403b with no match investment priority

[YeahBuddy]

Happy New Year! Time to review our portfolio and ask for advice from this great community. I am interested in how to best prioritize our investments when we can't max all options and have an employer provided 403b with no match. Also appreciate any general advice on our current portfolio/other.

I am grandfathered into an excellent pension at my employer. The employer additionally offers a 403b with no match. Choices are diverse and low fee, listed below, but I'm mostly invested in VIIX - 0.02% fee. I am primary bread winner and we live in a VHCOLA. So I have historically hedged my investment options, max his/her Roths, and $10-$15k to 403b / Roth 403b on a 80/20 ratio. With kids, age 15 and 12, I just started to focus more on their 529s. Unsure how that would affect future financial aid. Assume no major lifestyle changes, DW will not be working more or changing jobs, yearly 2.5% raises, and income can grow 10% or more with additional overtime.

What's the boglehead investing priority advice? And any other advice.

Major upcoming expenses this year may be home projects (fence falling down, add livable space / heat to a 3/4 finished basement, upgrade electric service that's maxed out). Will also need to replace aging vehicle within 3 years.

I would love to retire early but quickly realizing I'll need to stay at my employer until ~65 or 67 for healthcare coverage alone. This assumes no major changes to our current health care system, but I'm erring on the side of caution here. Most of my colleagues retire at full retirement age or later.

Our details

Family: Mid 40s couple, mainly 1 income family of 4, VHCOLA
Tax Bracket: 22%
Income: $190 total His $150k, Her ~$40k part time job gig
Emergency Fund: 6 months, increasing to 9 months (Working 75hrs this week to quickly bump this up to 9-12 months!)
Retirement Portfolio: $500k ($220k 403b, $165k Roths, $100k fully vested pension).
Investments: 100% equities, 40 year investing horizon, Roths are all VTSAX.
Real estate: 1 family house worth ~$800k, more once basement finished. 2 Toyotas paid off years ago.
Debt: $160k 15 year mortgage, 11 years remaining @ 2.35%, $25k HELOC @ 7.25%, $2k @ 0% - I am OK leveraging debt.
Life insurance: About 13x salary. 9x salary from employer, supplemental $500k from private company I pay $300/year out of pocket.
Disability: Employer funded short term and long term disability at 70% gross income.
529s: $21k total, 2 kids ages 15 and 12 currently interested in engineering and healthcare/veterinarian. Will likely go to state schools.



Pension details
"Cash Balance Retirement Plan"
Current value: $100,000, 12 years into employment
Fully funded by employer, vested long ago
Employer credits account with annual pay credit as a percentage of base pay determined by age + years or service
5-15% of total income. Currently at the 9% contribution level. So figure credit of $10k a year free money now, increasing by 1 or 2 thousand dollars every year going forward
Fully payable at work separation or to beneficiary at time of death
Payable - lump sum, single life annuity, joint and survivor annuity, certain continuous annuity, certain only annuities, multiple annuities
Would likely choose payments which would decrease to 66 2/3 to spouse upon my death

