Investment Checkup

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fortfun
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Investment Checkup

Post by fortfun » Sun Jan 21, 2018 8:27 pm

Emergency funds: Yes (probably too much).
Debt: Mortgage 129k 3% 10yrs remaining. Home value 600k.
Tax Filing Status: Married filing jointly.
Tax Rate: I think it will be 12% Federal, 4.6% State
State of Residence: CO
Age: 44 wife 46. Kids 9 and 11.
Desired Asset allocation: 70% stocks / 30% bonds roughly
Desired International allocation: 40% of stocks roughly
Term Life Insurance each $1M.

Current retirement assets

Taxable
50k(7.4%) 1.75 No Penalty CD.
70k(7.4%) 1.5 Online Savings Account

His 401k
189K(28%) - 2050 PERAdvantage Target (ER .16)
No company match. I know this is too aggressive.

His Roth IRA at Vanguard
14K(2.1%) Vanguard Total US Stocks Admiral
14K(2.1%) Vanguard Total Int. Stocks Admiral

Pension (cash value 200k): Begins at age 50 (5.5 yrs). Approx 65k/yr (option that will pay until both die). 1.5% COLA.

Her 403b/Work Retirement Account
139k(21%) Fidelity Spartan US Tot Index (low ER)
55.6k(8%) Fidelity Spartan Int. Tot Index (low ER)
83.3k(12%) Fidelity Spartan Tot Bonds (low ER)
20K(3%) in a TIAA annuity that is being moved (slowly) to her Fidelity Spartan funds

Her Traditional IRA at Vanguard
30K(4%) 2035 Vanguard Target Date (ER .2%?)

Her Roth IRA
27K(4%) 2035 Vanguard Target Date (ER .2%?)

Her 457 Roth:
1.5k(.2%) 2030 PERAdvantage Target (ER .16)
I know this is too aggressive.

Total of All Accounts Together
Total: 673K (not including pension)

Kids 529s: 54K & 64K

Contributions

New annual Contributions
$18,500 his 401k (no match)
$13,767 her employer retirement (not sure what plan. she contributes 5k with 8k employer match).
$18,500 her 403b
$5.5K his IRA/Roth IRA
$5.5K her IRA/Roth IRA
$18k her 457
529s done contributing for now.
HSA $6k/yr. Fidelity Spartan funds (use for retirement).

Questions:
My hope is to partially retire in 8 years (year wife turns 55). I'll begin collecting pension in 5yrs at age 50. I'd like to begin drawing from wife's retirement when she turns 55 (approx 4%). I expect her funds to reach $1M by then (hopefully). My 401k will only be accessed if necessary at age 59.5. I think it will reach $1M by then (hopefully). It will only be used as an emergency/backup. I know our retirement will be considered frugal by some on this forum--that's okay. We will both work part-time, as needed. We have a basement apartment that can produce 1k per month. I hope to have house paid off and I hope 529s will cover lion's share of kid's college. They may need loans for the remainder.

Questions:
1. Should we use extra savings (70k) to pay down mortgage (that's what I'm leaning towards), after tax investing, OR invest in a 457 that is available at my work https://docs.google.com/spreadsheets/d/ ... 9m/pubhtml
2. I know we should move the Target Date funds to something more conservative than 2050, since we hope to partially retire in 8 years. Agreed? I'm expecting everyone to tell me to move hers to 2025 and mine to 2035. I'm okay leaving them a little aggressive. We will work as long as necessary.
3. What else am I missing? Sadly, we didn't start saving early enough but I guess better late than never.
Last edited by fortfun on Sat May 05, 2018 6:11 pm, edited 4 times in total.

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fortfun
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Re: Investment Checkup

Post by fortfun » Mon Jan 22, 2018 10:13 am

Posted this late last night. Getting back to the top of the queue.

student
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Re: Investment Checkup

Post by student » Mon Jan 22, 2018 10:28 am

fortfun wrote:
Sun Jan 21, 2018 8:27 pm
3. I know we should move the Target Date funds to something more conservative than 2050, since we hope to partially retire in 8 years. Agreed? I'm expecting everyone to tell me to move hers to 2025 and mine to 2035. I'm okay leaving them a little aggressive. We will work as long as necessary.
I don't understand. The 2050 fund is for people who wants to retire around 2050 so right now, it is aggressive. You have a $65,000 pension with 2% COLA. This is already higher than the average household income. Do you have health insurance when you retire? If you do, I think you are in a great position.

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fortfun
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Re: Investment Checkup

Post by fortfun » Mon Jan 22, 2018 10:42 am

student wrote:
Mon Jan 22, 2018 10:28 am
fortfun wrote:
Sun Jan 21, 2018 8:27 pm
3. I know we should move the Target Date funds to something more conservative than 2050, since we hope to partially retire in 8 years. Agreed? I'm expecting everyone to tell me to move hers to 2025 and mine to 2035. I'm okay leaving them a little aggressive. We will work as long as necessary.
I don't understand. The 2050 fund is for people who wants to retire around 2050 so right now, it is aggressive. You have a $65,000 pension with 2% COLA. This is already higher than the average household income. Do you have health insurance when you retire? If you do, I think you are in a great position.
We have access to affordable healthcare through state's pension. I plan to dial back the target dates soon. Since I have the pension, I'm willing to be more heavily invested in stocks. Thanks student.

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Peter Foley
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Re: Investment Checkup

Post by Peter Foley » Mon Jan 22, 2018 10:50 am

You are in really good shape. The fact that your wife has a 457 plan is a bonus because there is no penalty for early withdrawal based on age. Because that is the account you are likely to tap first, I would be inclined to invest that account a bit more conservatively.

The approach my wife and I took, and I recognize that it may not be the right approach for you, was to pay off our mortgage before our daughters started college. This was at a time when bond and CD returns were less than the pre-tax mortgage rate.

With the change in the tax law fewer people will be itemizing deductions. This means the mortgage interest rate is the real rate most people will be paying. Therefore, it makes sense to me to pay down the mortgage and I would even tap into some of your savings to do so. Personally I would be tempted to pay it all off in 5 years.

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fortfun
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Re: Investment Checkup

Post by fortfun » Mon Jan 22, 2018 11:26 am

Peter Foley wrote:
Mon Jan 22, 2018 10:50 am
You are in really good shape. The fact that your wife has a 457 plan is a bonus because there is no penalty for early withdrawal based on age. Because that is the account you are likely to tap first, I would be inclined to invest that account a bit more conservatively.

The approach my wife and I took, and I recognize that it may not be the right approach for you, was to pay off our mortgage before our daughters started college. This was at a time when bond and CD returns were less than the pre-tax mortgage rate.

