Starting to invest at 35, is this a good plan for retirement planning?

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jack1234
Posts: 54
Joined: Thu Oct 19, 2017 2:12 pm

Starting to invest at 35, is this a good plan for retirement planning?

Post by jack1234 » Sat Apr 07, 2018 7:47 am

Hi all,

I've been reading these pages for a long time now and have learned a lot. So much sage advice!
I'm still new to investing but know the 3 fund plan and just really want to know if there is anything else I should be doing.
I recently got a new job where I can finally save a lot of money and would love to get some advice on my retirement plan.

I'm a little worried that I started investing a little too late as I never thought about retirement until recently. I've been reading about how my money could have grown so much had I invested more in my 20's (compound interest, all that jazz)... Sigh. But I traveled a lot and lived abroad and didn't make enough money to save as much as I would have liked.

Details about me: 35 years old, New York resident, Single, Stable job that I will be in for the next 30 years at which point I plan to retire with a pension
So, I will be investing for the next 30 years...and I know my needs will change as time goes on, but as of today, does my portfolio look ok? Anything I should tweak?


Assets:
Vanguard Roth IRA: $10,000----->
all invested in VTSAX (Vanguard Total Stock Market Admiral Shares)
Vanguard Brokerage Account: $125,000----->
50% is equally split between VTSAX and VFIAX (Vanguard 500 Index Fund Admiral) and the other
50% is all in VTIAX (Vanguard Total International Stock Market Admiral Shares)
I also have about $10,000 in BRB-B - Berkshire Hathaway B

I know it's risky to not put any money in bonds ... but I prefer being a little risky .... is this allocation ok?
New York State 457 Deferred Compensation Plan: $1500 --------->
This is all in VPMAX (Vanguard Primecap Admiral Shares)- I did this because I really want to invest in VPMAX and I can't invest in it in my personal Vanguard account as it is closed to new investors. However, I can get exposure to it through the 457b plan. As the balance grows, I will diversify the allocations here but at just $1500, investing in this one fund seems ok for now.

Expense ratios and a list of all the funds for the 457 b plan is here: https://www.nysdcp.com/tcm/nysdcp/stati ... cy.pdf?r=1

DEBT:
I have an undergrad student loan of $30,000 at 4%.
No credit card debt and no mortgage for the next 2 years at least.

I have a 6 month emergency fund and live on a budget.

My salary is about $90,000 and will increase to about $115,000 in a few years and will go up to $155,000 or so in the future.

I will retire with a pension and a really good health care plan which puts my mind at ease.

However, I am worried that I don't have enough saved now at my age.....I've read that we need 2 million when we retire?

I will be able to contribute the full $18,500 to the New York 457b plan this year and most likely next year.
I will also be able to contribute the full $5,500 to the Roth IRA this year.

After these contributions, I have about $1000 a month left over to invest.
Should I just throw that into my Vanguard Brokerage account?
Should I put that extra $1000 towards the college loan debt?
Or should I put $500 towards the loan and $500 towards the Brokerage account?

Is there anything else I should be doing?

I just want to make sure I'm investing wisely and will be ok in retirement.
Any advice would be greatly appreciated.

ef11
Posts: 198
Joined: Sat Mar 10, 2012 10:39 pm

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by ef11 » Sat Apr 07, 2018 10:04 am

Hey Jack,

Looks like you are getting on the right path and while 35 might seem late to you, it is still earlier than many or even most Americans in my opinion.

The most important things you can be doing for the time being is maxing your Roth and 457 plan. With your heavy weighting towards your taxable account, it is clear you have not done this in the past and now you have money tied up in taxable accounts vs. tax-advantaged. It is still savings, which is great, but let's try to really fund those tax-advantaged accounts now.

It seems you are roughly 55% US stock and 45% international stock which I think is OK for the time being, the most important thing you can do is max Roth, 457B, and save as much as possible at the end of each month. Eventually you should probably shift to a true three fund portfolio, but for now maximizing contributions and paying off loans should be first priority in my opinion.

I would really tighten your budget and try to have $1,500 a month left after your contributions to retirement accounts and pay your student loans off within the next two years. Getting a guaranteed 4% return on that money by paying it off is a good call in my opinion vs. funded an already too large taxable account.
45% Vang S&P500 Fund ER .011% | 10% Vang Extended Market Fund ER .038% | 25% ACWI EX US IMI NL R ER .10% | 10% Vang Total Bond Market ER .027% | 10% Fidelity MSCI Real Estate ER 0.084%

Dandy
Posts: 5406
Joined: Sun Apr 25, 2010 7:42 pm

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by Dandy » Sat Apr 07, 2018 10:29 am

I think you are focused too much catching up and that might be leading you to be more aggressive than you need to be. Also, being relatively new to investing you might not have a good handle on your risk tolerance. Risk tolerance is very hard to determine especially if you have been investing during an 8 year bull market and don't have large equity dollars at risk.

The good news is you have 30 years to retirement and most likely a couple of decades after that. So, you have 40+ years which should be plenty of time given that you plan to max out tax advantaged contributions and will likely have left over money to pay off student loan and have a nice sized taxable account. Add to that a rare, in these days, a pension. You should be fine.

