Five-Year Financial Check-Up

[dale77]

It’s been five years since my last portfolio review -- which I found extremely helpful -- so thought it might be time for another one.

Emergency funds:
$17k in savings; $72k in CDs, but not replacing CDs as they mature over the next 18 months; good amount in taxable I could pull from in a pinch

Debt:
No mortgage -- paid off $700k home; $5k on a car on 0.9% loan

Tax Filing Status:
Married Filing Jointly

Tax Rate:
24% Federal, 5% State

State of Residence:
Illinois

Age:
47/48

Desired Asset Allocation:
72% stocks / 28% bonds (all TIPS), gliding down to 55% / 45% in 2032 (expected retirement)

Desired International Allocation:
35% of stocks

Portfolio Size:
$2.6 million

Portfolio Breakdown:

• Taxable:
  • 10% Vanguard All-World ex-US (VFWAX) (0.11%)
  • 9% TIPS
  • 3% her company’s stock (just vested -- planning to sell)
• Her 401k:
  • 38% State Street S&P 500 Index (SVSPX) (0.02%)
  • 9% State Street Global All Cap Equity ex-US Index (SSGLX) (0.18%)
• Her Traditional IRA at Vanguard:
  • 9% TIPS
• Her HSA:
  • 1% Vanguard Extended Market Index (VIEIX) (0.05%)
• His Traditional IRA at Fidelity:
  • 7% TIPS
  • 4% Fidelity Extended Market Index (FSMAX) (0.04%)
• His 403(b) at Fidelity:
  • 3% Fidelity All-World ex-US Index (FSGGX) (0.06%)
  • 1% Fidelity Extended Market Index (FSMAX) (0.04%)
• His 457(b) at Fidelity:
  • 4% Fidelity All-World ex-US Index (FSGGX) (0.06%)
• His Roth IRA at Vanguard:
  • 2% Vanguard Extended Market Index (VIEIX) (0.05%)

New Annual Contributions:

• $23k her 401(k) (plus $15k from employer)
• $8k her HSA (though this is probably the last possible year)
• $23k his 403(b)
• $23k his 457(b)
• $9k voluntary contributions his IMRF (Illinois Municipal Retirement Fund)
• probably $25k or so into taxable -- not a predetermined amount, just whenever the savings account gets too high

The 403(b) and 457(b) do have Roth versions available, which we’re not currently using.

Available Funds:
401(k) has the low-cost S&P 500 (SVSPX) and international funds (SSGLX) above, as well as low-cost State Street mid-cap and bond funds. Most of the rest is pretty pricey. Everything else has the general options from Fidelity or Vanguard. TIPS are not available in her 401(k) or his 403(b)/457(b).

College Savings:
We have $200k in 529s and a Coverdell ESA covering our youngest kid and me (I’m also a student). Should be sufficient, so we’re not planning to add more to it.

TIPS:
All our bond money is in a (partial) TIPS ladder to cover the period from 2033 (expected retirement) to 2049 (when we’ll have to start taking RMDs). Ladder steps start big ($114k in today’s dollars), then lesser amounts later after factoring in Social Security and my pension. It’s about 60 percent funded right now. TIPS I know isn’t generally preferred in taxable, but (a) the part in taxable is the money we’ll take out before we’re 59.5 and (b) there just isn’t much more room in tax-advantaged for TIPS unless one of us changes jobs.

Questions:
Nothing specific, just a general check-in to see if there’s anything we’re doing that can be improved on. Happy to answer any other questions about our current finances that anyone needs.

Cheers!

[westpac]

I think you're on the right track. I'd think you should beef up int'l stocks.

Westpac

[dale77]

I think you're on the right track. I'd think you should beef up int'l stocks.

I've considered using the composition of VTWAX (Vanguard Total World Stock Index) to use as my international stock percentage rather than the sorta arbitrarily chosen 35% I have now. But the reality is that wouldn't make a lot of difference right now, since the VTWAX international percentage is currently down to 37%. I still may make that change, however, because I think that long-term I think it's going to be hard for the US to grow as much as International, and I'd just rather have a percentage with some heuristic basis than one I chose out of thin air.

[CoAndy]

I like what I see.

[dale77]

I like what I see.

Great -- glad to hear!