With the change in the tax law fewer people will be itemizing deductions. This means the mortgage interest rate is the real rate most people will be paying. Therefore, it makes sense to me to pay down the mortgage and I would even tap into some of your savings to do so. Personally I would be tempted to pay it all off in 5 years.
Thanks Peter. I think we will dial that back to 2030 or 2025. Also, planning to get the mortgage paid off in 8 years (hopefully five, as you suggested).

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TimeRunner
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Re: Investment Checkup

Post by TimeRunner » Mon Jan 22, 2018 5:37 pm

As others have posted, you're in great financial shape. Stay healthy, take great vacations with your kids, etc. 8-)
“Some depart to remain.”

grettman
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Re: Investment Checkup

Post by grettman » Mon Jan 22, 2018 5:47 pm

You are doing good! Great in fact considering you started late. Sorry if I missed it but what do you expect to be your expenses when you retire?

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fortfun
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Re: Investment Checkup

Post by fortfun » Mon Jan 22, 2018 6:48 pm

grettman wrote:
Mon Jan 22, 2018 5:47 pm
You are doing good! Great in fact considering you started late. Sorry if I missed it but what do you expect to be your expenses when you retire?
Thanks Grettman. Health Insurance, Groceries, utilities, etc. Hopefully, enough for some travel (with inexpensive accommodations). I'd like to visit the World Heritage sites, etc. We've got 30 of the 60 National Parks checked off of our list now.

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Pajamas
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Re: Investment Checkup

Post by Pajamas » Mon Jan 22, 2018 6:48 pm

fortfun wrote:
Sun Jan 21, 2018 8:27 pm

Questions:
My hope is to partially retire in 8 years (year wife turns 55). I'll begin collecting pension in 5.5yrs at age 50. I'd like to begin drawing from wife's retirement when she turns 55 (approx 4%). I expect her funds to reach $1M by then (hopefully). My 401k will only be accessed if necessary at age 59.5. I think it will reach $1M by then (hopefully). It will only be used as an emergency/backup. I know our retirement will be considered frugal by some on this forum--that's okay. We will both work part-time, as needed. We have a basement apartment that can produce 1k per month. I hope to have house paid off and I hope 529s will cover lion's share of kid's college. They may need loans for the remainder.

Questions:
1. Should we use extra income to pay down mortgage (that's what I'm leaning towards) OR invest in a 457/457Roth that is available at my work (.69%ER)
I would invest rather than use extra income to pay off a 3% mortgage with such a low balance compared to the property value, especially with interest rates rising. (Of course, I would even borrow money at 3% to invest.) This is really a matter of personal preference but you seem to be fairly aggressive and paying off a 3% mortgage seems fairly conservative with current conditions in your situation.
2. Should we continue to move my wife's TIAA annuity into Fidelity Spartan funds. I think the annuity is earning 4%. We got stuck with that before I started using Bogleheads (sadly).
I would, not just for the higher potential gain and control over the money but also to simply. Honestly, because it is only 3% of your assets, it is not going to make a critical difference either way.
3. I know we should move the Target Date funds to something more conservative than 2050, since we hope to partially retire in 8 years. Agreed? I'm expecting everyone to tell me to move hers to 2025 and mine to 2035. I'm okay leaving them a little aggressive. We will work as long as necessary.
Again, a matter of personal preference and risk tolerance. There are other target dates between 2050 and 2035 and between 2050 and 2025, it's not a matter of either or. What would you really feel absolutely comfortable with in a 30% down market or worse?
4. What else am I missing? Sadly, we didn't start saving early enough but I guess better late than never.
Seems like you are on top of things. Just stay flexible and optimistic. Having an emergency fund that is too big helps with that.

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fortfun
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Re: Investment Checkup

Post by fortfun » Mon Jan 22, 2018 6:49 pm

TimeRunner wrote:
Mon Jan 22, 2018 5:37 pm
As others have posted, you're in great financial shape. Stay healthy, take great vacations with your kids, etc. 8-)
Thanks TimeRunner. Just returned from 18 days in Hawaii. The surface lava flow at Volcano National Park was amazing!

livesoft
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Re: Investment Checkup

Post by livesoft » Mon Jan 22, 2018 7:13 pm

So you have a TIAA traditional annuity paying almost double what the CD in taxable is paying, yet you are trying to get out of it, but not out of the CD. That doesn't make sense to me.

I'd keep the TIAA TA and maybe add to it. You can put those Fidelity equity funds in taxable rather than in the 403(b) if you keep TIAA TA in the 403(b).
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fortfun
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Re: Investment Checkup

Post by fortfun » Mon Jan 22, 2018 7:42 pm

livesoft wrote:
Mon Jan 22, 2018 7:13 pm
So you have a TIAA traditional annuity paying almost double what the CD in taxable is paying, yet you are trying to get out of it, but not out of the CD. That doesn't make sense to me.

I'd keep the TIAA TA and maybe add to it. You can put those Fidelity equity funds in taxable rather than in the 403(b) if you keep TIAA TA in the 403(b).
Thanks Livesoft! That's why I post here! I don't understand annuities and just figured someone was trying to rip off my wife. The transfer just started--we have some learning to do. The CDs are temporary until we decide what to do, which is one of the reasons I posted this checkup. I think I'm going to put some of that excess money, and leftover salary towards the mortgage. Thanks for your suggestions. I'm very grateful to the experienced people, on this forum, like you.

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fortfun
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Re: Investment Checkup

Post by fortfun » Mon Jan 22, 2018 7:45 pm

Pajamas wrote:
Mon Jan 22, 2018 6:48 pm
fortfun wrote:
Sun Jan 21, 2018 8:27 pm

Questions:
My hope is to partially retire in 8 years (year wife turns 55). I'll begin collecting pension in 5.5yrs at age 50. I'd like to begin drawing from wife's retirement when she turns 55 (approx 4%). I expect her funds to reach $1M by then (hopefully). My 401k will only be accessed if necessary at age 59.5. I think it will reach $1M by then (hopefully). It will only be used as an emergency/backup. I know our retirement will be considered frugal by some on this forum--that's okay. We will both work part-time, as needed. We have a basement apartment that can produce 1k per month. I hope to have house paid off and I hope 529s will cover lion's share of kid's college. They may need loans for the remainder.