Age in bonds is a decent starting point for determining an allocation. Since you are a late starter you might want to be a bit more aggressive than that so maybe 70/30? The keys for you are diversity of investments and keeping the focus on maxing out savings.

TravelGeek
Posts: 2363
Joined: Sat Oct 25, 2014 3:23 pm

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by TravelGeek » Sat Apr 07, 2018 10:44 am

jack1234 wrote:
Sat Apr 07, 2018 7:47 am

I will retire with a pension and a really good health care plan which puts my mind at ease.

However, I am worried that I don't have enough saved now at my age.....I've read that we need 2 million when we retire?
Read where?

If everyone needed $2m to retire, very few people would retire in this country.

The amount of money you need will depend on your desired and necessary expenses and income from other sources (pension, social security). Your expenses depend on factors such as retirement location, hobbies, ... You are a few decades away from retirement, so trying to accurately estimate now your needs in 30 years may be challenging unless you know for sure that you will want a vacation home in Hawaii, a self-driving/flying Tesla Model 17 in the garage etc. :)

If your pension is stable and if your job is as secure as you believe, and you can maximize your retirement plan contributions, I have no doubt you will be fine. I personally would use the extra cash to pay down the educational loans.

mhalley
Posts: 6154
Joined: Tue Nov 20, 2007 6:02 am

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by mhalley » Sat Apr 07, 2018 10:50 am

One way to catch up is to take cues from the FIRE community, so you might peruse those types of websites. The time until you can afford to retire is all about the saving rate. Check out mmm post on the simple math of early retirement.

https://www.mrmoneymustache.com/2012/01 ... etirement/

jack1234
Posts: 54
Joined: Thu Oct 19, 2017 2:12 pm

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by jack1234 » Sat Apr 07, 2018 12:52 pm

ef11 wrote:
Sat Apr 07, 2018 10:04 am
Hey Jack,

Looks like you are getting on the right path and while 35 might seem late to you, it is still earlier than many or even most Americans in my opinion.

The most important things you can be doing for the time being is maxing your Roth and 457 plan. With your heavy weighting towards your taxable account, it is clear you have not done this in the past and now you have money tied up in taxable accounts vs. tax-advantaged. It is still savings, which is great, but let's try to really fund those tax-advantaged accounts now.

It seems you are roughly 55% US stock and 45% international stock which I think is OK for the time being, the most important thing you can do is max Roth, 457B, and save as much as possible at the end of each month. Eventually you should probably shift to a true three fund portfolio, but for now maximizing contributions and paying off loans should be first priority in my opinion.

I would really tighten your budget and try to have $1,500 a month left after your contributions to retirement accounts and pay your student loans off within the next two years. Getting a guaranteed 4% return on that money by paying it off is a good call in my opinion vs. funded an already too large taxable account.
Thanks! I plan on doing that- $1500 is possible if I cut out eating out as much as I do...And I agree on paying down the debt. Should I try to change the $125k that is in the Vanguard brokerage account to the 3 fund portfolio now?

jack1234
Posts: 54
Joined: Thu Oct 19, 2017 2:12 pm

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by jack1234 » Sat Apr 07, 2018 12:54 pm

Dandy wrote:
Sat Apr 07, 2018 10:29 am
I think you are focused too much catching up and that might be leading you to be more aggressive than you need to be. Also, being relatively new to investing you might not have a good handle on your risk tolerance. Risk tolerance is very hard to determine especially if you have been investing during an 8 year bull market and don't have large equity dollars at risk.

The good news is you have 30 years to retirement and most likely a couple of decades after that. So, you have 40+ years which should be plenty of time given that you plan to max out tax advantaged contributions and will likely have left over money to pay off student loan and have a nice sized taxable account. Add to that a rare, in these days, a pension. You should be fine.

Age in bonds is a decent starting point for determining an allocation. Since you are a late starter you might want to be a bit more aggressive than that so maybe 70/30? The keys for you are diversity of investments and keeping the focus on maxing out savings.
Yea I totally agree. I definitely feel as if I need to play catch up and want to be aggressive but I also feel like since I will be working / investing for the next 30 years or so, I should be taking more risks?...

jack1234
Posts: 54
Joined: Thu Oct 19, 2017 2:12 pm

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by jack1234 » Sat Apr 07, 2018 12:55 pm

TravelGeek wrote:
Sat Apr 07, 2018 10:44 am
jack1234 wrote:
Sat Apr 07, 2018 7:47 am

I will retire with a pension and a really good health care plan which puts my mind at ease.

However, I am worried that I don't have enough saved now at my age.....I've read that we need 2 million when we retire?
Read where?

If everyone needed $2m to retire, very few people would retire in this country.

