Retiring in 2 weeks, Traditional 401k

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ruralavalon
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Re: Retiring in 2 weeks, Traditional 401k

Post by ruralavalon » Sat Dec 08, 2018 1:22 pm

reeko0530 wrote:
Sat Dec 08, 2018 12:54 pm
Ben Mathew wrote:
Fri Dec 07, 2018 1:32 pm
reeko0530 wrote:
Fri Dec 07, 2018 2:37 am
If I want to better insulate his 401k against lets say a 60-70% correction which is rumored to occur within the next year or two, would 20 percent in stocks and 80 percent in bonds insulate them the most? But then I read also that if the fed rate raises, bonds go down so its like a viscous circle with everything i am reading. I am not sure if i should change it to 40/60, 30/70, or 20/80. I know I want to keep some in the stocks to hopefully fight inflation.
If they can tolerate some risk, I would strongly encourage including stocks. Let's say you start with 40% now and glide down to 20% at age 100. Assuming 1.5% real bond return and 5% real stock return, they could draw $12,000/year (today's dollars) and be left with $11,862 at age 100. (Here's the spreadsheet I used to calculate this.) The odds that this plan will work out is good. But if returns are lower than expected and the money runs out early, they will need to dip into home equity. The value of their home would determine how much of a cushion they have to tolerate portfolio underperformance.

Once you pick the stock and bond percentages (asset allocation), the only thing left to do is stick with the plan and not second guess yourself or the markets. There's always something going on--market corrections, Fed does something with interest rates, trade wars, real wars, and so on. Neither you nor your parents need to think about any of this stuff. Financial markets are continually listening to news and correcting prices (by the nanosecond!), so there is no need for you to be involved. Your only job is to stick to the plan. Rebalance back to your planned asset allocation once a year or so. If the portfolio underperforms, try to cut costs. There is really nothing else to do. Trying to parse the news and time the market does more harm than good. This is the one area in life where slacking off and not paying attention is good for you.
Then the next question is with T Rowe Price, which bond and stocks do I then shift into? If I stop with the Target 2020, I must make custom selections. I have never chosen stocks so if I chose 30% stocks, do i put 20 percent in US and 10 in foreign? Any good solid stocks to choose from on the list from T Rowe? Thanks for any help. This has been so informative and I have probably spent about 12 hours today alone reading about retirement and stocks. There is just so much to do and learn, and then the difficulty is I am a third party trying to do this for someone else.
I would move the money to a traditional IRA at Vanguard to simplify everything and make it easy to invest in low cost Vanguard index funds. You can create a great portfolio using just three funds (see three fund portfolio on the Bogleheads Wiki):

Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)
Vanguard Total International Stock Index Fund Admiral Shares (VTIAX)
Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX)

Let's say you decide on 40% stock : 60% bonds. Of the stock portion, you could go with roughly half in international if you want to reflect global market cap. Some like to tilt towards the U.S. more. You don't have to get this exactly right. Let's say you decide to allocate your stocks to 2/3 US and 1/3 international. That means 27% of your portfolio goes into US and 13% into international. So you have:

Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX): 13%
Vanguard Total International Stock Index Fund Admiral Shares (VTIAX): 27%
Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX): 60%

It's really as easy as that.
The fear of making a mistake and then being responsible for my parents possible demise is a tough burden.
Try to approach it differently. Risks are a part of life. If you do your best to help your parents, then you should be at peace with yourself, even if the market tanks. Ajit Jain of Berkshire Hathaway said that one of the things he liked about working for Warren Buffett is that Buffett is really good about decoupling decisions and their outcomes. If Ajit made a good decision, but the outcome was bad because of bad luck, Buffett was alright with it. It's hard to achieve Buffett's level of rationality and equanimity, but it's something we can all aspire to.
Thanks. This is gonna sound bad. So all your suggestions about moving to a traditional Ira, is that staying with t Rowe? And then within that choosing the vanguard options? I think I can choose those even with the 401k as well? Sorry still a beginner here.
The fund he is currently using in his 401k, T. Rowe Price Retirement 2050 Fund (TRRMX), has an expense ratio of 0.72%, which is high in my opinion.