Questions:
1. Should we use extra income to pay down mortgage (that's what I'm leaning towards) OR invest in a 457/457Roth that is available at my work (.69%ER)
I would invest rather than use extra income to pay off a 3% mortgage with such a low balance compared to the property value, especially with interest rates rising. (Of course, I would even borrow money at 3% to invest.) This is really a matter of personal preference but you seem to be fairly aggressive and paying off a 3% mortgage seems fairly conservative with current conditions in your situation.
2. Should we continue to move my wife's TIAA annuity into Fidelity Spartan funds. I think the annuity is earning 4%. We got stuck with that before I started using Bogleheads (sadly).
I would, not just for the higher potential gain and control over the money but also to simply. Honestly, because it is only 3% of your assets, it is not going to make a critical difference either way.
3. I know we should move the Target Date funds to something more conservative than 2050, since we hope to partially retire in 8 years. Agreed? I'm expecting everyone to tell me to move hers to 2025 and mine to 2035. I'm okay leaving them a little aggressive. We will work as long as necessary.
Again, a matter of personal preference and risk tolerance. There are other target dates between 2050 and 2035 and between 2050 and 2025, it's not a matter of either or. What would you really feel absolutely comfortable with in a 30% down market or worse?
4. What else am I missing? Sadly, we didn't start saving early enough but I guess better late than never.
Seems like you are on top of things. Just stay flexible and optimistic. Having an emergency fund that is too big helps with that.
Thanks Pajamas! I appreciate your thoughtful response!

livesoft
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Re: Investment Checkup

Post by livesoft » Mon Jan 22, 2018 7:47 pm

You should probably search the forum for "TIAA traditional annuity" and see how it is like a stable value fund.
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staythecourse
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Re: Investment Checkup

Post by staythecourse » Mon Jan 22, 2018 8:06 pm

I think anytime you are talking about retirement you have to START with annual expenses expected in retirement. Without that number how do you know how much money you need? Then subtract out guaranteed income, i.e. pension (how much are you going to receiving?), annuities, etc... until reaching age of SS. Then see what is left over and see if you can pull off a 3% withdrawal rate (since we are talking about ER). If it is doable then great. If not, then having a plan for part time work is a good one.

So get cracking on annual expenses (don't forget to add taxes to that amount) and do some simple back of the envelope math.

Overall, looks to be doing great, but asking about retirement always starts with annual expenses.

Good luck.
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fortfun
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Re: Investment Checkup

Post by fortfun » Mon Jan 22, 2018 9:21 pm

livesoft wrote:
Mon Jan 22, 2018 7:47 pm
You should probably search the forum for "TIAA traditional annuity" and see how it is like a stable value fund.
Thanks Livesoft. I just did that. In my search, I found that TIAA doesn't allow a "midstream" stop of the transfer. So, looks like I screwed this one up...Live and learn, I guess.

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Re: Investment Checkup

Post by livesoft » Mon Jan 22, 2018 9:22 pm

But can your spouse make contributions to that fund in the future?
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fortfun
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Re: Investment Checkup

Post by fortfun » Mon Jan 22, 2018 9:51 pm

livesoft wrote:
Mon Jan 22, 2018 9:22 pm
But can your spouse make contributions to that fund in the future?
Yes. Wise? What guarantee should we look for? How do we know we aren't getting screwed? Thanks you livesoft!

retiredjg
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Re: Investment Checkup

Post by retiredjg » Tue Jan 23, 2018 9:03 am

I think you are in good shape, but have some questions.
fortfun wrote:
Sun Jan 21, 2018 8:27 pm

I expect her funds to reach $1M by then (hopefully).
Your wife's assets add up to about $350k at the present. How do you expect that to reach $1M in 8 years? That seems very optimistic to me.

My 401k will only be accessed if necessary at age 59.5. I think it will reach $1M by then (hopefully).
Same question. I'm wondering if I'm missing something.

I'm not sure it is going to matter - it appears to me you are in good shape whether your savings get to $2 million or not. But it is not good to have unreasonable expectations and I'm wondering if that is what you are doing.


1. Should we use extra income to pay down mortgage (that's what I'm leaning towards) OR invest in a 457/457Roth that is available at my work (.69%ER)
I think the financial answer is to keep the mortgage since rate is low or maybe pay only one extra payment a year. The emotional answer might be to pay it off quickly. Each of these is the "right" answer and I don't think it will make much of a financial difference in the long run. Do what feels right to you.

Have you been able to find out if Her 403b will be available at age 55? If not, you may need more in taxable or 457 to live on from 55 to 59.5 unless you want to do a SEPP on a tax-deferred account.

2. Should we continue to move my wife's TIAA annuity into Fidelity Spartan funds. I think the annuity is earning 4%. We got stuck with that before I started using Bogleheads (sadly).
As you've already realized, this is not the type of annuity that is considered bad. In fact, a stable value type fund that pays 4% a year is quite a blessing. If she has the ability to keep using it, I would. But maybe not for her entire bond allocation because it is not very liquid.

3. I know we should move the Target Date funds to something more conservative than 2050, since we hope to partially retire in 8 years. Agreed? I'm expecting everyone to tell me to move hers to 2025 and mine to 2035. I'm okay leaving them a little aggressive. We will work as long as necessary.
I think your portfolio should be invested at your desired 70/30 overall. Use whatever funds are needed to achieve that. Do keep in mind that 70/30 is pretty aggressive for a retirement (or semi) in only 8 years. I don't mean to imply that 70/30 is too aggressive for today. What I mean is you should probably not arrive at retirement day at 70/30. Consider when you want to start dialing back and how fast you want to do that.

4. What else am I missing? Sadly, we didn't start saving early enough but I guess better late than never.
I don't see any evidence of not saving early enough. It appears to me that your COLA'd pension will cover much of your retirement expenses. Your other money will be needed to supplement that, but it appears to me you have more than an adequate buffer as long as you don't take too much each year. Since your expected retirement is early, you will need that portfolio for more than the "usual" 30 years - for that reason I would not depend on taking the "usual" 4% from the portfolio.

Do you have SS coming?

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fortfun
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Re: Investment Checkup

Post by fortfun » Tue Jan 23, 2018 12:29 pm

retiredjg wrote:
Tue Jan 23, 2018 9:03 am
I think you are in good shape, but have some questions.
fortfun wrote:
Sun Jan 21, 2018 8:27 pm

I expect her funds to reach $1M by then (hopefully).
Your wife's assets add up to about $350k at the present. How do you expect that to reach $1M in 8 years? That seems very optimistic to me.
She will contribute another 400k in 403, 457, Roth IRA, etc. during the next 8 years. That plus the 350k should easily produce 1M, even with dismal returns. I put it in a spreadsheet and it seems pretty likely.
My 401k will only be accessed if necessary at age 59.5. I think it will reach $1M by then (hopefully).
Same question. I'm wondering if I'm missing something.
Again, I put it in a spreadsheet, with 7%, and that's what it came to. I know it might not make 7%.
I'm not sure it is going to matter - it appears to me you are in good shape whether your savings get to $2 million or not. But it is not good to have unreasonable expectations and I'm wondering if that is what you are doing.
Possibly and that's why we are willing to work longer, if necessary.