The amount of money you need will depend on your desired and necessary expenses and income from other sources (pension, social security). Your expenses depend on factors such as retirement location, hobbies, ... You are a few decades away from retirement, so trying to accurately estimate now your needs in 30 years may be challenging unless you know for sure that you will want a vacation home in Hawaii, a self-driving/flying Tesla Model 17 in the garage etc. :)

If your pension is stable and if your job is as secure as you believe, and you can maximize your retirement plan contributions, I have no doubt you will be fine. I personally would use the extra cash to pay down the educational loans.
Sorry! Let me clarify... I have heard and read that about the location where I currently live Bc the property taxes are high and cost of living is high but you’re right- I have no idea if I will still live here in 30 years. 😬

jack1234
Posts: 54
Joined: Thu Oct 19, 2017 2:12 pm

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by jack1234 » Sat Apr 07, 2018 12:55 pm

jack1234 wrote:
Sat Apr 07, 2018 12:55 pm
TravelGeek wrote:
Sat Apr 07, 2018 10:44 am
jack1234 wrote:
Sat Apr 07, 2018 7:47 am

I will retire with a pension and a really good health care plan which puts my mind at ease.

However, I am worried that I don't have enough saved now at my age.....I've read that we need 2 million when we retire?
Read where?

If everyone needed $2m to retire, very few people would retire in this country.

The amount of money you need will depend on your desired and necessary expenses and income from other sources (pension, social security). Your expenses depend on factors such as retirement location, hobbies, ... You are a few decades away from retirement, so trying to accurately estimate now your needs in 30 years may be challenging unless you know for sure that you will want a vacation home in Hawaii, a self-driving/flying Tesla Model 17 in the garage etc. :)

If your pension is stable and if your job is as secure as you believe, and you can maximize your retirement plan contributions, I have no doubt you will be fine. I personally would use the extra cash to pay down the educational loans.
Sorry! Let me clarify... I have heard and read that about the location where I currently live Bc the property taxes are high and cost of living is high but you’re right- I have no idea if I will still live here when I’m ready to retire 😬

jack1234
Posts: 54
Joined: Thu Oct 19, 2017 2:12 pm

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by jack1234 » Sat Apr 07, 2018 12:57 pm

mhalley wrote:
Sat Apr 07, 2018 10:50 am
One way to catch up is to take cues from the FIRE community, so you might peruse those types of websites. The time until you can afford to retire is all about the saving rate. Check out mmm post on the simple math of early retirement.

https://www.mrmoneymustache.com/2012/01 ... etirement/
I just read the article you linked to... great advice and worth looking into. Thanks!

Bacchus01
Posts: 1932
Joined: Mon Dec 24, 2012 9:35 pm

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by Bacchus01 » Sat Apr 07, 2018 12:59 pm

You’ll read threads here and believe you are woefully behind.

Just realize you are ahead of 99% of people in the US.

I’d ditch the student loan as quick as possible. That’s a big sum at 35. How long have you carried it and how big was it to start?

You have a 30 year horizon. Look forward, not back. What are your expenses? What do you expect them to be in retirement? What life events are you still projecting (house, marriage, kids)? Those are huge impacts. What do you estimate your pension to be?

A lot at play here, but you have lots and lots of time yet. Even the arbitrary $2M is quite achievable, and then some, in that timeframe.

Mudpuppy
Posts: 5889
Joined: Sat Aug 27, 2011 2:26 am
Location: Sunny California

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by Mudpuppy » Sat Apr 07, 2018 1:22 pm

You can't go back and change the past, so try to stop worrying so much about what you could have done and focus on what you can do now, going forward.

I would agree with the others to maximize your contributions to your 457(b) and Roth IRA. Do you also have access to a 401(k) or 403(b)? Some states have both 457(b) plans and one of these two available to their employees. For example, California has both a 401(k) and 457(b) available through the California Savings Plus Program.

Within your 457(b), why do you want the Vanguard Primecap fund instead of the NYSDCB low-cost index funds? NYSDCB Equity Index Unitized Account has an ER of 0.0084% while Vanguard Primecap has an ER of 0.33%.

jalbert
Posts: 3815
Joined: Fri Apr 10, 2015 12:29 am

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by jalbert » Sat Apr 07, 2018 1:50 pm

Details about me: 35 years old, New York resident, Single, Stable job that I will be in for the next 30 years at which point I plan to retire with a pension
That's a good plan, but you should make plans that do not require that outcome. There are no guarantees.

Not sure why you want the primecap fund. If it is based on performance in the last 5 years, that's a terrible reason. At some point a mean reversion of small cap growth may lead to significant underperformance.

If you were not investing in your 20's, I take it you have not experienced a bear market with significant assets invested. It is easy to believe you are highly risk tolerant when the market is going up consistently. You will find out how risk tolerant you actually are in the next bear market.

Try to be honest with yourself-- what is the largest portfolio loss you could tolerate and rebalance back to your allocation (by increasing stock holdings) when the market is crashing with no end in sight? Would the 55% loss of the 2008/2009 have been comfortable? Or would you have just pulled out of the market to stop the bleeding when it was down 40% and then missed the recovery? Lots of individuals who thought they were risk tolerant and comfortable with 100% stock allocations did the latter, and would have been better off at 40% bonds.

Your stock allocation percentage should not exceed double your maximum acceptable portfolio loss.

The 457 account is the ideal location for bonds. You may want to consider reallocating that to a stable value fund (if the crediting rate is reasonable) or bond fund.

Paying down the student loan is equivalent to investing funds in bonds and at 4% that would be attractive. That is what I would do with taxable space savings. Once paid off, taxable space savings can resume going into stocks, or be saved for a real estate down payment. By then you should have a healthy bond allocation in your 457.