We don't know what other funds are offered in the 401k plan. If the other funds are also higher expense it will be a good idea to rollover the 401k to an IRA at a low cost provider like Vanguard or Fidelity.

In my opinion the 1) rollover decision, 2) the fund firm to use, and 3) the mutual funds to use, are not the top priority for decision at this point, with just 3 weeks till he retires at year end.

In my opinion the more urgent priorities are:
1) buying health insurance for her;
2) getting a solid number for their retirement expenses; and
3) getting the exact number for their Social Security benefits.
Last edited by ruralavalon on Sat Dec 08, 2018 1:27 pm, edited 1 time in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

johnz1001
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Joined: Tue Jan 01, 2013 7:41 am

Re: Retiring in 2 weeks, Traditional 401k

Post by johnz1001 » Sat Dec 08, 2018 1:27 pm

teen persuasion wrote:
Fri Dec 07, 2018 2:35 pm
Katietsu wrote:
Fri Dec 07, 2018 1:07 pm

See if you can find out more information on the health insurance. There are very specific rules about when you can sign up for health insurance if you want subsidies and guaranteed accaptance.
I wanted to emphasize this - to be eligible for ACA coverage on Jan 1, your mother must be approved before December 15. If you wait until after the 15th of any month, the earliest her coverage can begin is the first of the month following the next month.

Right now is open enrollment for coverage in 2019. Please don't miss enrolling her for 2019 by waiting too long. Contact an insurance navigator to help you thru the process, and your options. Compare costs of ACA and Cobra (and length she can be on it, and if she can switch to ACA after it runs out). Also add the costs of Medicare for your father - that will reduce the Social Security he nets.
ACA has been mentioned a couple of times. OPEN ENROLLMENT ENDS DECEMBER 15th. Having your mom on ACA could be the difference between your parents being solvent and not having enough income since her health insurance cost would be minimal rather than between $500-1,000 on COBRA. But you may have to walk her through the application and it will take time. It can all be done on-line. This avenue is very important. The other decisions can be made within several weeks, but this decision could save your parents a lot of money. They're fortunate to have a son who cares enough to assist.

Ben Mathew
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Re: Retiring in 2 weeks, Traditional 401k

Post by Ben Mathew » Sat Dec 08, 2018 1:42 pm

reeko0530 wrote:
Sat Dec 08, 2018 1:20 pm

STOCKS
EMERGING MARKETS STOCK FUND
GROWTH STOCK FUND
MID-CAP GROWTH FUND
MID-CAP VALUE FUND
NEUBERGER BERMAN GENESIS INS
T ROWE PRICE INTL VALUE EQUITY
VALUE FUND
VANGUARD DVLPD MRKTS IND ADM
VANGUARD REIT INDEX ADMIRAL
VANGUARD SMALL CAP INDEX, ADM
VANGUARD TOT STK MKT IND ADM


BONDS
PIMCO TOTAL RETURN INSTL
VANGUARD INF PROTECTED SEC
MONEY MARKET/ STABLE VALUE
TRP STABLE VALUE FUND - N
Can you post the expense ratios as well?

As others have said, this is not a top priority--you can leave it for a few months. You can attend to healthcare and social security first. But I feel part of why you're overwhelmed is you don't know what's the right thing to do regarding investments, and sorting that out might help.

reeko0530
Posts: 49
Joined: Thu Dec 06, 2018 7:34 pm

Re: Retiring in 2 weeks, Traditional 401k

Post by reeko0530 » Sat Dec 08, 2018 1:52 pm

Delete
Last edited by reeko0530 on Sat Dec 08, 2018 1:58 pm, edited 2 times in total.

