[Seeking Advice] Current portfolio

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Topic Author
ajbogle
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Joined: Thu May 12, 2022 9:43 am

[Seeking Advice] Current portfolio

Post by ajbogle »

Hi everyone,

Yes my last name is actually Bogle, go figure. I was told to come check you guys out to get some solid resources. I'm a pretty lazy investor, but nevertheless I've been pretty good with my money over the years. However, I believe I can be better and with my salary steadily increasing over the years I figured I better get educated on investing and being more mindful. I'd love to get an idea of how I should handle this current market, and changes you guys recommend.

Emergency Funds: $10k (cash) & 275oz silver ($6k with current pricing, bastards!)
Debt: $15k (Car / School)
Tax Filing Status: Single
Tax Rate: 25%
State: CA
Age: 29
Salary: $85k/yr jumping to $125k/yr in a few weeks (new job).
Desired Asset Allocation: This one I'm unsure but from what I've read, probably 80/20 (stock/bonds)

Current Retirement Assets

Vanguard Traditional IRA (switched from employer 401k/profit sharing): $50k - I never contributed, worked for a company that gave 15% each year. Currently it's all in commodities, before y'all crucify me, I wanted to be lazy and focus on my career. But that's on a solid track so I can give more time/discipline to my future and investments.

I will look to be engaged this year, married next. The lady is a teacher, but since we don't share finances yet I'll leave those details out. Let me know if I forgot anything, I was thinking of doing the Boglehead 3 fund portfolio or even the Vanguard 4 fund portfolio. I'm all good with volatility as I watched my 401k (I didnt put a single dollar in) drop like 40% and saw it rise, and I'm young so it's all good.
SnowBog
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Re: [Seeking Advice] Current portfolio

Post by SnowBog »

Welcome to the forum!

If you haven't yet, recommend checking out the following: Would highly recommend switching your 401k from commodities to a 2 or 3 fund investment (sounds like you are already familiar with those) or better yet if you want to remain a "lazy investor" - just use a "target date fund" - that might be optimal for you! .That should give you better growth and much better diversification.

And I need to call out what - to me - reads as a red flag... You are 29 —and basically have a personal net worth of roughly $0. Your cash and silver are worth roughly the same as your debt. Which means you aren't really saving anything right now...

The only retirement savings you have appears to have come purely from your former employer.
ajbogle wrote: Thu May 12, 2022 9:56 am ... I never contributed, worked for a company that gave 15% each year.
... (I didnt put a single dollar in)...
The key to retirement - more then almost anything else - is your ability to save. And at the moment - I'm not seeing that you are saving anything...

Now, maybe that's fine for where you've been. Maybe you had large school loans, debts, etc. you had to pay off first. I'm not judging. I'm just pointing out that your savings rate is going to be the biggest factor for you going forward.

The other key factor - maybe even the biggest one - is your expenses (X). Ultimately, when we think about what's needed for retirement - the recommendation is usually to have between 25 - 33 times your expenses (25X - 33X), depending on what level of safety you need. The higher your expenses, the more you need to save, but you also have less available to save (since the higher expenses consume more of your income). Conversely, the lower your expenses, the less you need to save, and assuming that your income comfortably exceeds your expenses - the more you are able to save each year. For extra emphasis, your expenses drive your savings rate, which drives your retirement savings.

As a general recommendation, saving 15% of gross (before tax) income for retirement is usually the minimum recommended. More is better! But you have to find balance, so you can enjoy life (and the upcoming wedding :beer) along the way, while saving for your future.

So my "next step" recommendations would be:
  • Figure out your annual expenses
  • If needed, start using an app like Mint to keep track of all incoming and outgoing money. After roughly 6 months, you should have enough to start understanding your average monthly expenses.
  • Put all (or a good chunk) of that soon to be higher paycheck into your retirement savings, until you hit a minimum of 15% gross.
  • Continue to allocate a meaningful amount of future pay raises to the same - so that you continue to grow your retirement savings.
  • Come back and update the thread with both your estimated annual expenses as well as your estimated annual contributions
With those last two, we can help point you to tools like Firecalc that can show you if you are "on track" or not. (Again, primary inputs being annual expenses, annual savings, and how much is already saved.)
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retired@50
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Re: [Seeking Advice] Current portfolio

Post by retired@50 »

ajbogle wrote: Thu May 12, 2022 9:56 am
Tax Filing Status: Single
Tax Rate: 25%
State: CA
Age: 29
Salary: $85k/yr jumping to $125k/yr in a few weeks (new job).
Welcome to the forum. :happy

I think you may have missed something on the tax rate shown above.
Federal rates are ... 22%, 24%, 32% etc...
California rates are ... 4%, 6%, 8%, 9.3% etc...