403b Investment options
Name/Inception Date Asset Class Plan-specific option Gross Expense Ratio** Shareholder Fees
TIER ONE: EASY CHOICE
VANG TARGET RET 2020 (VTWNX)
06/07/2006
Blended Investments* No 0.08% No additional fees apply.
VANG TARGET RET 2025 (VTTVX)
10/27/2003
Blended Investments* No 0.08% No additional fees apply.
VANG TARGET RET 2030 (VTHRX)
06/07/2006
Blended Investments* No 0.08% No additional fees apply.
VANG TARGET RET 2035 (VTTHX)
10/27/2003
Blended Investments* No 0.08% No additional fees apply.
VANG TARGET RET 2040 (VFORX)
06/07/2006
Blended Investments* No 0.08% No additional fees apply.
VANG TARGET RET 2045 (VTIVX)
10/27/2003
Blended Investments* No 0.08% No additional fees apply.
VANG TARGET RET 2050 (VFIFX)
06/07/2006
Blended Investments* No 0.08% No additional fees apply.
VANG TARGET RET 2055 (VFFVX)
08/18/2010
Blended Investments* No 0.08% No additional fees apply.
VANG TARGET RET 2060 (VTTSX)
01/19/2012
Blended Investments* No 0.08% No additional fees apply.
VANG TARGET RET 2065 (VLXVX)
07/12/2017
Blended Investments* No 0.08% No additional fees apply.
VANG TARGET RET 2070 (VSVNX)
06/28/2022
Blended Investments* No 0.08% No additional fees apply.
VANG TARGET RET INC (VTINX)
10/27/2003
Blended Investments* No 0.08% No additional fees apply.
TIER TWO: GUIDED CHOICE
ARTISAN GLBL VAL IS (APHGX)
12/10/2007
Stock Investments Yes 1.08% No additional fees apply.
VANG EXT MKT IDX INS (VIEIX)
12/21/1987
Stock Investments Yes 0.05% No additional fees apply.
VANG FTSE SOC IDX IS (VFTNX)
01/14/2003
Stock Investments Yes 0.12% No additional fees apply.
Investments you currently own VANG INST INDEX PLUS (VIIIX)
07/31/1990
Stock Investments Yes 0.02% No additional fees apply.
VANG TOT INTL STK IS (VTSNX)
04/29/1996
Stock Investments Yes 0.09% No additional fees apply.
FID SUSTN BOND IDX (FNDSX)
06/19/2018
Bond Investments No 0.1% No additional fees apply.
IS ST TIPS BD IDX K (BKIPX)
02/16/2016
Bond Investments Yes 0.18% No additional fees apply.
IS US AGG BD IDX K (WFBIX)
07/02/1993
Bond Investments Yes 0.05% No additional fees apply.
PIM GL ADV STR BD IS (PSAIX)
02/05/2009
Bond Investments Yes 0.83% No additional fees apply.
VANG VMMR-FED MMKT (VMFXX)
07/13/1981
7 day yield as of
11/30/2024 4.57%
Short-Term Investments Yes 0.11% No additional fees apply.
TIER THREE: OPEN CHOICE
BROKERAGELINK
Click to expand upon your savings plan's investment options with Fidelity BrokerageLink®. Other Investments Yes N/A No additional fees apply.
TIER FOUR: ANNUITY CHOICE
TIAA TRADITIONAL ACC (FA)

Bond Investments Yes N/A Please contact TIAA for information.
CREF STOCK ACCOUNT (VA)
01/31/1973
Stock Investments Yes 0.32% Please contact TIAA for information.
CREF MONEY MKT ACCT (VA)
04/01/1988
7 day yield as of
11/25/2024 0.04%
Short-Term Investments Yes 0.42% Please contact TIAA for information.
NUVEEN MMKT FUND (TCIXX)
07/01/1999
7 day yield as of
11/30/2024 4.47%
Short-Term Investments Yes 0.12% Please contact TIAA for information.
TIAA REAL ESTATE ACC (VA)
10/02/1995
Other Investments Yes 1.015% Please contact TIAA for information.

[FiveK]

See Investment Order and Prioritizing investments.

[YeahBuddy]

See Investment Order and Prioritizing investments.

I have read and re read the prioritizing investments both in the past and now. But I'm still unsure if doing 50/50 403b/roth is best for our situation. Seems like 50/50 is fine, as I can't be more than 50% wrong. It feels wrong to not be able to max the 403b, but such is life. Will continue to pay off high interest debt and invest as much as possible seems like the best answer.

[retired@50]

See Investment Order and Prioritizing investments.

I have read and re read the prioritizing investments both in the past and now. But I'm still unsure if doing 50/50 403b/roth is best for our situation. Seems like 50/50 is fine, as I can't be more than 50% wrong. It feels wrong to not be able to max the 403b, but such is life. Will continue to pay off high interest debt and invest as much as possible seems like the best answer.

Sounds like you need to read the Traditional versus Roth wiki page.
https://www.bogleheads.org/wiki/Traditional_versus_Roth

Regards,

[steadyosmosis]

I deferred tax as much as possible at 22% (and 25%) federal, because I felt sure I would retire early.
Nowadays I annually move those same dollars into Roth status at 0%, 10%, and 12% federal tax.

[Nohbdy]

Happy New Year! Time to review our portfolio and ask for advice from this great community. I am interested in how to best prioritize our investments when we can't max all options and have an employer provided 403b with no match. Also appreciate any general advice on our current portfolio/other.

I am grandfathered into an excellent pension at my employer. The employer additionally offers a 403b with no match. Choices are diverse and low fee, listed below, but I'm mostly invested in VIIX - 0.02% fee. I am primary bread winner and we live in a VHCOLA. So I have historically hedged my investment options, max his/her Roths, and $10-$15k to 403b / Roth 403b on a 80/20 ratio. With kids, age 15 and 12, I just started to focus more on their 529s. Unsure how that would affect future financial aid. Assume no major lifestyle changes, DW will not be working more or changing jobs, yearly 2.5% raises, and income can grow 10% or more with additional overtime.