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ruralavalon
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Location: Illinois

Re: Retiring in 2 weeks, Traditional 401k

Post by ruralavalon » Sat Dec 08, 2018 1:54 pm

reeko0530 wrote:
Sat Dec 08, 2018 1:20 pm

STOCKS
EMERGING MARKETS STOCK FUND
GROWTH STOCK FUND
MID-CAP GROWTH FUND
MID-CAP VALUE FUND
NEUBERGER BERMAN GENESIS INS
T ROWE PRICE INTL VALUE EQUITY
VALUE FUND
VANGUARD DVLPD MRKTS IND ADM
VANGUARD REIT INDEX ADMIRAL
VANGUARD SMALL CAP INDEX, ADM
VANGUARD TOT STK MKT IND ADM


BONDS
PIMCO TOTAL RETURN INSTL
VANGUARD INF PROTECTED SEC
MONEY MARKET/ STABLE VALUE
TRP STABLE VALUE FUND - N
Are these the other funds offered in his 401k?

What are the ticker symbols and expense ratios for these funds as offered in his 401k?

You can simply add this to your post using the edit button, (the pencil icon near the upper right corner of your post).

As mentioned this is not the top priority at this point.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

jimishooch
Posts: 205
Joined: Tue Nov 11, 2014 2:28 pm

Re: Retiring in 2 weeks, Traditional 401k

Post by jimishooch » Sat Dec 08, 2018 1:55 pm

might want to check out a reverse mortgage...

reeko0530
Posts: 49
Joined: Thu Dec 06, 2018 7:34 pm

Re: Retiring in 2 weeks, Traditional 401k

Post by reeko0530 » Sat Dec 08, 2018 1:55 pm

ruralavalon wrote:
Sat Dec 08, 2018 1:54 pm
reeko0530 wrote:
Sat Dec 08, 2018 1:20 pm

STOCKS
EMERGING MARKETS STOCK FUND
GROWTH STOCK FUND
MID-CAP GROWTH FUND
MID-CAP VALUE FUND
NEUBERGER BERMAN GENESIS INS
T ROWE PRICE INTL VALUE EQUITY
VALUE FUND
VANGUARD DVLPD MRKTS IND ADM
VANGUARD REIT INDEX ADMIRAL
VANGUARD SMALL CAP INDEX, ADM
VANGUARD TOT STK MKT IND ADM


BONDS
PIMCO TOTAL RETURN INSTL
VANGUARD INF PROTECTED SEC
MONEY MARKET/ STABLE VALUE
TRP STABLE VALUE FUND - N
Are these the other funds offered in his 401k?

What are the ticker symbols and expense ratios for these funds as offered in his 401k?

You can simply add this to your post using the edit button, (the pencil icon near the upper right corner of your post).

As mentioned this is not the top priority at this point.
Yes, if I want to custom allocate, these are what's available in the 401k as choices

reeko0530
Posts: 49
Joined: Thu Dec 06, 2018 7:34 pm

Re: Retiring in 2 weeks, Traditional 401k

Post by reeko0530 » Sat Dec 08, 2018 2:04 pm

Ben Mathew wrote:
Sat Dec 08, 2018 1:42 pm
reeko0530 wrote:
Sat Dec 08, 2018 1:20 pm

STOCKS
EMERGING MARKETS STOCK FUND
GROWTH STOCK FUND
MID-CAP GROWTH FUND
MID-CAP VALUE FUND
NEUBERGER BERMAN GENESIS INS
T ROWE PRICE INTL VALUE EQUITY
VALUE FUND
VANGUARD DVLPD MRKTS IND ADM
VANGUARD REIT INDEX ADMIRAL
VANGUARD SMALL CAP INDEX, ADM
VANGUARD TOT STK MKT IND ADM


BONDS
PIMCO TOTAL RETURN INSTL
VANGUARD INF PROTECTED SEC
MONEY MARKET/ STABLE VALUE
TRP STABLE VALUE FUND - N
Can you post the expense ratios as well?