With a large cap tilt for US equities in taxable space you may want to consider holding either VEXAX (completion index for SP500) or VSIAX (small/mid value) in your Roth account.

Just some thoughts.
Risk is not a guarantor of return.

avoidingdumbmistakes
Posts: 101
Joined: Thu Mar 29, 2018 11:38 am

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by avoidingdumbmistakes » Sat Apr 07, 2018 2:07 pm

I'll echo the previous post about how much you need for retirement. We are all so different there and what we want out of life, where we retire, and what we plan on doing. Before you need to worry about how much you really need to have saved, you will need to have retirement in sight and run some #'s on what you will actually need.

I'm 48 and on track to retire @ 58-60. I've survived several very rough investment periods, 2 college education expenses, and 2 more to go (4 kids is no joke when it comes to money. lol). Right now my monthly expenses are in the $7,500 range and there is nothing that I can do to shave much off of that as I have no debt except a mortgage but even things like groceries and household items run me $1k/mo then add on utilities, car insurance (with kids), college savings, health insurance, and on and on...I have to come up with a pretty big chunk of cash to cover monthlies.

However, this will all change in 12 years. I'm on pace to have my house paid off in 10 years. All college expenses will be over. No more kids on car insurance and instead of feeding 4-6 people daily it will only be 2. My wife and I are going to move to a LCOL area, cash purchase on the house, and have much lower property taxes. I've done the math every which way from Sunday and it really does look like our monthly fixed expenses will drop of $7,500 currently to $4,000 or less. That's a huge difference right?

Looks like you are on a good path for 35. You can make up for lost ground EASILY with good discipline. You have nothing to worry about. Just make smart decisions with big purchases like houses, cars, and if you have kids...make sure you plan accordingly and stick to it. Don't rack up debt and don't waste money. You can still have a lot of fun without wasting money. I think your current strategy is sound with one exception...add bond funds to your portfolio. It will soften the blow both mathematically and emotionally when we have another extended down market. You will likely see 2-3 or more of them before you are 60. Insulate yourself from some of that. You will never regret it. Maximizing returns feels great until you experience maximizing losses.

02nz
Posts: 528
Joined: Wed Feb 21, 2018 3:17 pm

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by 02nz » Sat Apr 07, 2018 3:45 pm

I'll disagree a little with previous posters on the PRIMECAP fund. No, one shouldn't look only at past performance to select a fund, but PRIMECAP's consistency, low turnover, and (for an actively managed fund) low costs make for a good fund. Will it outperform indexing in the future? No one knows. But it can certainly be part of a well-balanced and -diversified portfolio, and if the OP can access this otherwise closed fund through the 457, it's probably not the worst decision he could make. (BTW it's a large-cap growth fund, not small-cap.)

jalbert
Posts: 3815
Joined: Fri Apr 10, 2015 12:29 am

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by jalbert » Sat Apr 07, 2018 4:39 pm

I'll disagree a little with previous posters on the PRIMECAP fund. No, one shouldn't look only at past performance to select a fund, but PRIMECAP's consistency, low turnover, and (for an actively managed fund) low costs make for a good fund. 
Never said it was a bad fund. Said that if the motivation for choosing it was recent historical overperformance, that is a terrible reason to invest in it. That would be true of any investment.
Risk is not a guarantor of return.

jack1234
Posts: 54
Joined: Thu Oct 19, 2017 2:12 pm

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by jack1234 » Sat Apr 07, 2018 4:50 pm

avoidingdumbmistakes wrote:
Sat Apr 07, 2018 2:07 pm
I'll echo the previous post about how much you need for retirement. We are all so different there and what we want out of life, where we retire, and what we plan on doing. Before you need to worry about how much you really need to have saved, you will need to have retirement in sight and run some #'s on what you will actually need.

I'm 48 and on track to retire @ 58-60. I've survived several very rough investment periods, 2 college education expenses, and 2 more to go (4 kids is no joke when it comes to money. lol). Right now my monthly expenses are in the $7,500 range and there is nothing that I can do to shave much off of that as I have no debt except a mortgage but even things like groceries and household items run me $1k/mo then add on utilities, car insurance (with kids), college savings, health insurance, and on and on...I have to come up with a pretty big chunk of cash to cover monthlies.

However, this will all change in 12 years. I'm on pace to have my house paid off in 10 years. All college expenses will be over. No more kids on car insurance and instead of feeding 4-6 people daily it will only be 2. My wife and I are going to move to a LCOL area, cash purchase on the house, and have much lower property taxes. I've done the math every which way from Sunday and it really does look like our monthly fixed expenses will drop of $7,500 currently to $4,000 or less. That's a huge difference right?