My guess is you were at 22% Federal and 8% California, but now, with the new $125K salary, you'll likely be in 24% Federal and 9.3% California.

You can determine the marginal rates using these links below, then edit your post to provide the correct numbers.
Federal: https://www.nerdwallet.com/article/taxe ... x-brackets
California: https://www.nerdwallet.com/article/taxe ... -state-tax

When referring to the linked pages above, have your 2021 IRS Form 1040 taxable income handy. It's on line 15.

Regards,
This is one person's opinion. Nothing more.
Topic Author
ajbogle
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Re: [Seeking Advice] Current portfolio

Post by ajbogle »

SnowBog wrote: Thu May 12, 2022 12:50 pm So my "next step" recommendations would be:
  • Figure out your annual expenses
  • If needed, start using an app like Mint to keep track of all incoming and outgoing money. After roughly 6 months, you should have enough to start understanding your average monthly expenses.
  • Put all (or a good chunk) of that soon to be higher paycheck into your retirement savings, until you hit a minimum of 15% gross.
  • Continue to allocate a meaningful amount of future pay raises to the same - so that you continue to grow your retirement savings.
  • Come back and update the thread with both your estimated annual expenses as well as your estimated annual contributions
With those last two, we can help point you to tools like Firecalc that can show you if you are "on track" or not. (Again, primary inputs being annual expenses, annual savings, and how much is already saved.)
Thank you!

Great stuff! Yes, I know my net worth is $0 but I rather have no net worth than debt. I came from a family that didn't care too much about money, as long as the debit card swiped everything was good. I've been rather ultra mindful of debt and some early experiences that I wanted to enjoy. So, saving and investing were not a priority at that point.

Currently, my employer does not offer any type of retirement package which is fine. I'm rather hesitant with the stock market, as 07' was a whirlwind with my family. Nevertheless, I wanted to reduce my debt before anything, so a huge chunk of my savings/earnings has been to get that out of the way. Fortunately, my lady is not keen on a big wedding, so that will be a mild expense and the honeymoon will be the bigger chunk ($10k) all together with the ring.

Current Salary/Expenses/Savings:
Yearly Income: $85k
Monthly Expenses (all-in): $3,300 or $39.6k (rent, car, insurance, phone, food, date nights)
Saving Average: $1k - $1500 or a fair estimate of $15k/yr

I don't foresee my life's expenses increasing much if at all when the new salary hits. Also, I did get a DUI when I was younger so my insurance should drop considerably and also the debt should be paid off by years end. The next big purchase will most likely be a home, still deciding if I want a single family home or to get a duplex or triplex but that'll be 2-3 years from now.
retired@50 wrote: Thu May 12, 2022 1:03 pm My guess is you were at 22% Federal and 8% California, but now, with the new $125K salary, you'll likely be in 24% Federal and 9.3% California.
Yes, that sounds more accurate. So I pay roughly 30%...
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Re: [Seeking Advice] Current portfolio

Post by tashnewbie »

ajbogle wrote: Thu May 12, 2022 1:17 pm Currently, my employer does not offer any type of retirement package which is fine.
Welcome to the forum!

Do you mean your soon-to-be new employer doesn't offer a 401k/403b/etc.? Or just that they don't make any contributions to the plan for employees?

This wiki about prioritizing investments may be helpful: https://www.bogleheads.org/wiki/Priorit ... nvestments

If you don't have a 401k available to you, then investing in a Traditional or Roth IRA is a good place to start.