What's the boglehead investing priority advice? And any other advice.

Major upcoming expenses this year may be home projects (fence falling down, add livable space / heat to a 3/4 finished basement, upgrade electric service that's maxed out). Will also need to replace aging vehicle within 3 years.

I would love to retire early but quickly realizing I'll need to stay at my employer until ~65 or 67 for healthcare coverage alone. This assumes no major changes to our current health care system, but I'm erring on the side of caution here. Most of my colleagues retire at full retirement age or later.

Our details

Family: Mid 40s couple, mainly 1 income family of 4, VHCOLA
Tax Bracket: 22%
Income: $190 total His $150k, Her ~$40k part time job gig
Emergency Fund: 6 months, increasing to 9 months (Working 75hrs this week to quickly bump this up to 9-12 months!)
Retirement Portfolio: $500k ($220k 403b, $165k Roths, $100k fully vested pension).
Investments: 100% equities, 40 year investing horizon, Roths are all VTSAX.
Real estate: 1 family house worth ~$800k, more once basement finished. 2 Toyotas paid off years ago.
Debt: $160k 15 year mortgage, 11 years remaining @ 2.35%, $25k HELOC @ 7.25%, $2k @ 0% - I am OK leveraging debt.
Life insurance: About 13x salary. 9x salary from employer, supplemental $500k from private company I pay $300/year out of pocket.
Disability: Employer funded short term and long term disability at 70% gross income.
529s: $21k total, 2 kids ages 15 and 12 currently interested in engineering and healthcare/veterinarian. Will likely go to state schools.



Pension details
"Cash Balance Retirement Plan"
Current value: $100,000, 12 years into employment
Fully funded by employer, vested long ago
Employer credits account with annual pay credit as a percentage of base pay determined by age + years or service
5-15% of total income. Currently at the 9% contribution level. So figure credit of $10k a year free money now, increasing by 1 or 2 thousand dollars every year going forward
Fully payable at work separation or to beneficiary at time of death
Payable - lump sum, single life annuity, joint and survivor annuity, certain continuous annuity, certain only annuities, multiple annuities
Would likely choose payments which would decrease to 66 2/3 to spouse upon my death

Happy new year indeed. Thank you.
Our situation is very similar to yours: similar incomes, our kids are just starting to launch, pensions, more tax advantaged space than we can use.

My main concern is that I think your lifestyle expenses are about to get away from you. If you pay no state tax and you can safely house 4 people in an $800k house, then there are lots of places with higher cost of living. At most, I think you are HCOL.

A HELOC at 7.25% is a red flag for me. We opened a HELOC at one point for a much needed home reno and it was terrible. The fees were absurd and not transparent at all. Even at face value, a 7.25% guaranteed return is really tough to ignore. Since you have cash, stop trading paper for a loss.

Regarding college: It would be to your advantage to reduce AGI as much as possible in the 2 years before college starts. Research and understand the AOTC income threshold and read pub970. FAFSA is basically a 2 year lookback for income so my suggestion would be to maximize all tax deferred space in the year that kid1 is 2 years out. Our kid1 started college in the fall and for 2024 fafsa (completed in Dec ‘23 using ‘22 AGI) and because I sold off a bunch of taxable gains to live off of (while maximizing tax deferral) in ‘22, our income pushed us just over & we didn’t qualify for aid at a state school. We just completed fafsa again and it looks like we will qualify for a smidge of aid. Our total income is about $180-185 and we tax defer down to about 130. That’s not including match and pensions. Fafsa also considers your taxable holdings (sans home) at the time you fill out the form, so I’d reduce taxable by paying off the HELOC (immediately) and take on no new debt. Then, 2 years out, max out all tax deferred space and make more: have the spouse open a SEP or soloK. Depending in the fees in your 403(b), there’s a good chance that a self managed account for her would be a lower cost option anyway.

If your income is reliable, I would consider reducing taxable EF to your highest insurance deductible. It’s not great to raid retirement accounts early, but Roth can be viable as a job loss emergency fund, especially if your have more tax advantaged space than you can use.

[YeahBuddy]

Happy New Year! Time to review our portfolio and ask for advice from this great community. I am interested in how to best prioritize our investments when we can't max all options and have an employer provided 403b with no match. Also appreciate any general advice on our current portfolio/other.