Looks like you are on a good path for 35. You can make up for lost ground EASILY with good discipline. You have nothing to worry about. Just make smart decisions with big purchases like houses, cars, and if you have kids...make sure you plan accordingly and stick to it. Don't rack up debt and don't waste money. You can still have a lot of fun without wasting money. I think your current strategy is sound with one exception...add bond funds to your portfolio. It will soften the blow both mathematically and emotionally when we have another extended down market. You will likely see 2-3 or more of them before you are 60. Insulate yourself from some of that. You will never regret it. Maximizing returns feels great until you experience maximizing losses.
I’m not sure if we will have kids but I do agree on allocating some of my money to bonds. Do you recommend I do that now in my taxable brokerage account or in my Roth IRA or in the 457? Or in all?

jack1234
Posts: 54
Joined: Thu Oct 19, 2017 2:12 pm

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by jack1234 » Sat Apr 07, 2018 4:52 pm

jalbert wrote:
Sat Apr 07, 2018 1:50 pm
Details about me: 35 years old, New York resident, Single, Stable job that I will be in for the next 30 years at which point I plan to retire with a pension
That's a good plan, but you should make plans that do not require that outcome. There are no guarantees.

Not sure why you want the primecap fund. If it is based on performance in the last 5 years, that's a terrible reason. At some point a mean reversion of small cap growth may lead to significant underperformance.

If you were not investing in your 20's, I take it you have not experienced a bear market with significant assets invested. It is easy to believe you are highly risk tolerant when the market is going up consistently. You will find out how risk tolerant you actually are in the next bear market.

Try to be honest with yourself-- what is the largest portfolio loss you could tolerate and rebalance back to your allocation (by increasing stock holdings) when the market is crashing with no end in sight? Would the 55% loss of the 2008/2009 have been comfortable? Or would you have just pulled out of the market to stop the bleeding when it was down 40% and then missed the recovery? Lots of individuals who thought they were risk tolerant and comfortable with 100% stock allocations did the latter, and would have been better off at 40% bonds.

Your stock allocation percentage should not exceed double your maximum acceptable portfolio loss.

The 457 account is the ideal location for bonds. You may want to consider reallocating that to a stable value fund (if the crediting rate is reasonable) or bond fund.

Paying down the student loan is equivalent to investing funds in bonds and at 4% that would be attractive. That is what I would do with taxable space savings. Once paid off, taxable space savings can resume going into stocks, or be saved for a real estate down payment. By then you should have a healthy bond allocation in your 457.

With a large cap tilt for US equities in taxable space you may want to consider holding either VEXAX (completion index for SP500) or VSIAX (small/mid value) in your Roth account.

Just some thoughts.
All good points ... I haven’t been investing long enough to know what a loss feels like. I’m risk averse but not super risk averse so I do agree I need to put money in bonds. Which vanguard bond fund do you recommend and at what percentage should I allocate it for?

jack1234
Posts: 54
Joined: Thu Oct 19, 2017 2:12 pm

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by jack1234 » Sat Apr 07, 2018 4:54 pm

Mudpuppy wrote:
Sat Apr 07, 2018 1:22 pm
You can't go back and change the past, so try to stop worrying so much about what you could have done and focus on what you can do now, going forward.

I would agree with the others to maximize your contributions to your 457(b) and Roth IRA. Do you also have access to a 401(k) or 403(b)? Some states have both 457(b) plans and one of these two available to their employees. For example, California has both a 401(k) and 457(b) available through the California Savings Plus Program.

Within your 457(b), why do you want the Vanguard Primecap fund instead of the NYSDCB low-cost index funds? NYSDCB Equity Index Unitized Account has an ER of 0.0084% while Vanguard Primecap has an ER of 0.33%.
There is a 403b option available but they’re all annuiti s except one that has mutual funds and they don’t have a good rep. But it is tax advantaged - I just think I’d be better off putting my extra $1000 towards the brokerage account (once student loans are paid off)...

jack1234
Posts: 54
Joined: Thu Oct 19, 2017 2:12 pm

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by jack1234 » Sat Apr 07, 2018 4:56 pm

Bacchus01 wrote:
Sat Apr 07, 2018 12:59 pm
You’ll read threads here and believe you are woefully behind.

Just realize you are ahead of 99% of people in the US.

I’d ditch the student loan as quick as possible. That’s a big sum at 35. How long have you carried it and how big was it to start?

You have a 30 year horizon. Look forward, not back. What are your expenses? What do you expect them to be in retirement? What life events are you still projecting (house, marriage, kids)? Those are huge impacts. What do you estimate your pension to be?

A lot at play here, but you have lots and lots of time yet. Even the arbitrary $2M is quite achievable, and then some, in that timeframe.
I’ve carried the debt for 12 years and it was $25,000 when I graduated. I just realized that $12,000 of it is at 4% and the other $18,000 is under a specific deferral where it actually doesn’t accumulate interest for the next year.

jack1234
Posts: 54
Joined: Thu Oct 19, 2017 2:12 pm

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by jack1234 » Sat Apr 07, 2018 4:57 pm

jack1234 wrote:
Sat Apr 07, 2018 4:54 pm
Mudpuppy wrote:
Sat Apr 07, 2018 1:22 pm
You can't go back and change the past, so try to stop worrying so much about what you could have done and focus on what you can do now, going forward.

I would agree with the others to maximize your contributions to your 457(b) and Roth IRA. Do you also have access to a 401(k) or 403(b)? Some states have both 457(b) plans and one of these two available to their employees. For example, California has both a 401(k) and 457(b) available through the California Savings Plus Program.