You say you're hesitant with the stock market but also that you haven't flinched with the downturn in your Traditional IRA. You'll need to get comfortable with risk and normal market fluctuations, if you want to use the markets to grow personal wealth. Your asset allocation will help you hone in on your personal risk tolerance.
Topic Author
ajbogle
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Re: [Seeking Advice] Current portfolio

Post by ajbogle »

tashnewbie wrote: Thu May 12, 2022 3:11 pm
ajbogle wrote: Thu May 12, 2022 1:17 pm Currently, my employer does not offer any type of retirement package which is fine.
Welcome to the forum!

Do you mean your soon-to-be new employer doesn't offer a 401k/403b/etc.? Or just that they don't make any contributions to the plan for employees?

This wiki about prioritizing investments may be helpful: https://www.bogleheads.org/wiki/Priorit ... nvestments

If you don't have a 401k available to you, then investing in a Traditional or Roth IRA is a good place to start.

You say you're hesitant with the stock market but also that you haven't flinched with the downturn in your Traditional IRA. You'll need to get comfortable with risk and normal market fluctuations, if you want to use the markets to grow personal wealth. Your asset allocation will help you hone in on your personal risk tolerance.
Correct, they don't offer nor contribute to a 401k. I have a Traditional IRA, about $50k. And yes, hesitant to put money into it but watching the downturn of money that I didn't even contribute doesn't seem to bother me.

Nevertheless, I recognize the need to be more educated and take a proactive approach. Now is a good time for me and my gf.
SnowBog
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Re: [Seeking Advice] Current portfolio

Post by SnowBog »

Thanks for posting the extra details.
ajbogle wrote: Thu May 12, 2022 1:17 pm Great stuff! Yes, I know my net worth is $0 but I rather have no net worth than debt. I came from a family that didn't care too much about money, as long as the debit card swiped everything was good. I've been rather ultra mindful of debt and some early experiences that I wanted to enjoy. So, saving and investing were not a priority at that point.
Well - I'll break my earlier statement... I said I wouldn't judge - but I will... Good for you for breaking the cycle! Keep up the progress!
ajbogle wrote: Thu May 12, 2022 1:17 pm Currently, my employer does not offer any type of retirement package which is fine.
This means you'll need to be extra diligent about saving. Without access to a 401k/403b option, you are limited to IRA's (and maybe an HSA - although I doubt your employer offers that option if they don't have a retirement plan). Which means the most you can contribute to a tax-advantaged account is $6k/year. The rest will end up being in taxable.

ajbogle wrote: Thu May 12, 2022 1:17 pm I'm rather hesitant with the stock market, as 07' was a whirlwind with my family.
What helped me was understanding the difference between "stocks" and the "stock market". Trying to pick "winning" stocks is a fool's errand, which is laid clear in books like https://www.amazon.com/Bogleheads-Guide ... 3149&psc=1.

But once the light bulb went on for me that buying something like a "total stock market" fund was essentially buying a piece of the entire stock market - things started to click. In this context, the stock market is nothing more than the representation of the output of all of the companies in the market. So long as companies exist, and people continue to try to improve their lot in life (hard work, income growth, etc.), the markets will continue to grow over time. While there will be years like this one - where things look bad (as they did in '07) - when you look at something like the S&P 500 over time - these "down" periods are hard to find in the march of the stock market "up and to the right". And candidly - the "best" time to invest is oddly times like now - when things seem bleak - as that just means you are "buying on sale" (so to speak).

Another thing that helped me was the information I found here, as well as a few books. My short list of recommendations are below. Each of these helped me rethink "what I knew" - and really more "what I didn't know" - and helped me realize that I was in control over my future.
ajbogle wrote: Thu May 12, 2022 1:17 pm Current Salary/Expenses/Savings:
Yearly Income: $85k
Monthly Expenses (all-in): $3,300 or $39.6k (rent, car, insurance, phone, food, date nights)
Saving Average: $1k - $1500 or a fair estimate of $15k/yr
OK - slight correction/clarification... Generally, you should either call taxes out separately or include as part of "expenses." While taxes are usually taken out by our employer's - they are ultimately an expense we pay.