I am grandfathered into an excellent pension at my employer. The employer additionally offers a 403b with no match. Choices are diverse and low fee, listed below, but I'm mostly invested in VIIX - 0.02% fee. I am primary bread winner and we live in a VHCOLA. So I have historically hedged my investment options, max his/her Roths, and $10-$15k to 403b / Roth 403b on a 80/20 ratio. With kids, age 15 and 12, I just started to focus more on their 529s. Unsure how that would affect future financial aid. Assume no major lifestyle changes, DW will not be working more or changing jobs, yearly 2.5% raises, and income can grow 10% or more with additional overtime.

What's the boglehead investing priority advice? And any other advice.

Major upcoming expenses this year may be home projects (fence falling down, add livable space / heat to a 3/4 finished basement, upgrade electric service that's maxed out). Will also need to replace aging vehicle within 3 years.

I would love to retire early but quickly realizing I'll need to stay at my employer until ~65 or 67 for healthcare coverage alone. This assumes no major changes to our current health care system, but I'm erring on the side of caution here. Most of my colleagues retire at full retirement age or later.

Our details

Family: Mid 40s couple, mainly 1 income family of 4, VHCOLA
Tax Bracket: 22%
Income: $190 total His $150k, Her ~$40k part time job gig
Emergency Fund: 6 months, increasing to 9 months (Working 75hrs this week to quickly bump this up to 9-12 months!)
Retirement Portfolio: $500k ($220k 403b, $165k Roths, $100k fully vested pension).
Investments: 100% equities, 40 year investing horizon, Roths are all VTSAX.
Real estate: 1 family house worth ~$800k, more once basement finished. 2 Toyotas paid off years ago.
Debt: $160k 15 year mortgage, 11 years remaining @ 2.35%, $25k HELOC @ 7.25%, $2k @ 0% - I am OK leveraging debt.
Life insurance: About 13x salary. 9x salary from employer, supplemental $500k from private company I pay $300/year out of pocket.
Disability: Employer funded short term and long term disability at 70% gross income.
529s: $21k total, 2 kids ages 15 and 12 currently interested in engineering and healthcare/veterinarian. Will likely go to state schools.



Pension details
"Cash Balance Retirement Plan"
Current value: $100,000, 12 years into employment
Fully funded by employer, vested long ago
Employer credits account with annual pay credit as a percentage of base pay determined by age + years or service
5-15% of total income. Currently at the 9% contribution level. So figure credit of $10k a year free money now, increasing by 1 or 2 thousand dollars every year going forward
Fully payable at work separation or to beneficiary at time of death
Payable - lump sum, single life annuity, joint and survivor annuity, certain continuous annuity, certain only annuities, multiple annuities
Would likely choose payments which would decrease to 66 2/3 to spouse upon my death

Happy new year indeed. Thank you.
Our situation is very similar to yours: similar incomes, our kids are just starting to launch, pensions, more tax advantaged space than we can use.

My main concern is that I think your lifestyle expenses are about to get away from you. If you pay no state tax and you can safely house 4 people in an $800k house, then there are lots of places with higher cost of living. At most, I think you are HCOL.

A HELOC at 7.25% is a red flag for me. We opened a HELOC at one point for a much needed home reno and it was terrible. The fees were absurd and not transparent at all. Even at face value, a 7.25% guaranteed return is really tough to ignore. Since you have cash, stop trading paper for a loss.

Regarding college: It would be to your advantage to reduce AGI as much as possible in the 2 years before college starts. Research and understand the AOTC income threshold and read pub970. FAFSA is basically a 2 year lookback for income so my suggestion would be to maximize all tax deferred space in the year that kid1 is 2 years out. Our kid1 started college in the fall and for 2024 fafsa (completed in Dec ‘23 using ‘22 AGI) and because I sold off a bunch of taxable gains to live off of (while maximizing tax deferral) in ‘22, our income pushed us just over & we didn’t qualify for aid at a state school. We just completed fafsa again and it looks like we will qualify for a smidge of aid. Our total income is about $180-185 and we tax defer down to about 130. That’s not including match and pensions. Fafsa also considers your taxable holdings (sans home) at the time you fill out the form, so I’d reduce taxable by paying off the HELOC (immediately) and take on no new debt. Then, 2 years out, max out all tax deferred space and make more: have the spouse open a SEP or soloK. Depending in the fees in your 403(b), there’s a good chance that a self managed account for her would be a lower cost option anyway.