Within your 457(b), why do you want the Vanguard Primecap fund instead of the NYSDCB low-cost index funds? NYSDCB Equity Index Unitized Account has an ER of 0.0084% while Vanguard Primecap has an ER of 0.33%.
There is a 403b option available but they’re all annuiti s except one that has mutual funds and they don’t have a good rep. But it is tax advantaged which is a huge plus .... just based on everything I read in 403b wise, it seems like a bad idea - I just think I’d be better off putting my extra $1000 towards the brokerage account (once student loans are paid off)...?

Mudpuppy
Posts: 5889
Joined: Sat Aug 27, 2011 2:26 am
Location: Sunny California

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by Mudpuppy » Sat Apr 07, 2018 5:09 pm

jack1234 wrote:
Sat Apr 07, 2018 4:50 pm
I’m not sure if we will have kids but I do agree on allocating some of my money to bonds. Do you recommend I do that now in my taxable brokerage account or in my Roth IRA or in the 457? Or in all?
It's more tax-efficient to place your bonds in your 457(b) account or IRA. The NYS bond index fund in your 457(b) is a good option. For your IRA, the Vanguard Total Bond Market index fund is a good option, but you'll need to wait for a bit since $10k is the fund minimum for your Vanguard stock market index fund. I'd just put the bond slice in the 457(b) for now. It's the most flexible option.
jack1234 wrote:
Sat Apr 07, 2018 4:54 pm
There is a 403b option available but they’re all annuiti s except one that has mutual funds and they don’t have a good rep. But it is tax advantaged - I just think I’d be better off putting my extra $1000 towards the brokerage account (once student loans are paid off)...
Good rep or good provider? You can bypass the rep and manage the account yourself through the website if the provider is otherwise decent.

avoidingdumbmistakes
Posts: 101
Joined: Thu Mar 29, 2018 11:38 am

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by avoidingdumbmistakes » Sat Apr 07, 2018 7:03 pm

jack1234 wrote:
Sat Apr 07, 2018 4:50 pm

I’m not sure if we will have kids but I do agree on allocating some of my money to bonds. Do you recommend I do that now in my taxable brokerage account or in my Roth IRA or in the 457? Or in all?
General rule of thumb is to keep bonds in tax advantaged accounts and not taxable. If you hold bonds or bond funds in your taxable account then you will have to pay taxes on gains every year. There are exceptions like with tax free bonds and such but when you're young and saving towards retirement just keep your bond or any fixed income allocation in tax advantaged accounts.

jalbert
Posts: 3815
Joined: Fri Apr 10, 2015 12:29 am

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by jalbert » Sat Apr 07, 2018 10:45 pm

All good points ... I haven’t been investing long enough to know what a loss feels like. I’m risk averse but not super risk averse so I do agree I need to put money in bonds. Which vanguard bond fund do you recommend and at what percentage should I allocate it for?
Hold bonds and/or a stable value fund in 457. A bond is loaning out money, the opposite of taking out a loan. Accelerating payment of a student loan is equivalent to investing in a bond. If you want to be reasonably aggressive, you might use (AGE - 10) as a target percentage for bonds. If you look at the Vanguard target retirement fund for your targeted year of retirement, that would also give you a data point. These are aggressive funds, probably more aggressive than age-10 in bonds, and more aggressive than would satisfy my needs, but I may be more risk averse than Vanguard's target investor.
Risk is not a guarantor of return.

Bacchus01
Posts: 1932
Joined: Mon Dec 24, 2012 9:35 pm

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by Bacchus01 » Sun Apr 08, 2018 9:51 am

jack1234 wrote:
Sat Apr 07, 2018 4:56 pm
Bacchus01 wrote:
Sat Apr 07, 2018 12:59 pm
You’ll read threads here and believe you are woefully behind.

Just realize you are ahead of 99% of people in the US.

I’d ditch the student loan as quick as possible. That’s a big sum at 35. How long have you carried it and how big was it to start?

You have a 30 year horizon. Look forward, not back. What are your expenses? What do you expect them to be in retirement? What life events are you still projecting (house, marriage, kids)? Those are huge impacts. What do you estimate your pension to be?

A lot at play here, but you have lots and lots of time yet. Even the arbitrary $2M is quite achievable, and then some, in that timeframe.
I’ve carried the debt for 12 years and it was $25,000 when I graduated. I just realized that $12,000 of it is at 4% and the other $18,000 is under a specific deferral where it actually doesn’t accumulate interest for the next year.
You’ve had it for 12 years and it went from $25k to $30k?

jack1234
Posts: 54
Joined: Thu Oct 19, 2017 2:12 pm

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by jack1234 » Mon Apr 09, 2018 9:14 pm

jalbert wrote:
Sat Apr 07, 2018 10:45 pm
All good points ... I haven’t been investing long enough to know what a loss feels like. I’m risk averse but not super risk averse so I do agree I need to put money in bonds. Which vanguard bond fund do you recommend and at what percentage should I allocate it for?
Hold bonds and/or a stable value fund in 457. A bond is loaning out money, the opposite of taking out a loan. Accelerating payment of a student loan is equivalent to investing in a bond. If you want to be reasonably aggressive, you might use (AGE - 10) as a target percentage for bonds. If you look at the Vanguard target retirement fund for your targeted year of retirement, that would also give you a data point. These are aggressive funds, probably more aggressive than age-10 in bonds, and more aggressive than would satisfy my needs, but I may be more risk averse than Vanguard's target investor.
https://investor.vanguard.com/mutual-fu ... nd-returns