Using your 30% state/federal tax estimate, we can revise this to:
Yearly Income: $85k
Estimated Taxes: $25.5k
Monthly Expenses: $3,300 or $39.6k (rent, car, insurance, phone, food, date nights)
Estimated Expenses + Taxes: $65.1k
Saving Average: $1k - $1500 or a fair estimate of $15k/yr

I don't foresee my life's expenses increasing much if at all when the new salary hits. Also, I did get a DUI when I was younger so my insurance should drop considerably and also the debt should be paid off by years end. The next big purchase will most likely be a home, still deciding if I want a single family home or to get a duplex or triplex but that'll be 2-3 years from now.

Assuming your expenses won't change (they will - especially when you get married - so when they do - just adjust accordingly)... That 25X - 33X means your retirement savings should be in the range of $1.6M - $2.2M.

If we plug in your numbers and assume you can save $15k/year until you retire at 67 into Firecalc (https://firecalc.com/index.php?wdamt=65 ... rsion=3.0&), it says that (historically speaking), your "plan" would work 100% of the time! :sharebeer While we can't predict the future - I'd say if you can commit to saving $15k (minimally 15% of your gross) - you'll find yourself well setup for retirement!
Last edited by SnowBog on Thu May 12, 2022 3:30 pm, edited 1 time in total.
SnowBog
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Re: [Seeking Advice] Current portfolio

Post by SnowBog »

ajbogle wrote: Thu May 12, 2022 3:23 pm Nevertheless, I recognize the need to be more educated and take a proactive approach. Now is a good time for me and my gf.
Once you are married - I'd recommend updating this with a "joint" post inclusive of all of your family details. IIRC your future wife is a teacher - which likely means they have multiple retirement savings options. There may be benefits in thinking about how to leverage those as a couple. (This assumes that you will eventually co-mingle finances... Which not everyone does - some want to maintain their own finances...)
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ajbogle
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Re: [Seeking Advice] Current portfolio

Post by ajbogle »

SnowBog wrote: Thu May 12, 2022 3:29 pm
ajbogle wrote: Thu May 12, 2022 3:23 pm Nevertheless, I recognize the need to be more educated and take a proactive approach. Now is a good time for me and my gf.
Once you are married - I'd recommend updating this with a "joint" post inclusive of all of your family details. IIRC your future wife is a teacher - which likely means they have multiple retirement savings options. There may be benefits in thinking about how to leverage those as a couple. (This assumes that you will eventually co-mingle finances... Which not everyone does - some want to maintain their own finances...)
Yes, she makes great money as a teacher, more than I expected. Granted it is in a very expensive area and I've heard about some of their retirement plans. We plan on co-mingling funds absolutely, and I'll have to take the lead on it so want to get a head of the game and learn myself.
ajbogle wrote: Thu May 12, 2022 1:17 pm
Using your 30% state/federal tax estimate, we can revise this to:
Yearly Income: $85k
Estimated Taxes: $25.5k
Monthly Expenses: $3,300 or $39.6k (rent, car, insurance, phone, food, date nights)
Estimated Expenses + Taxes: $65.1k
Saving Average: $1k - $1500 or a fair estimate of $15k/yr

Assuming your expenses won't change (they will - especially when you get married - so when they do - just adjust accordingly)... That 25X - 33X means your retirement savings should be in the range of $1.6M - $2.2M.
Great way of putting it, and yes, I think $15k is reasonable. I've done that roughly last year and with the salary increase I should be able to do more than that forsure. By no means do I want to retire at 67 so I'll have to really up that number and figure out a different solution for the extra cash.

The new employer will offer an FSA account which they say has a $2850 limit on what I can contribute. So, if I went that route with my IRA that's $8850 per year, and so if I can hit $20k/yr savings I'll need to figure out what to do with the $11,150. This doesn't include her pay, but I'll factor that in next year. I'll just add she makes slightly less than what I do, and we've already talked about finances and have similar expenses. I'm a few $100 higher than her, we can say $3k/m for her.

With all that, I was going to rebalance the portfolio and came up with the following, please let me know if this sounds right.