As others have said, this is not a top priority--you can leave it for a few months. You can attend to healthcare and social security first. But I feel part of why you're overwhelmed is you don't know what's the right thing to do regarding investments, and sorting that out might help.
I can see his own current expense rations i believe and all his percentages since inception? I dont know if I should post that information though

reeko0530
Posts: 49
Joined: Thu Dec 06, 2018 7:34 pm

Re: Retiring in 2 weeks, Traditional 401k

Post by reeko0530 » Sat Dec 08, 2018 2:06 pm

fixing

reeko0530
Posts: 49
Joined: Thu Dec 06, 2018 7:34 pm

Re: Retiring in 2 weeks, Traditional 401k

Post by reeko0530 » Sat Dec 08, 2018 2:10 pm

ruralavalon wrote:
Sat Dec 08, 2018 1:54 pm
reeko0530 wrote:
Sat Dec 08, 2018 1:20 pm

STOCKS
EMERGING MARKETS STOCK FUND
GROWTH STOCK FUND
MID-CAP GROWTH FUND
MID-CAP VALUE FUND
NEUBERGER BERMAN GENESIS INS
T ROWE PRICE INTL VALUE EQUITY
VALUE FUND
VANGUARD DVLPD MRKTS IND ADM
VANGUARD REIT INDEX ADMIRAL
VANGUARD SMALL CAP INDEX, ADM
VANGUARD TOT STK MKT IND ADM


BONDS
PIMCO TOTAL RETURN INSTL
VANGUARD INF PROTECTED SEC
MONEY MARKET/ STABLE VALUE
TRP STABLE VALUE FUND - N
Are these the other funds offered in his 401k?

What are the ticker symbols and expense ratios for these funds as offered in his 401k?

You can simply add this to your post using the edit button, (the pencil icon near the upper right corner of your post).

As mentioned this is not the top priority at this point.
Are these safe to post, should I remove this? If so please do not quote.