This site shows Vanguard bond funds that are tax exempt... for example, VNYTX... is this a good option if I want to do bonds in my brokerage account? Or still better to keep it in the 457b tax advantaged?

jack1234
Posts: 54
Joined: Thu Oct 19, 2017 2:12 pm

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by jack1234 » Mon Apr 09, 2018 9:15 pm

avoidingdumbmistakes wrote:
Sat Apr 07, 2018 7:03 pm
jack1234 wrote:
Sat Apr 07, 2018 4:50 pm

I’m not sure if we will have kids but I do agree on allocating some of my money to bonds. Do you recommend I do that now in my taxable brokerage account or in my Roth IRA or in the 457? Or in all?
General rule of thumb is to keep bonds in tax advantaged accounts and not taxable. If you hold bonds or bond funds in your taxable account then you will have to pay taxes on gains every year. There are exceptions like with tax free bonds and such but when you're young and saving towards retirement just keep your bond or any fixed income allocation in tax advantaged accounts.
Great advice! Thank you! Why is it better to keep bonds in tax advantaged accounts again?
https://investor.vanguard.com/mutual-fu ... nd-returns

This site shows Vanguard bond funds that are tax exempt... for example, VNYTX... is this a good option if I want to do bonds in my brokerage account? Or still better to keep it in the 457b tax advantaged?

jack1234
Posts: 54
Joined: Thu Oct 19, 2017 2:12 pm

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by jack1234 » Mon Apr 09, 2018 9:18 pm

Bacchus01 wrote:
Sun Apr 08, 2018 9:51 am
jack1234 wrote:
Sat Apr 07, 2018 4:56 pm
Bacchus01 wrote:
Sat Apr 07, 2018 12:59 pm
You’ll read threads here and believe you are woefully behind.

Just realize you are ahead of 99% of people in the US.

I’d ditch the student loan as quick as possible. That’s a big sum at 35. How long have you carried it and how big was it to start?

You have a 30 year horizon. Look forward, not back. What are your expenses? What do you expect them to be in retirement? What life events are you still projecting (house, marriage, kids)? Those are huge impacts. What do you estimate your pension to be?

A lot at play here, but you have lots and lots of time yet. Even the arbitrary $2M is quite achievable, and then some, in that timeframe.
I’ve carried the debt for 12 years and it was $25,000 when I graduated. I just realized that $12,000 of it is at 4% and the other $18,000 is under a specific deferral where it actually doesn’t accumulate interest for the next year.
You’ve had it for 12 years and it went from $25k to $30k?
Not sure why this is important but Let me clarify -

So I had one loan that was originally $7,000 and over 12 -13years it grew to $12,000 on the 4.5% interest.
The other loan has been mostly stable at $18,000. Lots of deferrals.

The original $7k + $18k = $25k

So the new $12k plus $18k = $ 30k

jalbert
Posts: 3815
Joined: Fri Apr 10, 2015 12:29 am

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by jalbert » Tue Apr 10, 2018 3:13 am

Long-term capital gains and qualified dividends of stocks are taxed favorably in a taxable account.

If you have a large taxable space relative to tax-deferred space and cannot fit your bond allocation into tax-deferred space, then it can make sense to hold tax exempt (muni) bonds.

If public employee pensions get into trouble, state budgets would also be pressured, and it could heighten default risk of muni bonds, so that credit spreads for munis widened considerably, leading to a deterioration of market value of the bonds. This would be a risk correlated to employment risk for a state employee, a significant downside.
Risk is not a guarantor of return.

Bacchus01
Posts: 1932
Joined: Mon Dec 24, 2012 9:35 pm

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by Bacchus01 » Tue Apr 10, 2018 5:30 am

jack1234 wrote:
Mon Apr 09, 2018 9:18 pm
Bacchus01 wrote:
Sun Apr 08, 2018 9:51 am
jack1234 wrote:
Sat Apr 07, 2018 4:56 pm
Bacchus01 wrote:
Sat Apr 07, 2018 12:59 pm
You’ll read threads here and believe you are woefully behind.

Just realize you are ahead of 99% of people in the US.

I’d ditch the student loan as quick as possible. That’s a big sum at 35. How long have you carried it and how big was it to start?

You have a 30 year horizon. Look forward, not back. What are your expenses? What do you expect them to be in retirement? What life events are you still projecting (house, marriage, kids)? Those are huge impacts. What do you estimate your pension to be?

A lot at play here, but you have lots and lots of time yet. Even the arbitrary $2M is quite achievable, and then some, in that timeframe.
I’ve carried the debt for 12 years and it was $25,000 when I graduated. I just realized that $12,000 of it is at 4% and the other $18,000 is under a specific deferral where it actually doesn’t accumulate interest for the next year.
You’ve had it for 12 years and it went from $25k to $30k?
Not sure why this is important but Let me clarify -

So I had one loan that was originally $7,000 and over 12 -13years it grew to $12,000 on the 4.5% interest.
The other loan has been mostly stable at $18,000. Lots of deferrals.