Portfolio:
Debt: $15k
Cash: $10k
Silver: 275oz ($6k)
VTSAX 60% ($30k)
VTIAX 20% ($10k)
VBTLX 20% ($10k)

Question: Should I consider moving my Traditional IRA to a Roth? And, am I able to open a 401k Roth independently?
Last edited by ajbogle on Thu May 12, 2022 4:18 pm, edited 1 time in total.
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Re: [Seeking Advice] Current portfolio

Post by retired@50 »

ajbogle wrote: Thu May 12, 2022 4:07 pm The new employer will offer an FSA account which they say has a $2850 limit on what I can contribute. So, if I went that route with my IRA that's $8850 per year, and so if I can hit $20k/yr savings I'll need to figure out what to do with the $11,150. This doesn't include her pay, but I'll factor that in next year. I'll just add she makes slightly less than what I do, and we've already talked about finances and have similar expenses. I'm a few $100 higher than her, we can say $3k/m for her.
If the FSA mentioned above is like most FSAs, it's not really a long term savings vehicle.

See the wiki page on FSA: https://www.bogleheads.org/wiki/Flexibl ... rrangement
Boglehead wiki wrote: Balance in an FSA

Flexible spending accounts are use-it-or-lose-it plans. This means that amounts in the account at the end of the plan year cannot be carried over to the next year. However, the plan can provide for a grace period of up to 2½ months after the end of the plan year. If there is a grace period, any qualified medical expenses incurred in that period can be paid from any amounts left in the account at the end of the previous year. Your employer is not permitted to refund any part of the balance to you.[4]
Regards,
This is one person's opinion. Nothing more.
Topic Author
ajbogle
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Re: [Seeking Advice] Current portfolio

Post by ajbogle »

retired@50 wrote: Thu May 12, 2022 4:13 pm
ajbogle wrote: Thu May 12, 2022 4:07 pm The new employer will offer an FSA account which they say has a $2850 limit on what I can contribute. So, if I went that route with my IRA that's $8850 per year, and so if I can hit $20k/yr savings I'll need to figure out what to do with the $11,150. This doesn't include her pay, but I'll factor that in next year. I'll just add she makes slightly less than what I do, and we've already talked about finances and have similar expenses. I'm a few $100 higher than her, we can say $3k/m for her.
If the FSA mentioned above is like most FSAs, it's not really a long term savings vehicle.

See the wiki page on FSA: https://www.bogleheads.org/wiki/Flexibl ... rrangement
Boglehead wiki wrote: Balance in an FSA

Flexible spending accounts are use-it-or-lose-it plans. This means that amounts in the account at the end of the plan year cannot be carried over to the next year. However, the plan can provide for a grace period of up to 2½ months after the end of the plan year. If there is a grace period, any qualified medical expenses incurred in that period can be paid from any amounts left in the account at the end of the previous year. Your employer is not permitted to refund any part of the balance to you.[4]
Regards,
Yup, that is exactly it, ok so I'll have to figure out what to do with this cash. Hopefully the lady will have more options, otherwise, perhaps I move into real estate. Thoughts?
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retired@50
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Re: [Seeking Advice] Current portfolio

Post by retired@50 »

ajbogle wrote: Thu May 12, 2022 4:19 pm Yup, that is exactly it, ok so I'll have to figure out what to do with this cash. Hopefully the lady will have more options, otherwise, perhaps I move into real estate. Thoughts?
Well, you could consider requesting that your employer start a 401k plan. That would benefit, not just you, but all employees. If it's a really small company, with few employees, then they may not want to bother. However, if you can convince them to start a 401k plan, it would give you a huge advantage since tax-deferred savings can grow for years without being taxed.

As already mentioned, you can certainly use a Traditional or Roth IRA.

Further, you can invest in a normal non-retirement taxable account. If you go with a taxable investment account, be sure to pay attention to the tax-efficient fund placement wiki page. Buying the wrong kind of mutual fund or ETF in a taxable account can be a tough lesson.
Tax-efficient fund placement: https://www.bogleheads.org/wiki/Tax-eff ... _placement

Real estate is something to consider, but I'd buy a primary residence as step #1.

Trying to be a landlord and holding down a full time job won't give you much time to spare. Plus, being a landlord in California is tough and houses are expensive. A variety of tenant-friendly laws and regulations make it a challenge beyond what you'd normally assume.