If your income is reliable, I would consider reducing taxable EF to your highest insurance deductible. It’s not great to raid retirement accounts early, but Roth can be viable as a job loss emergency fund, especially if your have more tax advantaged space than you can use.

Appreciate your response! Gives me some good structure and advice. For some reason I am struggling to understand the math and assumptions from the suggested pages others have offered.

As for the lifestyle, we live a simple lifestyle, maybe it looks worse from my presentation? The $800k house was $335k when we purchased it in 2012. Mortgage is $2100, cheaper than most rent in this area. The HELOC was 3% when we decided to do our home project. I'm paying it down aggressively and it will be paid off within a year or two. Maybe I should reduce home projects. I could try to patch up the fence rather than paying a contractor for a new one. And will reduce expenses to finish basement (have been slowly working on it, adding insulation, ceiling, French drainage system, year by year). All that's left is flooring, small amount of carpentry, then plumber to add heat zone for $4k. The basement is cold and drafty. Am I being reasonable or justifying a lifestyle I cannot afford?

At a time where I feel I am doing better than most of my peers, this forum provides a good wake up call when we need it.

Thanks again!

[FiveK]

For some reason I am struggling to understand the math and assumptions from the suggested pages others have offered.

The wiki tends to be written by folks with more than average experience with the underlying math and assumptions. That can sometimes miss the mark for new readers. If you can describe what isn't clear to you, you might get helpful explanations and/or the wiki could be edited to make things clearer for future readers.

[Nohbdy]

Happy new year indeed. Thank you.
Our situation is very similar to yours: similar incomes, our kids are just starting to launch, pensions, more tax advantaged space than we can use.

My main concern is that I think your lifestyle expenses are about to get away from you. If you pay no state tax and you can safely house 4 people in an $800k house, then there are lots of places with higher cost of living. At most, I think you are HCOL.

A HELOC at 7.25% is a red flag for me. We opened a HELOC at one point for a much needed home reno and it was terrible. The fees were absurd and not transparent at all. Even at face value, a 7.25% guaranteed return is really tough to ignore. Since you have cash, stop trading paper for a loss.

Regarding college: It would be to your advantage to reduce AGI as much as possible in the 2 years before college starts. Research and understand the AOTC income threshold and read pub970. FAFSA is basically a 2 year lookback for income so my suggestion would be to maximize all tax deferred space in the year that kid1 is 2 years out. Our kid1 started college in the fall and for 2024 fafsa (completed in Dec ‘23 using ‘22 AGI) and because I sold off a bunch of taxable gains to live off of (while maximizing tax deferral) in ‘22, our income pushed us just over & we didn’t qualify for aid at a state school. We just completed fafsa again and it looks like we will qualify for a smidge of aid. Our total income is about $180-185 and we tax defer down to about 130. That’s not including match and pensions. Fafsa also considers your taxable holdings (sans home) at the time you fill out the form, so I’d reduce taxable by paying off the HELOC (immediately) and take on no new debt. Then, 2 years out, max out all tax deferred space and make more: have the spouse open a SEP or soloK. Depending in the fees in your 403(b), there’s a good chance that a self managed account for her would be a lower cost option anyway.

If your income is reliable, I would consider reducing taxable EF to your highest insurance deductible. It’s not great to raid retirement accounts early, but Roth can be viable as a job loss emergency fund, especially if your have more tax advantaged space than you can use.

Appreciate your response! Gives me some good structure and advice. For some reason I am struggling to understand the math and assumptions from the suggested pages others have offered.

As for the lifestyle, we live a simple lifestyle, maybe it looks worse from my presentation? The $800k house was $335k when we purchased it in 2012. Mortgage is $2100, cheaper than most rent in this area. The HELOC was 3% when we decided to do our home project. I'm paying it down aggressively and it will be paid off within a year or two. Maybe I should reduce home projects. I could try to patch up the fence rather than paying a contractor for a new one. And will reduce expenses to finish basement (have been slowly working on it, adding insulation, ceiling, French drainage system, year by year). All that's left is flooring, small amount of carpentry, then plumber to add heat zone for $4k. The basement is cold and drafty. Am I being reasonable or justifying a lifestyle I cannot afford?

At a time where I feel I am doing better than most of my peers, this forum provides a good wake up call when we need it.

Thanks again!

Apologies if I minimized your efforts. I initially read that you are building the EF well beyond 6 months with a few different (potentially way more $ than what you just described) priorities and I became concerned that you are taking out HELOC debt, while hoarding cash, and buying a car while not fully utilizing your tax advantaged space. I’m relieved to learn that paying the HELOC off is a priority for you.