The original $7k + $18k = $25k

So the new $12k plus $18k = $ 30k
It’s imporyant because it should be your first priorities. That’s not a huge student loan debt. It is troublesome, however, that it’s not getting smaller. Get rid of it quickly.

jack1234
Posts: 54
Joined: Thu Oct 19, 2017 2:12 pm

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by jack1234 » Sun Apr 15, 2018 12:41 pm

jack1234 wrote:
Mon Apr 09, 2018 9:18 pm
Bacchus01 wrote:
Sun Apr 08, 2018 9:51 am
jack1234 wrote:
Sat Apr 07, 2018 4:56 pm
Bacchus01 wrote:
Sat Apr 07, 2018 12:59 pm
You’ll read threads here and believe you are woefully behind.

Just realize you are ahead of 99% of people in the US.

I’d ditch the student loan as quick as possible. That’s a big sum at 35. How long have you carried it and how big was it to start?

You have a 30 year horizon. Look forward, not back. What are your expenses? What do you expect them to be in retirement? What life events are you still projecting (house, marriage, kids)? Those are huge impacts. What do you estimate your pension to be?

A lot at play here, but you have lots and lots of time yet. Even the arbitrary $2M is quite achievable, and then some, in that timeframe.
I’ve carried the debt for 12 years and it was $25,000 when I graduated. I just realized that $12,000 of it is at 4% and the other $18,000 is under a specific deferral where it actually doesn’t accumulate interest for the next year.
You’ve had it for 12 years and it went from $25k to $30k?
..

PFInterest
Posts: 2554
Joined: Sun Jan 08, 2017 12:25 pm

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by PFInterest » Mon Apr 16, 2018 12:06 pm

jack1234 wrote:
Sat Apr 07, 2018 7:47 am
Hi all,

I've been reading these pages for a long time now and have learned a lot. So much sage advice!
I'm still new to investing but know the 3 fund plan and just really want to know if there is anything else I should be doing.
I recently got a new job where I can finally save a lot of money and would love to get some advice on my retirement plan.

I'm a little worried that I started investing a little too late as I never thought about retirement until recently. I've been reading about how my money could have grown so much had I invested more in my 20's (compound interest, all that jazz)... Sigh. But I traveled a lot and lived abroad and didn't make enough money to save as much as I would have liked.

Details about me: 35 years old, New York resident, Single, Stable job that I will be in for the next 30 years at which point I plan to retire with a pension
So, I will be investing for the next 30 years...and I know my needs will change as time goes on, but as of today, does my portfolio look ok? Anything I should tweak?


Assets:
Vanguard Roth IRA: $10,000----->
all invested in VTSAX (Vanguard Total Stock Market Admiral Shares)
Vanguard Brokerage Account: $125,000----->
50% is equally split between VTSAX and VFIAX (Vanguard 500 Index Fund Admiral) and the other
50% is all in VTIAX (Vanguard Total International Stock Market Admiral Shares)
I also have about $10,000 in BRB-B - Berkshire Hathaway B

I know it's risky to not put any money in bonds ... but I prefer being a little risky .... is this allocation ok?
New York State 457 Deferred Compensation Plan: $1500 --------->
This is all in VPMAX (Vanguard Primecap Admiral Shares)- I did this because I really want to invest in VPMAX and I can't invest in it in my personal Vanguard account as it is closed to new investors. However, I can get exposure to it through the 457b plan. As the balance grows, I will diversify the allocations here but at just $1500, investing in this one fund seems ok for now.

Expense ratios and a list of all the funds for the 457 b plan is here: https://www.nysdcp.com/tcm/nysdcp/stati ... cy.pdf?r=1

DEBT:
I have an undergrad student loan of $30,000 at 4%.
No credit card debt and no mortgage for the next 2 years at least.

I have a 6 month emergency fund and live on a budget.

My salary is about $90,000 and will increase to about $115,000 in a few years and will go up to $155,000 or so in the future.

I will retire with a pension and a really good health care plan which puts my mind at ease.

However, I am worried that I don't have enough saved now at my age.....I've read that we need 2 million when we retire?

I will be able to contribute the full $18,500 to the New York 457b plan this year and most likely next year.
I will also be able to contribute the full $5,500 to the Roth IRA this year.

After these contributions, I have about $1000 a month left over to invest.
Should I just throw that into my Vanguard Brokerage account?
Should I put that extra $1000 towards the college loan debt?
Or should I put $500 towards the loan and $500 towards the Brokerage account?

Is there anything else I should be doing?

I just want to make sure I'm investing wisely and will be ok in retirement.
Any advice would be greatly appreciated.
you are saving 26% of your income for retirement so this is already great.
i would still suggest some FI. 100% of something is generally not recommended. even 10% can be helpful long term.
i would prioritize the debt (maybe 75:25) to investing which will free up cash flow in the future.
otherwise sounds like a start.

Nate79
Posts: 3583
Joined: Thu Aug 11, 2016 6:24 pm
Location: Delaware

Re: Starting to invest at 35, is this a good plan for retirement planning?

Post by Nate79 » Mon Apr 16, 2018 1:00 pm

I would throw all additional money above the tax deferred accounts at your student loans. Pay them off asap.

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