Regards,
This is one person's opinion. Nothing more.
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Re: [Seeking Advice] Current portfolio

Post by SnowBog »

ajbogle wrote: Thu May 12, 2022 4:19 pm Yup, that is exactly it, ok so I'll have to figure out what to do with this cash. Hopefully the lady will have more options, otherwise, perhaps I move into real estate. Thoughts?
Some swear by real estate. Others (including myself) swear at real estate.

But I think you are over complicating it. You can open a "taxable" brokerage account - and just save there.

Follow the advice here: https://www.bogleheads.org/wiki/Priorit ... nvestments

Which basically says fill up tax-advantaged accounts first given the near and long term tax benefits of doing so.

But if you run out of tax-advantaged space, then you just start investing in a taxable account.

Keep it simple! And things will stay well!
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Re: [Seeking Advice] Current portfolio

Post by ajbogle »

Ok good to know, will keep reading.

Last thing, I wanted to get some opinions on rebalancing my IRA to the following:
VTSAX 60% ($30k)
VTIAX 20% ($10k)
VBTLX 20% ($10k)
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Re: [Seeking Advice] Current portfolio

Post by retired@50 »

ajbogle wrote: Thu May 12, 2022 4:35 pm Last thing, I wanted to get some opinions on rebalancing my IRA to the following:
VTSAX 60% ($30k)
VTIAX 20% ($10k)
VBTLX 20% ($10k)
The above mix seems good to me.

80% stock index funds/20% bond index funds until around 40 or 45 years old, then re-assess based on your risk tolerance at that time. Bonds will probably be a bigger chunk of your portfolio when you're ready to retire.

Regards,
This is one person's opinion. Nothing more.
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Re: [Seeking Advice] Current portfolio

Post by ajbogle »

retired@50 wrote: Thu May 12, 2022 4:58 pm
ajbogle wrote: Thu May 12, 2022 4:35 pm Last thing, I wanted to get some opinions on rebalancing my IRA to the following:
VTSAX 60% ($30k)
VTIAX 20% ($10k)
VBTLX 20% ($10k)
The above mix seems good to me.

80% stock index funds/20% bond index funds until around 40 or 45 years old, then re-assess based on your risk tolerance at that time. Bonds will probably be a bigger chunk of your portfolio when you're ready to retire.

Regards,
Preference on Roth vs Traditional? I've always picked Traditional as I do think I'd pay more now in taxes than when I retire.
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Re: [Seeking Advice] Current portfolio

Post by retired@50 »

ajbogle wrote: Thu May 12, 2022 5:14 pm
retired@50 wrote: Thu May 12, 2022 4:58 pm
ajbogle wrote: Thu May 12, 2022 4:35 pm Last thing, I wanted to get some opinions on rebalancing my IRA to the following:
VTSAX 60% ($30k)
VTIAX 20% ($10k)
VBTLX 20% ($10k)
The above mix seems good to me.

80% stock index funds/20% bond index funds until around 40 or 45 years old, then re-assess based on your risk tolerance at that time. Bonds will probably be a bigger chunk of your portfolio when you're ready to retire.

Regards,
Preference on Roth vs Traditional? I've always picked Traditional as I do think I'd pay more now in taxes than when I retire.
With the new job, and raise, paying a marginal income tax rate of 33.3% (Federal: 24% + Calif. 9.3%) cries out for using traditional IRA or traditional 401k if you get the chance.

Regards,
This is one person's opinion. Nothing more.
SnowBog
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Re: [Seeking Advice] Current portfolio

Post by SnowBog »

retired@50 wrote: Thu May 12, 2022 5:24 pm
ajbogle wrote: Thu May 12, 2022 5:14 pm
retired@50 wrote: Thu May 12, 2022 4:58 pm
ajbogle wrote: Thu May 12, 2022 4:35 pm Last thing, I wanted to get some opinions on rebalancing my IRA to the following:
VTSAX 60% ($30k)
VTIAX 20% ($10k)
VBTLX 20% ($10k)
The above mix seems good to me.

80% stock index funds/20% bond index funds until around 40 or 45 years old, then re-assess based on your risk tolerance at that time. Bonds will probably be a bigger chunk of your portfolio when you're ready to retire.