This isn’t a home improvement DIY forum so I’m hesitant to get to sidetracked too much, but we do our own demo and other preliminary work like what you described. If it can leak or burn the house down then yeah I usually get permits and pay a pro. We save a ton by making small improvements over time and then doing exactly what you described. Flooring is pretty basic, YMMV. A few hours a week, I learn how things work, and keep more money that we earned.

Why do you want a 12 month emergency fund and the HELOC?

[lazylarry]

As others mentioned, there is some incomplete info that would be helpful for what you're not clear on, but my general take, with caveats that this probably varies on your individual situation.

Agreed that first priority should be to pay off high-interest debt. That is really hurting you.

1) Not sure why you're contributing to the Roth 403b. At your income level, pre-tax seems best unless you're expecting a higher income at retirement. I would contribute all to 403b and max this. Within the 403b, the target date funds, say are perfect for whatever horizon. Similarly, as others said, have spouse max out SEP/soloK, as best as possible.

2) Usually the recs are to focus on your own retirement account maximization, and then the kids 529.

3) Assuming all equities are VTSAX. Usually, a split between international and domestic is recommended.

4) Don't know that you need to work more to bump up emergency fund more rapidly. Why not build over time?

[YeahBuddy]

Appreciate your response! Gives me some good structure and advice. For some reason I am struggling to understand the math and assumptions from the suggested pages others have offered.

As for the lifestyle, we live a simple lifestyle, maybe it looks worse from my presentation? The $800k house was $335k when we purchased it in 2012. Mortgage is $2100, cheaper than most rent in this area. The HELOC was 3% when we decided to do our home project. I'm paying it down aggressively and it will be paid off within a year or two. Maybe I should reduce home projects. I could try to patch up the fence rather than paying a contractor for a new one. And will reduce expenses to finish basement (have been slowly working on it, adding insulation, ceiling, French drainage system, year by year). All that's left is flooring, small amount of carpentry, then plumber to add heat zone for $4k. The basement is cold and drafty. Am I being reasonable or justifying a lifestyle I cannot afford?

At a time where I feel I am doing better than most of my peers, this forum provides a good wake up call when we need it.

Thanks again!

Apologies if I minimized your efforts. I initially read that you are building the EF well beyond 6 months with a few different (potentially way more $ than what you just described) priorities and I became concerned that you are taking out HELOC debt, while hoarding cash, and buying a car while not fully utilizing your tax advantaged space. I’m relieved to learn that paying the HELOC off is a priority for you.

This isn’t a home improvement DIY forum so I’m hesitant to get to sidetracked too much, but we do our own demo and other preliminary work like what you described. If it can leak or burn the house down then yeah I usually get permits and pay a pro. We save a ton by making small improvements over time and then doing exactly what you described. Flooring is pretty basic, YMMV. A few hours a week, I learn how things work, and keep more money that we earned.

Why do you want a 12 month emergency fund and the HELOC?

No need to apologize. I should have presented the situation more clearly. And it sounds like I should bump up my 403b. I welcome the feedback.

We took out the HELOC initially about 5 years ago to pay for solar. We had the cash, but full payment would put us close to $0 liquid cash and that scares us. Some would say, then we can't afford solar. But that was our decision, and it's been a pretty good investment. No electric bills for 3+ years. And the green factor.

Then, after a few years of messing with small, temporary pools for us and the kids, we finally did a big back yard project (24' above ground pool, heated, and some landscaping for privacy). And same situation where paying cash would wipe out of EF. So I realized I need to keep more cash on hand for projects, as projects or cars are not emergencies to me, and maybe 12 months EF will allow us to pay cash while maintaining an EF, and I can sleep better at night.

We save on many projects by friends/family helping us, the way we help them, so I'm not expecting too many huge bills besides the fence. Thank you for your interest and help.

[YeahBuddy]

For some reason I am struggling to understand the math and assumptions from the suggested pages others have offered.

The wiki tends to be written by folks with more than average experience with the underlying math and assumptions. That can sometimes miss the mark for new readers. If you can describe what isn't clear to you, you might get helpful explanations and/or the wiki could be edited to make things clearer for future readers.

Yes it's the math and assumptions, and length of the post.

I will try to grind through it later but the whole reason I love the site is the simplicity, set it and forget it, and it's not complex or time consuming.

Will me collecting on my pension and 403b put me in a higher tax bracket?