1. Should we use extra income to pay down mortgage (that's what I'm leaning towards) OR invest in a 457/457Roth that is available at my work (.69%ER)
I think the financial answer is to keep the mortgage since rate is low or maybe pay only one extra payment a year. The emotional answer might be to pay it off quickly. Each of these is the "right" answer and I don't think it will make much of a financial difference in the long run. Do what feels right to you.
I think we will make at least one extra payment per year, maybe a bit more if the cash flow is there.
Have you been able to find out if Her 403b will be available at age 55? If not, you may need more in taxable or 457 to live on from 55 to 59.5 unless you want to do a SEPP on a tax-deferred account.
Checking with HR and the plan document as we speak. If she can't, I may start contributing to my 457 (higher ER) or just start doing more in taxable.
2. Should we continue to move my wife's TIAA annuity into Fidelity Spartan funds. I think the annuity is earning 4%. We got stuck with that before I started using Bogleheads (sadly).
As you've already realized, this is not the type of annuity that is considered bad. In fact, a stable value type fund that pays 4% a year is quite a blessing. If she has the ability to keep using it, I would. But maybe not for her entire bond allocation because it is not very liquid.
At first, I thought it was an insurance scam. I know better now. I guess we are not allowed to stop midstream, so I might just need to consider having her re-contribute to this in the future (live soft is recommending that).
3. I know we should move the Target Date funds to something more conservative than 2050, since we hope to partially retire in 8 years. Agreed? I'm expecting everyone to tell me to move hers to 2025 and mine to 2035. I'm okay leaving them a little aggressive. We will work as long as necessary.
I think your portfolio should be invested at your desired 70/30 overall. Use whatever funds are needed to achieve that. Do keep in mind that 70/30 is pretty aggressive for a retirement (or semi) in only 8 years. I don't mean to imply that 70/30 is too aggressive for today. What I mean is you should probably not arrive at retirement day at 70/30. Consider when you want to start dialing back and how fast you want to do that.
Agreed. I think I'll switch wife's 457 to 2030 from now on.

4. What else am I missing? Sadly, we didn't start saving early enough but I guess better late than never.
I don't see any evidence of not saving early enough. It appears to me that your COLA'd pension will cover much of your retirement expenses. Your other money will be needed to supplement that, but it appears to me you have more than an adequate buffer as long as you don't take too much each year. Since your expected retirement is early, you will need that portfolio for more than the "usual" 30 years - for that reason I would not depend on taking the "usual" 4% from the portfolio.
Definitely lucky to have the pension. Without that, it would be a little bleak.
Do you have SS coming?
Little to no SS coming for either of us.
Thanks for all of your help retiredjg. Very grateful!

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celia
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Re: Investment Checkup

Post by celia » Wed Jan 24, 2018 4:56 am

One of the things I tend to look at when looking at someone's portfolio, is to see if it is tax-efficient. Yours isn't anywhere near as efficient as it could be. In a tax-efficient portfolio, the Roths tend to hold stock funds (so the maximum growth can happen there and be tax-free). The tax-deferred accounts tend to hold bond funds (since the earned interest does not have any special tax preferences, like Qualified Dividends and long-term capital gains have).

But in your portfolio, you have a lot of Target <date> funds, which contain both stock funds and bond funds. They appear in Roths and tax-deferred accounts. Luckily, there are no income tax consequences in the year(s) you change holdings in these accounts. So it would be easy to get rid of the Target <date> funds and replace them with stock funds and bond funds. You will also be able to calculate your AA much easier too.

You already have a stated AA, but I can't tell by looking at your portfolio if it meets your AA goals or not. Can you tell?

You can fix the AA-visibility problem and some of the tax-efficiency problem at the same time by picking new funds, then following the steps discussed in Tax-efficient fund placement. Since you have about 77% of your portfolio in tax-deferred accounts, and you certainly don't want that much in bonds, there is a limit to what you will be able to do. But you can improve it somewhat. And if you are willing to hold mutual funds in Taxable accounts, that would help too (but may not give you easy access to the CD and savings account).
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.

retiredjg
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Re: Investment Checkup

Post by retiredjg » Wed Jan 24, 2018 8:41 am

fortfun wrote:
Tue Jan 23, 2018 12:29 pm
She will contribute another 400k in 403, 457, Roth IRA, etc. during the next 8 years. That plus the 350k should easily produce 1M, even with dismal returns. I put it in a spreadsheet and it seems pretty likely.
That does seem better - I had forgotten about the extra $18.5k going to the 457. But I still think it is overly optimistic. Did you consider there might be a market crash that makes returns -20% or -30% for a couple of years? And keep in mind that if the market goes down 50%, it has to go up 100% just to get back to where you were.

I don't think considering a 7% return over 100 years is greatly out of line, but I think there is a high likelihood that things will not average 7% over any 8 year period. If there is a market crash in this time, you'll be lucky to get half that in 8 years. Or worse.

All that said....even if you don't make the totals you are expecting, I don't see that you will be short of money in retirement. You apparently can live very frugally. Your pension will cover a lot - maybe near all your expenses. And you have the flexibility to work longer if needed. I think your outlook is promising even if/when bad times visit.



I do not share Celia's concern over tax-efficiency. In my mind, your only inefficiency is in the CD and savings account in taxable, but I assumed that money was your emergency fund which most people want to hold in taxable (there is a workaround). I don't think interest rates are high enough for that inefficiency to be worth worrying about if you want maintain that large a buffer.

I do share Celia's question about whether you know just what your stock to bond ratio is. I think you do, but did not do the math myself - it "seems" about right to me. Have you checked lately?

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celia
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Re: Investment Checkup

Post by celia » Wed Jan 24, 2018 10:39 am

With 77% of the portfolio in tax-deferred, you need to start thinking about having "too much" in there. You could end up needing to do Roth conversions in early retirement to avoid age 70.5 RMDs from pushing you into higher tax brackets at the same time you collect SS and a pension. If you are in the 12% tax bracket, it would make sense to convert up to the top of that bracket starting now. (The current tax rates are only good until 2025, at which time Congress has to address them else they revert back to what they were last year, I believe.) The alternative is to not defer so much and put the money into taxable. If you don't have enough money in taxable to pay the future conversion/withdrawal taxes, you will need to withhold taxes from the conversion or tax-deferred withdrawal.

