date w/0.34% expense ratio
$10k Traditional IRA - 2060 Target Date w/0.08% expense ratio
$25k Simple IRA

Other investments:
$350k Windsor II VWNAX (some appreciation)
$170k NWAEX (significant appreciation)
Note: plan to keep these legacy mutual funds, but redirect future dividends and capital gains into index funds and bonds
$75k 6-month T-Bill
$10k I-bond

Other assets:
~$350k house, no mortgage
2 cars, both Japanese sedans 7-8 years old; 50k and 100k miles

Income (gross)
$95k/year [his] + $55k/year [her] = $150k total

Expenses
$45k annual expenses (assumes 1% annual maintenance for house)
+ ~$4k health insurance
+ ~$50k income and FICA taxes
Includes vehicle maintenance but *not* depreciation/future replacement.

We have no early retirement aspirations, but my wife would likely work part-time if we have 1 or 2 children in 3-5 years as is our current plan. Her profession would likely allow this. Both of us prioritize job satisfaction over maximizing compensation and will continue to do so. I have taken pay cuts in the past and would consider doing so again, but not until our family situation is finalized.

Based on the above, I think we have at least $50k/year (post-tax) to invest.

Questions:

1. I like Roth contributions because we have many years to take advantage of tax-free growth, and I feel it will simplify future retirement planning to have known tax-free withdrawals available. To me this is more important than trying to optimize based on unknown future tax rate, so my starting position is to contribute the $23k maximum to my Roth 401k. Employer match will be pre-tax regardless. Unless anyone can persuade otherwise?

2. My wife will contribute at least 3% (pre-tax) to a Simple IRA in order to get employer match. The Simple IRA is through Vanguard with low-cost options. We are wondering how much she should contribute to the Simple IRA vs. an individual Roth or Traditional IRA?

3. I am debt-averse and would like to see us pay off the remaining student loans, but acknowledge that the rates are low by current standards. Thoughts on paying off the $30k higher interest lump sum, and keep making payments on the remaining $10k?

4. The higher expense 401k is from a previous employer through Empower. I have left this alone due to apathy, but would it be feasible to roll over to Vanguard? Any gotchas to watch out for?

5. All existing accounts are separate, but we plan to set up joint bank accounts and a joint brokerage account. Any other joint accounts to create? Philosophically we are 50/50 joint everything but practically plan to keep existing assets as they are.

Thank you!

[retired@50]

$40k student loans: $30k @ 5.x%, $10k @ 4.x%
...
3. I am debt-averse and would like to see us pay off the remaining student loans, but acknowledge that the rates are low by current standards. Thoughts on paying off the $30k higher interest lump sum, and keep making payments on the remaining $10k?

I would definitely pay off the higher interest loan, and strongly consider paying off the 4.x% loan as well.

I don't think any of the bond funds you're holding, either directly, or in your target date retirement funds are paying you this much interest each month. Further, I wouldn't expect cash holdings to out-perform these loans on a long term basis. Frankly, just ridding yourself of the mental load that these loans cause would be worth it in my book.

Regards,

[Wiggums]

You both are doing great. Congratulations on your marriage. I would pay off the student loans.

[BolderBoy]

Emergency funds:
$50k total savings/checking
$50k federal money market VMFXX

VUSXX is mostly free of state income taxes and very safe. Why not put the whole $100k there?

[Mattman25]

Emergency funds:
$50k total savings/checking
$50k federal money market VMFXX

$100k is a pretty large emergency fund. Considering your taxable brokerage account amount you can tap into if needed, I would convert some of these savings into investments. There are also other emergency fund methods such as 401(k) hardship withdrawals, HELOC's ,etc.

[MrNarwhal]

Thanks for the comments so far. I thought I might get push back on paying off the student loans but so far, so good

Emergency funds:
$50k total savings/checking
$50k federal money market VMFXX

$100k is a pretty large emergency fund. Considering your taxable brokerage account amount you can tap into if needed, I would convert some of these savings into investments. There are also other emergency fund methods such as 401(k) hardship withdrawals, HELOC's ,etc.

Yes, this is why we need to figure out our investment plan. What I categorized as our emergency fund is more accurately savings which have piled up without a clear direction.

I do want to keep liquid assets for whenever one or both cars need to be replaced, plus the standard emergency fund for job loss.

[MrNarwhal]

Emergency funds:
$50k total savings/checking
$50k federal money market VMFXX

VUSXX is mostly free of state income taxes and very safe. Why not put the whole $100k there?

I will read up on VUSXX vs. VMFXX, thanks.

From a logistical perspective (bill paying, etc.) I don't see us doing away with the FDIC-insured bank accounts altogether. But we can definitely consolidate and reduce the total balance earning so little.