--> For reference, we have historically been in the lower (12%) tax bracket so it made even more sense to do Roths over traditional (I think?)

[YeahBuddy]

As others mentioned, there is some incomplete info that would be helpful for what you're not clear on, but my general take, with caveats that this probably varies on your individual situation.

Agreed that first priority should be to pay off high-interest debt. That is really hurting you.

1) Not sure why you're contributing to the Roth 403b. At your income level, pre-tax seems best unless you're expecting a higher income at retirement. I would contribute all to 403b and max this. Within the 403b, the target date funds, say are perfect for whatever horizon. Similarly, as others said, have spouse max out SEP/soloK, as best as possible.

2) Usually the recs are to focus on your own retirement account maximization, and then the kids 529.

3) Assuming all equities are VTSAX. Usually, a split between international and domestic is recommended.

4) Don't know that you need to work more to bump up emergency fund more rapidly. Why not build over time?

1) Yes, I was expecting a higher income at retirement with the pension

2) I have historically done that, focusing on our retirement. Sister started small 529s years ago but now that the kids are within 4-6 years of college, I feel it's not bad to contribute some to 529s. Maybe I am wrong but the 529 contributions are not impacting my retirement contributions.

3) VTSAX in Roths. VIIX in 403b. Then a small 403b at another employer that I moonlight at, with almost all VTSAX.

4) I mentioned this to another person but the reason is because I found myself not being able to pay cash for "things" due to it would wipe out the EF. A friend has a 36 MONTH EF and it was not shunned or frowned upon here. Most actually endorsed it. And I think it would be better to pay cash than to tap the HELOC in the future.

My timing is always the worst, though, as rates significantly increased right when I used the HELOC. But I'm mostly OK with how much we have spent in interest so far. I'm paying this off aggressively.

[dknightd]

If FiveK and retired@50 tell you read something. Read it.

Your 403b options look pretty good.

You are lucky to be grandfathered into a pension. I'm surprised the cash value is so low. But not all pensions even offer a cash value option. But what really matters is what might happen over the next 20 years. Good luck predicting that!

I do not have a pension. Sometimes I wish I did. Especially if it was inflation adjusted. My primary retirement income comes from withdrawals. I'm buying SPIA to try to replicate a pension . . .

My one bit of advice. Open a 403b, and an IRA, Roth account before you are 54.5 years old. That way they are fully qualified when you are 59.5 years old.

My other bit of advice is. You can borrow money to go to school, but you can not borrow money for retirement.

[FiveK]

The wiki tends to be written by folks with more than average experience with the underlying math and assumptions. That can sometimes miss the mark for new readers. If you can describe what isn't clear to you, you might get helpful explanations and/or the wiki could be edited to make things clearer for future readers.

Yes it's the math and assumptions, and length of the post.

Agreed that the Traditional versus Roth - Bogleheads is too long. You probably can, however, get the majority of what you need to know by stopping after you have read from the start through the Simplest situation section. Does that help? What questions remain?

Will me collecting on my pension and 403b put me in a higher tax bracket?

That depends on the amounts of the pension and the 403b withdrawals. If you use the Simple method to estimate 403b income plus expected pension income in today's dollars, and calculate the marginal tax rate using 2025 tax rates, what do you get?

For reference, we have historically been in the lower (12%) tax bracket so it made even more sense to do Roths over traditional (I think?)

That's reasonable thinking. Going through the exercise above should help confirm that, or lead to a surprising result.

[YeahBuddy]

If FiveK and retired@50 tell you read something. Read it.

You are lucky to be grandfathered into a pension. I'm surprised the cash value is so low.

I have the opposite feelings. I started with this employer in my 30s and do not make a lot of money. Now in my 40s, I'm thinking $100k is a lot of free cash. I do not contribute anything to it. Playing with the employer provided calculator, it's estimated we will have a $1 - $1.3MM lump sum, or around $10k a month from the pension alone. That's double our current monthly spending!

Since I started, this pension has been modified greatly, but I am grandfathered in.

[smwisc]

That's not much in 529s for your kids' ages. Which is okay, that shouldn't be your top priority right now, but it means you should really start now doing some research into the options for colleges and paying for it. Most people do it by piecing together some combination of savings, cash flow, kid's earnings, scholarships, and loans.

First step is to do some initial research into likely costs - I'd start with the costs of your state schools, from community college on up to your state flagship. Then start looking at the various ways that other public and private schools set prices and award aid - good starting points are the books "The Price You Pay for College" and "Who Gets In and Why".