If the CD and savings accounts are your Emergency Fund, you should not count them as part of your portfolio. That then makes your portfolio heavier in stocks percentage-wise.

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fortfun
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Re: Investment Checkup

Post by fortfun » Wed Jan 24, 2018 9:13 pm

retiredjg wrote:
Wed Jan 24, 2018 8:41 am
fortfun wrote:
Tue Jan 23, 2018 12:29 pm
She will contribute another 400k in 403, 457, Roth IRA, etc. during the next 8 years. That plus the 350k should easily produce 1M, even with dismal returns. I put it in a spreadsheet and it seems pretty likely.
That does seem better - I had forgotten about the extra $18.5k going to the 457. But I still think it is overly optimistic. Did you consider there might be a market crash that makes returns -20% or -30% for a couple of years? And keep in mind that if the market goes down 50%, it has to go up 100% just to get back to where you were.

I don't think considering a 7% return over 100 years is greatly out of line, but I think there is a high likelihood that things will not average 7% over any 8 year period. If there is a market crash in this time, you'll be lucky to get half that in 8 years. Or worse.
All that said....even if you don't make the totals you are expecting, I don't see that you will be short of money in retirement. You apparently can live very frugally. Your pension will cover a lot - maybe near all your expenses. And you have the flexibility to work longer if needed. I think your outlook is promising even if/when bad times visit.
That is reassuring!


I do not share Celia's concern over tax-efficiency. In my mind, your only inefficiency is in the CD and savings account in taxable, but I assumed that money was your emergency fund which most people want to hold in taxable (there is a workaround). I don't think interest rates are high enough for that inefficiency to be worth worrying about if you want maintain that large a buffer.

I do share Celia's question about whether you know just what your stock to bond ratio is. I think you do, but did not do the math myself - it "seems" about right to me. Have you checked lately?
Thanks Retiredjg! We are a little heavy on the stock side at the moment. We discussed changing my wife's 457 to a 2025 or 2030 allocation this afternoon. We will likely tap into that money first. That will bring us more inline where we should be for a possible retirement 8 years from now. I think we will re-balance her 401k to about 40% bonds too.

I do consider the CDs and high yield savings account as part of our emergency fund. With two kids, I am a bit of a nervous Nelly. I know I didn't specify it that way in the analysis (sorry about that).

Again, thanks retiredjg and others who shared suggestions. We have a lot to think about this weekend.

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fortfun
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Re: Investment Checkup

Post by fortfun » Sat Jan 27, 2018 11:06 pm

celia wrote:
Wed Jan 24, 2018 10:39 am
With 77% of the portfolio in tax-deferred, you need to start thinking about having "too much" in there. You could end up needing to do Roth conversions in early retirement to avoid age 70.5 RMDs from pushing you into higher tax brackets at the same time you collect SS and a pension. If you are in the 12% tax bracket, it would make sense to convert up to the top of that bracket starting now. (The current tax rates are only good until 2025, at which time Congress has to address them else they revert back to what they were last year, I believe.) The alternative is to not defer so much and put the money into taxable. If you don't have enough money in taxable to pay the future conversion/withdrawal taxes, you will need to withhold taxes from the conversion or tax-deferred withdrawal.

If the CD and savings accounts are your Emergency Fund, you should not count them as part of your portfolio. That then makes your portfolio heavier in stocks percentage-wise.
Celia, are you saying to consider moving her trad 457 to Roth 457 for the next 8 years?
Thanks,
Fortfun

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Re: Investment Checkup

Post by celia » Sun Jan 28, 2018 2:44 am

fortfun wrote:
Sat Jan 27, 2018 11:06 pm
Celia, are you saying to consider moving her trad 457 to Roth 457 for the next 8 years?
No, I'm saying that since you two are such good savers :happy , you should try to plan that you don't have $1M in tax-deferred accounts when you retire. If you do, your age 70.5 RMDs could push you into a higher tax bracket at the same time you start SS. Age 70.5 RMDs start at 3.65% of the previous year's ending balance, which would be $36,500 on $1M of tax-deferred, that is added to one's income so taxes can be paid. The percentage and account balance both go up each year, making the RMD increase each year, until the percentage of growth is less than the percentage to be withdrawn (usually in your late 80s).

We have a lot of Bogleheads here who max out their contributions to tax-deferred plans (401Ks, 403b, 457, traditional IRA) to lower their taxes in their working years, then some find out that RMDs makes their retirement taxes be at a higher rate than they planned. So they start doing Roth conversions in their early retirement years to bring the tax-deferred balance down.
fortfun wrote: Celia, are you saying to consider moving her trad 457 to Roth 457 for the next 8 years?
Yes, if you are in a low tax bracket now, it would make sense to start doing Roth conversions, pay the tax on the conversion, and have some of the growth that will happen in the next 20 or 30 years happen in Roth instead. I'm not saying which account to convert from (it doesn't matter since you can change the holdings in the retirement accounts at any time without tax consequences) or what time period you should do it. But the factors to take into account are your current year tax bracket, your tax bracket if you convert (will it go up?), and if you have money in taxable or current year's income you are willing to use to pay the taxes. (And I like more space in my Roths to hold those faster-growing assets. See Tax-efficient fund placement.)

Some Bogleheads argue that if you are going to be in the same tax bracket now and during RMDs, it doesn't matter when you pay the taxes, since the same percentage will be paid either way. But, since I pay the taxes each year from my current income from the year, I think of it as I can pay $x now or $3x later when the account value has tripled.

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Re: Investment Checkup

Post by retiredjg » Sun Jan 28, 2018 9:05 am

As discussed in your earlier 457 thread, I think you should NOT increase how much you put into tax deferral. And I think being in the 12% tax bracket (if that happens for you) would be a good time to use Roth for Her 457. Or do Roth conversions as suggested by Celia.

Of course if you don't continue using traditional 457 (HERS) you may not stay in the 12% tax bracket. And if you do Roth conversions, there may not be much space in the 12% bracket and you'd have to decide whether to use the 22% as well.

It's my opinion that people with pensions should not be as aggressive about putting money into tax-deferral as people who do not have pensions. Your pension is going to "push against" falling into a very low tax bracket in retirement. I'm not saying not to save as much but to save more in Rothness than someone without a pension.

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Re: Investment Checkup

Post by fortfun » Sun Jan 28, 2018 3:17 pm

retiredjg wrote:
Sun Jan 28, 2018 9:05 am
As discussed in your earlier 457 thread, I think you should NOT increase how much you put into tax deferral. And I think being in the 12% tax bracket (if that happens for you) would be a good time to use Roth for Her 457. Or do Roth conversions as suggested by Celia.