Regards,
Preference on Roth vs Traditional? I've always picked Traditional as I do think I'd pay more now in taxes than when I retire.
With the new job, and raise, paying a marginal income tax rate of 33.3% (Federal: 24% + Calif. 9.3%) cries out for using traditional IRA or traditional 401k if you get the chance.

Regards,
Agreed - with a caveat. I'd stick with Traditional IRA for as long as you can deduct your contribution on your taxes.

With your new job - which doesn't offer a retirement plan - that should be the case for as long as you are single (regardless of income).

https://www.forbes.com/advisor/retireme ... on-limits/

Once you are married - and assuming your spouse has access to a retirement plan - then you'll start to run into deduction phase outs at a joint modified adjusted gross income (MAGI) of $204k and get no deduction after $214k.

If/once you are no longer getting the benefit of the Traditional IRA (the ability to deduct the contribution from your taxable income), then it makes sense to consider switching to a Roth IRA. Although once you can no longer deduct your Traditional IRA contribution - you can no longer make a Roth contribution.

But - you can do "Backdoor Roth" contribution - which is essentially make a "non-deductible" Traditional Contribution and then convert that to a Roth. https://www.bogleheads.org/wiki/Backdoor_Roth Unfortunately, you'd get caught by having to deal with the impact of still having money in a Traditional IRA... But maybe by then you'll have access to a 401k that you can use to rollover your Traditional IRA into the 401k...
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Re: [Seeking Advice] Current portfolio

Post by retired@50 »

SnowBog wrote: Thu May 12, 2022 7:28 pm Agreed - with a caveat. I'd stick with Traditional IRA for as long as you can deduct your contribution on your taxes.
+1. SnowBog raises some good points above...

All of which brings me back to asking your current employer about setting up a 401k plan.

This wiki page, which is about campaigning for a better 401k plan might have some information that you'd find helpful.
https://www.bogleheads.org/wiki/How_to_ ... 01(k)_plan

Regards,
This is one person's opinion. Nothing more.
SnowBog
Posts: 3094
Joined: Fri Dec 21, 2018 11:21 pm

Re: [Seeking Advice] Current portfolio

Post by SnowBog »

ajbogle wrote: Thu May 12, 2022 4:07 pm By no means do I want to retire at 67 so I'll have to really up that number...
I missed this before...

Firecalc has an "investigate" tab where you can explore various scenarios - such as "what happens if I retire earlier".

Using the link above (with your data), and switching to that option looking at over the next 40 years showed:
  • 0% chance of success through 2042
  • 48% chance in 2046
  • Roughly 90% chance in 2050
  • 100% chance after 2054
Obviously those are just estimates, the future is unwritten... But it gives you something to help understand the impacts of saving more, spending less, saving more and spending less, retiring earlier, etc.

Again, if you can live below your means, save the difference in a well diversified low cost fund, and be patient - good things can. come. If you want them faster - you know the levers to pull.
Topic Author
ajbogle
Posts: 8
Joined: Thu May 12, 2022 9:43 am

Re: [Seeking Advice] Current portfolio

Post by ajbogle »

SnowBog wrote: Thu May 12, 2022 7:28 pm
Once you are married - and assuming your spouse has access to a retirement plan - then you'll start to run into deduction phase outs at a joint modified adjusted gross income (MAGI) of $204k and get no deduction after $214k.

If/once you are no longer getting the benefit of the Traditional IRA (the ability to deduct the contribution from your taxable income), then it makes sense to consider switching to a Roth IRA. Although once you can no longer deduct your Traditional IRA contribution - you can no longer make a Roth contribution.

But - you can do "Backdoor Roth" contribution - which is essentially make a "non-deductible" Traditional Contribution and then convert that to a Roth. https://www.bogleheads.org/wiki/Backdoor_Roth Unfortunately, you'd get caught by having to deal with the impact of still having money in a Traditional IRA... But maybe by then you'll have access to a 401k that you can use to rollover your Traditional IRA into the 401k...
Ok I've heard of this, my brother and his wife have to do Roth for this specific reason and they also do this backdoor Roth contribution. When we do get married, we will be just slightly under that $214k, but that's good to keep in mind!
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