STOCKS
- EMERGING MARKETS STOCK FUND
PRMSX + 1 2
Redemption fee: 2.00% - 90 days or less
-4.28%
3 Month : -4.28%
YTD : -10.09%
1 Year : -3.44%
3 Year : 13.42%
5 Year : 5.53%
10 Year : 5.65%
Since Inception : 7.65%
03/31/1995
Gross Expense Ratio : 1.23%
Net Expense Ratio : 1.23%
Limitation : N/A
- GROWTH STOCK FUND
PRGFX + 2 4.86%
3 Month : 4.86%
YTD : 15.28%
1 Year : 22.25%
3 Year : 19.27%
5 Year : 16.11%
10 Year : 14.74%
Since Inception : 11.10%
04/11/1950
Gross Expense Ratio : 0.67%
Net Expense Ratio : 0.67%
Limitation : N/A
- MID-CAP GROWTH FUND
RPMGX + 2 7.42%
3 Month : 7.42%
YTD : 12.79%
1 Year : 17.79%
3 Year : 16.33%
5 Year : 14.25%
10 Year : 14.49%
Since Inception : 13.92%
06/30/1992
Gross Expense Ratio : 0.76%
Net Expense Ratio : 0.76%
Limitation : N/A
- MID-CAP VALUE FUND
TRMCX + 2 1.24%
3 Month : 1.24%
YTD : 4.57%
1 Year : 9.97%
3 Year : 14.42%
5 Year : 11.10%
10 Year : 11.71%
Since Inception : 11.57%
06/28/1996
Gross Expense Ratio : 0.79%
Net Expense Ratio : 0.79%
Limitation : N/A
- NEUBERGER BERMAN GENESIS INS
NBGIX 2 6.97%
3 Month : 6.97%
YTD : 11.88%
1 Year : 18.29%
3 Year : 16.41%
5 Year : 10.94%
10 Year : 10.69%
Since Inception : 12.02%
07/01/1999
Gross Expense Ratio : 0.85%
Net Expense Ratio : 0.85%
Limitation : N/A
- T ROWE PRICE INTL VALUE EQUITY
TRIGX + 1 2
Redemption fee: 2.00% - 90 days or less
0.42%
3 Month : 0.42%
YTD : -4.89%
1 Year : -3.57%
3 Year : 5.69%
5 Year : 2.53%
10 Year : 4.54%
Since Inception : 4.97%
12/21/1998
Gross Expense Ratio : 0.83%
Net Expense Ratio : 0.83%
Limitation : N/A
- VALUE FUND
TRVLX + 2 3.40%
3 Month : 3.40%
YTD : 1.15%
1 Year : 7.24%
3 Year : 12.85%
5 Year : 10.46%
10 Year : 10.77%
Since Inception : 10.94%
09/30/1994
Gross Expense Ratio : 0.81%
Net Expense Ratio : 0.80%
Limitation : Contractual
Expires
04/30/2019
- VANGUARD DVLPD MRKTS IND ADM
VTMGX + 2 1.09%
3 Month : 1.09%
YTD : -1.60%
1 Year : 2.78%
3 Year : 9.82%
5 Year : 4.84%
10 Year : 5.51%
Since Inception : 4.29%
08/17/1999
Gross Expense Ratio : 0.07%
Net Expense Ratio : 0.07%
Limitation : N/A
- VANGUARD REIT INDEX ADMIRAL
VGSLX + 2 0.52%
3 Month : 0.52%
YTD : 0.52%
1 Year : 1.92%
3 Year : 7.00%
5 Year : 8.68%
10 Year : 7.50%
Since Inception : 10.25%
11/12/2001
Gross Expense Ratio : 0.12%
Net Expense Ratio : 0.12%
Limitation : N/A
- VANGUARD SMALL CAP INDEX, ADM
VSMAX + 2 4.77%
3 Month : 4.77%
YTD : 11.04%
1 Year : 16.70%
3 Year : 16.34%
5 Year : 11.48%
10 Year : 12.36%
Since Inception : 9.64%
11/13/2000
Gross Expense Ratio : 0.05%
Net Expense Ratio : 0.05%
Limitation : N/A
- VANGUARD TOT STK MKT IND ADM
VTSAX + 2 7.09%
3 Month : 7.09%
YTD : 10.61%
1 Year : 17.62%
3 Year : 17.07%
5 Year : 13.44%
10 Year : 12.08%
Since Inception : 7.01%
11/13/2000
Gross Expense Ratio : 0.04%
Net Expense Ratio : 0.04%
Limitation : N/A
BONDS
- PIMCO TOTAL RETURN INSTL
PTTRX 2 6 0.09%
3 Month : 0.09%
YTD : -1.62%
1 Year : -1.51%
3 Year : 2.15%
5 Year : 2.27%
10 Year : 5.08%
Since Inception : 7.09%
05/11/1987
Gross Expense Ratio : 0.55%
Net Expense Ratio : 0.55%
Limitation : N/A
- VANGUARD INF PROTECTED SEC
VAIPX + 2 -0.79%
3 Month : -0.79%
YTD : -0.90%
1 Year : 0.28%
3 Year : 1.91%
5 Year : 1.29%
10 Year : 3.16%
Since Inception : 3.42%
06/10/2005
Gross Expense Ratio : 0.10%
Net Expense Ratio : 0.10%
Limitation : N/A
MONEY MARKET / STABLE VALUE
- TRP STABLE VALUE FUND - N
SVF-N 2 3 4 5 0.55%
3 Month : 0.55%
YTD : 1.60%
1 Year : 2.12%
3 Year : 1.99%
5 Year : 2.02%
10 Year : 2.70%
Since Inception : 4.93%
09/12/1988
Gross Expense Ratio : 0.20%
Net Expense Ratio : 0.20%
Limitation : N/A

reeko0530
Posts: 49
Joined: Thu Dec 06, 2018 7:34 pm

Re: Retiring in 2 weeks, Traditional 401k

Post by reeko0530 » Sat Dec 08, 2018 2:17 pm

ruralavalon wrote:
Sat Dec 08, 2018 1:22 pm
reeko0530 wrote:
Sat Dec 08, 2018 12:54 pm
Ben Mathew wrote:
Fri Dec 07, 2018 1:32 pm
reeko0530 wrote:
Fri Dec 07, 2018 2:37 am
If I want to better insulate his 401k against lets say a 60-70% correction which is rumored to occur within the next year or two, would 20 percent in stocks and 80 percent in bonds insulate them the most? But then I read also that if the fed rate raises, bonds go down so its like a viscous circle with everything i am reading. I am not sure if i should change it to 40/60, 30/70, or 20/80. I know I want to keep some in the stocks to hopefully fight inflation.
If they can tolerate some risk, I would strongly encourage including stocks. Let's say you start with 40% now and glide down to 20% at age 100. Assuming 1.5% real bond return and 5% real stock return, they could draw $12,000/year (today's dollars) and be left with $11,862 at age 100. (Here's the spreadsheet I used to calculate this.) The odds that this plan will work out is good. But if returns are lower than expected and the money runs out early, they will need to dip into home equity. The value of their home would determine how much of a cushion they have to tolerate portfolio underperformance.