Of course if you don't continue using traditional 457 (HERS) you may not stay in the 12% tax bracket. And if you do Roth conversions, there may not be much space in the 12% bracket and you'd have to decide whether to use the 22% as well.

It's my opinion that people with pensions should not be as aggressive about putting money into tax-deferral as people who do not have pensions. Your pension is going to "push against" falling into a very low tax bracket in retirement. I'm not saying not to save as much but to save more in Rothness than someone without a pension.
Thanks retiredjg! Does it make more sense to change the 457 contributions to ROTH, or do the conversions? Maybe since I don't know how to do conversions, we should just switch those contributions to ROTH. I think we will still likely end up mostly in the 12% bracket (marginal). Maybe just creep into the next bracket.

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Re: Investment Checkup

Post by fortfun » Sun Jan 28, 2018 3:19 pm

celia wrote:
Sun Jan 28, 2018 2:44 am
fortfun wrote:
Sat Jan 27, 2018 11:06 pm
Celia, are you saying to consider moving her trad 457 to Roth 457 for the next 8 years?
No, I'm saying that since you two are such good savers :happy , you should try to plan that you don't have $1M in tax-deferred accounts when you retire. If you do, your age 70.5 RMDs could push you into a higher tax bracket at the same time you start SS. Age 70.5 RMDs start at 3.65% of the previous year's ending balance, which would be $36,500 on $1M of tax-deferred, that is added to one's income so taxes can be paid. The percentage and account balance both go up each year, making the RMD increase each year, until the percentage of growth is less than the percentage to be withdrawn (usually in your late 80s).

We have a lot of Bogleheads here who max out their contributions to tax-deferred plans (401Ks, 403b, 457, traditional IRA) to lower their taxes in their working years, then some find out that RMDs makes their retirement taxes be at a higher rate than they planned. So they start doing Roth conversions in their early retirement years to bring the tax-deferred balance down.
fortfun wrote: Celia, are you saying to consider moving her trad 457 to Roth 457 for the next 8 years?
Yes, if you are in a low tax bracket now, it would make sense to start doing Roth conversions, pay the tax on the conversion, and have some of the growth that will happen in the next 20 or 30 years happen in Roth instead. I'm not saying which account to convert from (it doesn't matter since you can change the holdings in the retirement accounts at any time without tax consequences) or what time period you should do it. But the factors to take into account are your current year tax bracket, your tax bracket if you convert (will it go up?), and if you have money in taxable or current year's income you are willing to use to pay the taxes. (And I like more space in my Roths to hold those faster-growing assets. See Tax-efficient fund placement.)

Some Bogleheads argue that if you are going to be in the same tax bracket now and during RMDs, it doesn't matter when you pay the taxes, since the same percentage will be paid either way. But, since I pay the taxes each year from my current income from the year, I think of it as I can pay $x now or $3x later when the account value has tripled.
Thanks Celia! I'd rather get this right now than figure out we screwed up in 15 years.

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Re: Investment Checkup

Post by retiredjg » Sun Jan 28, 2018 3:32 pm

fortfun wrote:
Sun Jan 28, 2018 3:17 pm
Thanks retiredjg! Does it make more sense to change the 457 contributions to ROTH, or do the conversions? Maybe since I don't know how to do conversions, we should just switch those contributions to ROTH. I think we will still likely end up mostly in the 12% bracket (marginal). Maybe just creep into the next bracket.
I don't know which would be "better" and right now, no way to figure it out is coming to mind. If I were faced with the decision, I'd play around with tax software. Of course, nothing usable will come out till later in the year since the new tax laws are so recent.

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Re: Investment Checkup

Post by celia » Sun Jan 28, 2018 10:28 pm

One year likely won't matter. But I, too, would want to start on a glide path and just continue the same way as before, especially if my income might increase in the future.

FYI, if the stock markets drop significantly (whatever that means to you--for me at least 20%), THAT would be a good time to convert, since you can convert more shares for the same tax hit! But that might not happen this year, and waiting until December to convert might mean converting shares that are worth more than now. I miss the recharacterization option already. :(

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Re: Investment Checkup

Post by Peter Foley » Mon Jan 29, 2018 12:08 pm

retiredjg wrote:
It's my opinion that people with pensions should not be as aggressive about putting money into tax-deferral as people who do not have pensions. Your pension is going to "push against" falling into a very low tax bracket in retirement. I'm not saying not to save as much but to save more in Rothness than someone without a pension.
This is a good observation. Hindsight being 20/20, I wish I would have seen this 10 + years ago when the opportunity for 401k Roths and the like opened up.

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Re: Investment Checkup

Post by jalbert » Tue May 01, 2018 7:41 pm

Taxable
50k(7.4%) 1.75 No Penalty CD.
70k(7.4%) 1.5 Online Savings Account

His 401k
189K(28%) - 2050 PERAdvantage Target (ER .16)
No company match. I know this is too aggressive.

His Roth IRA at Vanguard
14K(2.1%) Vanguard Total US Stocks Admiral
14K(2.1%) Vanguard Total Int. Stocks Admiral

Pension (cash value 200k): Begins at age 50 (5.5 yrs). Approx 65k/yr (option that will pay until both die). 1.5% COLA.

Her 403b/Work Retirement Account
139k(21%) Fidelity Spartan US Tot Index (low ER)
55.6k(8%) Fidelity Spartan Int. Tot Index (low ER)
83.3k(12%) Fidelity Spartan Tot Bonds (low ER)
20K(3%) in a TIAA annuity that is being moved (slowly) to her Fidelity Spartan funds

Her Traditional IRA at Vanguard
30K(4%) 2035 Vanguard Target Date (ER .2%?)

Her Roth IRA
27K(4%) 2035 Vanguard Target Date (ER .2%?)

Her 457 Roth:
1.5k(.2%) 2030 PERAdvantage Target (ER .16)
I know this is too aggressive.
I can say how I would manage it. There is no single right way.

The no penalty CD can serve as an emergency fund if there is no penalty for early withdrawal as the name suggests.

Move the 70K in online savings to a total int’l index fund. IXUS is probably the most tax efficient option but VXUS/VTIAX is also fine.

Move all Roth accounts to a total US stock index fund (or similar investment in accounts without such a fund option).

Set her 403b and his 401K each to be 50% stock and 50% fixed income, with stock allocated to US and int’l to taste.

New contributions to these two accounts at 50:50 will establish a retirement glide path reducing your stock allocation gradually.

If you do Roth conversions you may need to adjust the 50/50 mix in the 401K and 403b so that the conversions don’t increase your stock allocation. If and when there is a bear market, you may need to adjust these accounts to be more aggressive to rebalance.
Risk is not a guarantor of return.