Re: the previous advice on decreasing AGI for FAFSA purposes . . . I think you may be close enough that it makes sense to optimize for the AOTC, but your income is likely too high for AGI reduction that will affect federal aid. It might matter for individual schools' institutional aid, but the most generous ones require the CSS, which is more thorough than the FAFSA. Check on any state programs, though- some of those have "cliffs" and you'll want to know what those are.

[YeahBuddy]

First step is to do some initial research into likely costs - I'd start with the costs of your state schools, from community college on up to your state flagship. Then start looking at the various ways that other public and private schools set prices and award aid - good starting points are the books "The Price You Pay for College" and "Who Gets In and Why".

I've done this and CC is free, state school tuition is $12,000 - 15,000, and state flagships are $60k+.
I'm of the belief that a degree is a degree. Whatever it takes to fulfill the job requirements.
Son will likely pursue engineering or a computer related degree, $60k for state undergrad, then masters. Daughter wants to be a vet, so I don't even want to think about those costs!
I will see if my library has those books available. Thank you!

[YeahBuddy]

I've increased 403b contributions

[ruralavalon]

I've increased 403b contributions

Good decision. How much (in dollars) are you now contributing annually to you 403b account?

The employer additionally offers a 403b with no match. Choices are diverse and low fee, listed below, but I'm mostly invested in VIIX - 0.02% fee. . . . .
. . .. .
What's the boglehead investing priority advice? And any other advice.
. . . . .
Family: Mid 40s couple, mainly 1 income family of 4, VHCOLA
Tax Bracket: 22%
. . . . .
Retirement Portfolio: $500k ($220k 403b, $165k Roths, $100k fully vested pension).

I suggest maximum annual employee contributions ($23.5k) to the 403b account (for the benefit of the tax-deduction) as a top priority, rather than contributions to Roth IRAs. Your employer's 403b plan offers excellent funds with very low expense ratios (e.g. Vanguard Institutional Index Fund VIIIX 0.02%). You do not currently have a large balance in traditional tax-deferred accounts.

[YeahBuddy]

I've increased 403b contributions

Good decision. How much (in dollars) are you now contributing annually to you 403b account?

The employer additionally offers a 403b with no match. Choices are diverse and low fee, listed below, but I'm mostly invested in VIIX - 0.02% fee. . . . .
. . .. .
What's the boglehead investing priority advice? And any other advice.
. . . . .
Family: Mid 40s couple, mainly 1 income family of 4, VHCOLA
Tax Bracket: 22%
. . . . .
Retirement Portfolio: $500k ($220k 403b, $165k Roths, $100k fully vested pension).

I suggest maximum annual employee contributions ($23.5k) to the 403b account (for the benefit of the tax-deduction) as a top priority, rather than contributions to Roth IRAs. Your employer's 403b plan offers excellent funds with very low expense ratios (e.g. Vanguard Institutional Index Fund VIIIX 0.02%). You do not currently have a large balance in traditional tax-deferred accounts.

I am no longer allowed to choose a specific dollar amount, so I chose 18% and will adjust as needed to not over contribute.

I'm not too worried about the low 403b balance, as I have 24-27 years of work years remaining if I stay healthy. By retirement, the 403b should be $3.8M (at 8% compounded annually). Then pension (~$1.5M) and Roths of $3M. $7.5M is more than 75x our current annual spending. This should decrease dramatically once mortgage is paid in 10 years and kids are on their own.

Also, 403b is low because I was following previous advice here to max the Roths over 403b, since no match. I'm fortunate to be able to hopefully do both this year! Thank you.

[retired@50]

I am no longer allowed to choose a specific dollar amount, so I chose 18% and will adjust as needed to not over contribute.

Many payroll systems are sophisticated enough to prevent the "over-contribution" issue. Maybe a quick chat with someone in the payroll department will let you know whether you need to keep a close eye on this issue or not.

Regards,

[YeahBuddy]

I am no longer allowed to choose a specific dollar amount, so I chose 18% and will adjust as needed to not over contribute.

Many payroll systems are sophisticated enough to prevent the "over-contribution" issue. Maybe a quick chat with someone in the payroll department will let you know whether you need to keep a close eye on this issue or not.

Regards,

I checked today with my employer today. They have indicated since they just changed over to a new system, "Workday", they do not currently know of a way to do this. The old system did have it. So their advice is for me to keep an eye on it. My contributions for the first couple weeks are much greater than the max, if divided by 52 weeks, so I will need to adjust down at some point. Thank you!