Once you pick the stock and bond percentages (asset allocation), the only thing left to do is stick with the plan and not second guess yourself or the markets. There's always something going on--market corrections, Fed does something with interest rates, trade wars, real wars, and so on. Neither you nor your parents need to think about any of this stuff. Financial markets are continually listening to news and correcting prices (by the nanosecond!), so there is no need for you to be involved. Your only job is to stick to the plan. Rebalance back to your planned asset allocation once a year or so. If the portfolio underperforms, try to cut costs. There is really nothing else to do. Trying to parse the news and time the market does more harm than good. This is the one area in life where slacking off and not paying attention is good for you.
Then the next question is with T Rowe Price, which bond and stocks do I then shift into? If I stop with the Target 2020, I must make custom selections. I have never chosen stocks so if I chose 30% stocks, do i put 20 percent in US and 10 in foreign? Any good solid stocks to choose from on the list from T Rowe? Thanks for any help. This has been so informative and I have probably spent about 12 hours today alone reading about retirement and stocks. There is just so much to do and learn, and then the difficulty is I am a third party trying to do this for someone else.
I would move the money to a traditional IRA at Vanguard to simplify everything and make it easy to invest in low cost Vanguard index funds. You can create a great portfolio using just three funds (see three fund portfolio on the Bogleheads Wiki):

Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)
Vanguard Total International Stock Index Fund Admiral Shares (VTIAX)
Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX)

Let's say you decide on 40% stock : 60% bonds. Of the stock portion, you could go with roughly half in international if you want to reflect global market cap. Some like to tilt towards the U.S. more. You don't have to get this exactly right. Let's say you decide to allocate your stocks to 2/3 US and 1/3 international. That means 27% of your portfolio goes into US and 13% into international. So you have:

Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX): 13%
Vanguard Total International Stock Index Fund Admiral Shares (VTIAX): 27%
Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX): 60%

It's really as easy as that.
The fear of making a mistake and then being responsible for my parents possible demise is a tough burden.
Try to approach it differently. Risks are a part of life. If you do your best to help your parents, then you should be at peace with yourself, even if the market tanks. Ajit Jain of Berkshire Hathaway said that one of the things he liked about working for Warren Buffett is that Buffett is really good about decoupling decisions and their outcomes. If Ajit made a good decision, but the outcome was bad because of bad luck, Buffett was alright with it. It's hard to achieve Buffett's level of rationality and equanimity, but it's something we can all aspire to.
Thanks. This is gonna sound bad. So all your suggestions about moving to a traditional Ira, is that staying with t Rowe? And then within that choosing the vanguard options? I think I can choose those even with the 401k as well? Sorry still a beginner here.
The fund he is currently using in his 401k, T. Rowe Price Retirement 2050 Fund (TRRMX), has an expense ratio of 0.72%, which is high in my opinion.

We don't know what other funds are offered in the 401k plan. If the other funds are also higher expense it will be a good idea to rollover the 401k to an IRA at a low cost provider like Vanguard or Fidelity.

In my opinion the 1) rollover decision, 2) the fund firm to use, and 3) the mutual funds to use, are not the top priority for decision at this point, with just 3 weeks till he retires at year end.