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Re: Investment Checkup

Post by fortfun » Tue May 01, 2018 7:50 pm

jalbert wrote:
Tue May 01, 2018 7:41 pm
Taxable
50k(7.4%) 1.75 No Penalty CD.
70k(7.4%) 1.5 Online Savings Account

His 401k
189K(28%) - 2050 PERAdvantage Target (ER .16)
No company match. I know this is too aggressive.

His Roth IRA at Vanguard
14K(2.1%) Vanguard Total US Stocks Admiral
14K(2.1%) Vanguard Total Int. Stocks Admiral

Pension (cash value 200k): Begins at age 50 (5.5 yrs). Approx 65k/yr (option that will pay until both die). 1.5% COLA.

Her 403b/Work Retirement Account
139k(21%) Fidelity Spartan US Tot Index (low ER)
55.6k(8%) Fidelity Spartan Int. Tot Index (low ER)
83.3k(12%) Fidelity Spartan Tot Bonds (low ER)
20K(3%) in a TIAA annuity that is being moved (slowly) to her Fidelity Spartan funds

Her Traditional IRA at Vanguard
30K(4%) 2035 Vanguard Target Date (ER .2%?)

Her Roth IRA
27K(4%) 2035 Vanguard Target Date (ER .2%?)

Her 457 Roth:
1.5k(.2%) 2030 PERAdvantage Target (ER .16)
I know this is too aggressive.
I can say how I would manage it. There is no single right way.

The no penalty CD can serve as an emergency fund if there is no penalty for early withdrawal as the name suggests.

Move the 70K in online savings to a total int’l index fund. IXUS is probably the most tax efficient option but VXUS/VTIAX is also fine.

Move all Roth accounts to a total US stock index fund (or similar investment in accounts without such a fund option).

Set her 403b and his 401K each to be 50% stock and 50% fixed income, with stock allocated to US and int’l to taste.

New contributions to these two accounts at 50:50 will establish a retirement glide path reducing your stock allocation gradually.

If you do Roth conversions you may need to adjust the 50/50 mix in the 401K and 403b so that the conversions don’t increase your stock allocation. If and when there is a bear market, you may need to adjust these accounts to be more aggressive to rebalance.
Thanks Jalbert!

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Re: Investment Checkup

Post by fortfun » Wed May 02, 2018 10:09 am

jalbert wrote:
Tue May 01, 2018 7:41 pm
Taxable
50k(7.4%) 1.75 No Penalty CD.
70k(7.4%) 1.5 Online Savings Account

His 401k
189K(28%) - 2050 PERAdvantage Target (ER .16)
No company match. I know this is too aggressive.

His Roth IRA at Vanguard
14K(2.1%) Vanguard Total US Stocks Admiral
14K(2.1%) Vanguard Total Int. Stocks Admiral

Pension (cash value 200k): Begins at age 50 (5.5 yrs). Approx 65k/yr (option that will pay until both die). 1.5% COLA.

Her 403b/Work Retirement Account
139k(21%) Fidelity Spartan US Tot Index (low ER)
55.6k(8%) Fidelity Spartan Int. Tot Index (low ER)
83.3k(12%) Fidelity Spartan Tot Bonds (low ER)
20K(3%) in a TIAA annuity that is being moved (slowly) to her Fidelity Spartan funds

Her Traditional IRA at Vanguard
30K(4%) 2035 Vanguard Target Date (ER .2%?)

Her Roth IRA
27K(4%) 2035 Vanguard Target Date (ER .2%?)

Her 457 Roth:
1.5k(.2%) 2030 PERAdvantage Target (ER .16)
I know this is too aggressive.
I can say how I would manage it. There is no single right way.

The no penalty CD can serve as an emergency fund if there is no penalty for early withdrawal as the name suggests.

Move the 70K in online savings to a total int’l index fund. IXUS is probably the most tax efficient option but VXUS/VTIAX is also fine.

Move all Roth accounts to a total US stock index fund (or similar investment in accounts without such a fund option).

Set her 403b and his 401K each to be 50% stock and 50% fixed income, with stock allocated to US and int’l to taste.

New contributions to these two accounts at 50:50 will establish a retirement glide path reducing your stock allocation gradually.

If you do Roth conversions you may need to adjust the 50/50 mix in the 401K and 403b so that the conversions don’t increase your stock allocation. If and when there is a bear market, you may need to adjust these accounts to be more aggressive to rebalance.
Jalbert. What are your thoughts on using up that 70k in savings by fully contributing to my work's 457? (Vanguard mid cap .05ER and .15% fee) Or, do you think I'm just better off putting that in post-tax? Thank you!

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Re: Investment Checkup

Post by jalbert » Wed May 02, 2018 12:46 pm

Enabling an increase in retirement account contributions by using cash to replace the unrealized income is beneficial. This is a separate decision from what your portfolio should look like. The contributions should be contributions to your portfolio, which should be designed to span all accounts, rather than looking for an individual investment for the cash.
Risk is not a guarantor of return.

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Re: Investment Checkup

Post by Duckie » Sat May 05, 2018 7:40 pm

fortfun wrote:What are your thoughts on using up that 70k in savings by fully contributing to my work's 457?
I'm not a fan of mortgage debt but in your case I'd use the money to add to the tax-sheltered accounts. Is the 457b at your job a government 457b plan? I'd probably use the Roth 457b option. The 500 Index is the best choice, even at 0.54%, especially if you use the Roth 457b.

Is her 457b plan a government plan?

I'd get out of the target-date funds in all accounts. Put bond funds in pre-tax and stock funds in taxable and Roth IRAs.

What are the options (fund names, ticker symbols, plan expense ratios) in his 401k, her 403b, his 457b, and her 457b?

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fortfun
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Re: Investment Checkup

Post by fortfun » Sat May 05, 2018 8:32 pm

Duckie wrote:
Sat May 05, 2018 7:40 pm
fortfun wrote:What are your thoughts on using up that 70k in savings by fully contributing to my work's 457?
I'm not a fan of mortgage debt but in your case I'd use the money to add to the tax-sheltered accounts. Is the 457b at your job a government 457b plan?
****Yes, public school teacher.

I'd probably use the Roth 457b option. The 500 Index is the best choice, even at 0.54%, especially if you use the Roth 457b.
****Better than Vanguard MidCap?

Is her 457b plan a government plan?
*****Yes, university. She HAS the Roth option. I don't think my 457 has that.

I'd get out of the target-date funds in all accounts. Put bond funds in pre-tax and stock funds in taxable and Roth IRAs.
****Okay.