In my opinion the more urgent priorities are:
1) buying health insurance for her;
2) getting a solid number for their retirement expenses; and
3) getting the exact number for their Social Security benefits.
He is not using the 2050 fund, its the 2020 fund

livesoft
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Re: Retiring in 2 weeks, Traditional 401k

Post by livesoft » Sat Dec 08, 2018 2:21 pm

After reading through many of the posts in this thread, I would like to recommend that the OP get a book from the library and read it. They should have the parents read it as well. The book is Jane Bryant Quinn's "How to Make Your Money Last." The book will give an excellent overview of all the things discussed in this thread and more. Good luck!
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ruralavalon
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Location: Illinois

Re: Retiring in 2 weeks, Traditional 401k

Post by ruralavalon » Sat Dec 08, 2018 2:26 pm

In my opinion the priorities for decision should probably in this order:
1) buying health insurance for her;
2) getting a solid number for their retirement expenses;
3) getting the exact number for their Social Security benefits;
4) deciding whether to use a SPIA to fill any gap between expenses and benefits;
5) deciding whether to rollover from his 401k to an IRA;
6) if moving to an IRA, deciding which fund firm to use; and
7) deciding which mutual funds to use.

reeko0530 wrote:
Sat Dec 08, 2018 2:17 pm
He is not using the 2050 fund, its the 2020 fund
T. Rowe Price Retirement 2020 Fund (TRRBX) has an expense ratio of 0.61% which is still high in my opinion.

Just for future reference, in my opinion these are the funds to consider using in his 401k if he decides to stay in the 401k instead of using an IRA:
1) VANGUARD TOT STK MKT IND ADM (VTSAX) Net Expense Ratio : 0.04%;
2) VANGUARD DVLPD MRKTS IND ADM (VTMGX) Net Expense Ratio : 0.07%; and
3) PIMCO TOTAL RETURN INSTL (PTTRX) Net Expense Ratio : 0.55%.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

reeko0530
Posts: 49
Joined: Thu Dec 06, 2018 7:34 pm

Re: Retiring in 2 weeks, Traditional 401k

Post by reeko0530 » Sat Dec 08, 2018 2:30 pm

ruralavalon wrote:
Sat Dec 08, 2018 2:26 pm
In my opinion the priorities for decision should probably in this order:
1) buying health insurance for her;
2) getting a solid number for their retirement expenses;
3) getting the exact number for their Social Security benefits;
4) deciding whether to use a SPIA to fill any gap between expenses and benefits;
5) deciding whether to rollover from his 401k to an IRA;
6) if moving to an IRA, deciding which fund firm to use; and
7) deciding which mutual funds to use.

He is not using the 2050 fund, its the 2020 fund
T. Rowe Price Retirement 2020 Fund (TRRBX) has an expense ratio of 0.61% which is still high in my opinion.

Just for future reference, in my opinion these are the funds to consider using in his 401k if he decides to stay in the 401k instead of using an IRA:
1) VANGUARD TOT STK MKT IND ADM (VTSAX) Net Expense Ratio : 0.04%;
2) VANGUARD DVLPD MRKTS IND ADM (VTMGX) Net Expense Ratio : 0.07%; and
3) PIMCO TOTAL RETURN INSTL (PTTRX) Net Expense Ratio : 0.55%.
what would good percentages be? I was thinking 40/60. So maybe 27 in he vtsax, 13 vtmgx and 60 in the pttrx? So nothing in the money market ?

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ruralavalon
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Re: Retiring in 2 weeks, Traditional 401k

Post by ruralavalon » Sat Dec 08, 2018 2:49 pm

reeko0530 wrote:
Sat Dec 08, 2018 2:30 pm
ruralavalon wrote:
Sat Dec 08, 2018 2:26 pm
In my opinion the priorities for decision should probably in this order:
1) buying health insurance for her;
2) getting a solid number for their retirement expenses;
3) getting the exact number for their Social Security benefits;
4) deciding whether to use a SPIA to fill any gap between expenses and benefits;
5) deciding whether to rollover from his 401k to an IRA;
6) if moving to an IRA, deciding which fund firm to use; and
7) deciding which mutual funds to use.

He is not using the 2050 fund, its the 2020 fund
T. Rowe Price Retirement 2020 Fund (TRRBX) has an expense ratio of 0.61% which is still high in my opinion.