What are the options (fund names, ticker symbols, plan expense ratios) in his 401k, her 403b, his 457b, and her 457b?

His 457 (don't think there's a Roth option). https://docs.google.com/spreadsheets/d/ ... 9m/pubhtml (first sheet)

Her 457 (roth available) and his 401k: (second sheet)
https://docs.google.com/spreadsheets/d/ ... 9m/pubhtml

Her 403b & Defined Contribution (8% employer match) (sheet 3) https://docs.google.com/spreadsheets/d/ ... 9m/pubhtml


Thank you! Thank you! Thank you Duckie!

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Re: Investment Checkup

Post by Duckie » Sun May 06, 2018 4:17 pm

fortfun wrote:His 457 (don't think there's a Roth option)
The better options are:
  • Great-West S&P 500 Index Fund 0.54%
  • Vanguard Mid Cap Index 0.05%
  • Vanguard Small Cap Value Index 0.07%
  • Invesco Corporate Bond 0.47%
Her 457 (roth available) and his 401k:
The best options are:
  • PERAdvantage U.S. Large Cap Stock Fund 0.08%
  • PERAdvantage Target Retirement Date Funds 0.12%
The other options aren't bad, just more expensive.

How expensive would it be to use the self-directed brokerage through TD Ameritrade?
Her 403b & Defined Contribution (8% employer match)
The best options are:
  • FID TOT MKT IDX PR (FSTVX) 0.04% -- Complete US stocks
  • FID REAL EST IDX PR (FSRVX) 0.09% -- REITs
  • FID INTL INDEX PR (FSIVX) 0.06% -- Developed markets, 75% of international stocks
  • FID US BOND IDX PR (FSITX) 0.05% -- US bonds
You have a desired AA of 70% stocks, 30% bonds, with 40% of stocks in international. That breaks down to 42% US stocks, 28% international stocks, and 30% bonds. Right now you could have:

Taxable at Vanguard -- $120K -- 18%
2% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)
16% (VTIAX) Vanguard Total International Stock Index Fund Admiral Shares (0.11%)

His 401k at Copera -- $189K -- 28%
28% (N/A) PERAdvantage U.S. Large Cap Stock Fund (0.08%)

His 457b at Empower -- $0 -- 0%
0% (VSIAX) Vanguard Small-Cap Value Index Fund Admiral Shares (0.07%)

Her 403b at Fidelity -- $280K -- 41%
11% (FSTVX) Fidelity Total Market Index Fund Premium Class (0.035%)
30% (FSITX) Fidelity U.S. Bond Index Fund Premium Class (0.05%)

Her Roth 457b at Copera -- $1.5K -- <1%
1% (N/A) PERAdvantage U.S. Large Cap Stock Fund (0.08%)

Her Traditional IRA at Vanguard -- $30K -- 4%
4% (VTIAX) Vanguard Total International Stock Index Fund Admiral Shares (0.11%)

His Roth IRA at Vanguard -- $28K -- 4%
4% (VTIAX) Vanguard Total International Stock Index Fund Admiral Shares (0.11%)

Her Roth IRA at Vanguard -- $27K -- 4%
4% (VTIAX) Vanguard Total International Stock Index Fund Admiral Shares (0.11%)

My comments:
  • This puts all the bonds in her 403b because it has the best, cheapest bond options.
  • This puts VSIAX in his new 457b plan to eventually help balance the large-caps in his 401k and her 457b.
  • This puts all international at Vanguard because your employer plans don't have the best international options.
  • Putting international in taxable allows you to take advantage of the Foreign tax credit.
Something to think about.

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fortfun
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Re: Investment Checkup

Post by fortfun » Sun May 06, 2018 7:59 pm

Duckie wrote:
Sun May 06, 2018 4:17 pm
fortfun wrote:His 457 (don't think there's a Roth option)
The better options are:
  • Great-West S&P 500 Index Fund 0.54%
  • Vanguard Mid Cap Index 0.05%
  • Vanguard Small Cap Value Index 0.07%
  • Invesco Corporate Bond 0.47%
Her 457 (roth available) and his 401k:
The best options are:
  • PERAdvantage U.S. Large Cap Stock Fund 0.08%
  • PERAdvantage Target Retirement Date Funds 0.12%
The other options aren't bad, just more expensive.

How expensive would it be to use the self-directed brokerage through TD Ameritrade?
Her 403b & Defined Contribution (8% employer match)
The best options are:
  • FID TOT MKT IDX PR (FSTVX) 0.04% -- Complete US stocks
  • FID REAL EST IDX PR (FSRVX) 0.09% -- REITs
  • FID INTL INDEX PR (FSIVX) 0.06% -- Developed markets, 75% of international stocks
  • FID US BOND IDX PR (FSITX) 0.05% -- US bonds
You have a desired AA of 70% stocks, 30% bonds, with 40% of stocks in international. That breaks down to 42% US stocks, 28% international stocks, and 30% bonds. Right now you could have:

Taxable at Vanguard -- $120K -- 18%
2% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)
16% (VTIAX) Vanguard Total International Stock Index Fund Admiral Shares (0.11%)

His 401k at Copera -- $189K -- 28%
28% (N/A) PERAdvantage U.S. Large Cap Stock Fund (0.08%)

His 457b at Empower -- $0 -- 0%
0% (VSIAX) Vanguard Small-Cap Value Index Fund Admiral Shares (0.07%)

Her 403b at Fidelity -- $280K -- 41%
11% (FSTVX) Fidelity Total Market Index Fund Premium Class (0.035%)
30% (FSITX) Fidelity U.S. Bond Index Fund Premium Class (0.05%)

Her Roth 457b at Copera -- $1.5K -- <1%
1% (N/A) PERAdvantage U.S. Large Cap Stock Fund (0.08%)

Her Traditional IRA at Vanguard -- $30K -- 4%
4% (VTIAX) Vanguard Total International Stock Index Fund Admiral Shares (0.11%)

His Roth IRA at Vanguard -- $28K -- 4%
4% (VTIAX) Vanguard Total International Stock Index Fund Admiral Shares (0.11%)

Her Roth IRA at Vanguard -- $27K -- 4%
4% (VTIAX) Vanguard Total International Stock Index Fund Admiral Shares (0.11%)

My comments:
  • This puts all the bonds in her 403b because it has the best, cheapest bond options.
  • This puts VSIAX in his new 457b plan to eventually help balance the large-caps in his 401k and her 457b.
  • This puts all international at Vanguard because your employer plans don't have the best international options.
  • Putting international in taxable allows you to take advantage of the Foreign tax credit.
Something to think about.
Thank you Duckie! I really appreciate your support.

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