Just for future reference, in my opinion these are the funds to consider using in his 401k if he decides to stay in the 401k instead of using an IRA:
1) VANGUARD TOT STK MKT IND ADM (VTSAX) Net Expense Ratio : 0.04%;
2) VANGUARD DVLPD MRKTS IND ADM (VTMGX) Net Expense Ratio : 0.07%; and
3) PIMCO TOTAL RETURN INSTL (PTTRX) Net Expense Ratio : 0.55%.
what would good percentages be? I was thinking 40/60. So maybe 27 in he vtsax, 13 vtmgx and 60 in the pttrx? So nothing in the money market ?
Thats the last decision they need to make. In my opinion it is not really possible to make the decision now as it so heavily depnds on the size of any gap between expenses and benefits, and whether or not they decide to use a Single Premium Immediate Annuity (SPIA) to fill any gap,
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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Earl Lemongrab
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Re: Retiring in 2 weeks, Traditional 401k

Post by Earl Lemongrab » Sat Dec 08, 2018 3:12 pm

GlacierRunner wrote:
Fri Dec 07, 2018 6:35 pm
A few years ago, the rule was that you couldn't access ACA plans when your COBRA plan ran out; you had to wait until open enrollment, but that may have been fixed.
I don't think that was ever true, but it certainly isn't now. Losing COBRA because it has run out qualifies you for a special enrollment period. Voluntarily ending COBRA, on the other hand, means you have to wait for open enrollment.

https://www.healthcare.gov/unemployed/cobra-coverage/
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

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Re: Retiring in 2 weeks, Traditional 401k

Post by reeko0530 » Sat Dec 08, 2018 4:02 pm

Earl Lemongrab wrote:
Sat Dec 08, 2018 3:12 pm
GlacierRunner wrote:
Fri Dec 07, 2018 6:35 pm
A few years ago, the rule was that you couldn't access ACA plans when your COBRA plan ran out; you had to wait until open enrollment, but that may have been fixed.
I don't think that was ever true, but it certainly isn't now. Losing COBRA because it has run out qualifies you for a special enrollment period. Voluntarily ending COBRA, on the other hand, means you have to wait for open enrollment.

https://www.healthcare.gov/unemployed/cobra-coverage/
Well I just quoted ACA out and the coverages for a person who visits an ER frequently is terrible compared to the Cobra. In the end, the cobra will end up being much cheaper and the deductible is lower, ER and Hospital visit copay is lower and her prescription costs will be cheaper. Unfortunately with an immune disorder, there is frequent hospital, ER and doctor visits and around 15-20 prescriptions. We may revisit ACA once we get a better grasp on what their total income is and options for her health treatment.

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Re: Retiring in 2 weeks, Traditional 401k

Post by reeko0530 » Sat Dec 08, 2018 4:04 pm

Thank you for everyones support here. I just wanted to be sure I said thank you. I am extremely thankful to each and everyone of you who has taken the time to provide your help and knowledge for my family. I hope you all have a terrific holiday and I will be sure to pass along help to others in areas where I am more proficient :).

reeko0530
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Re: Retiring in 2 weeks, Traditional 401k

Post by reeko0530 » Sat Dec 08, 2018 4:05 pm

ruralavalon wrote:
Sat Dec 08, 2018 2:49 pm
reeko0530 wrote:
Sat Dec 08, 2018 2:30 pm
ruralavalon wrote:
Sat Dec 08, 2018 2:26 pm
In my opinion the priorities for decision should probably in this order:
1) buying health insurance for her;
2) getting a solid number for their retirement expenses;
3) getting the exact number for their Social Security benefits;
4) deciding whether to use a SPIA to fill any gap between expenses and benefits;
5) deciding whether to rollover from his 401k to an IRA;
6) if moving to an IRA, deciding which fund firm to use; and
7) deciding which mutual funds to use.

He is not using the 2050 fund, its the 2020 fund
T. Rowe Price Retirement 2020 Fund (TRRBX) has an expense ratio of 0.61% which is still high in my opinion.

Just for future reference, in my opinion these are the funds to consider using in his 401k if he decides to stay in the 401k instead of using an IRA:
1) VANGUARD TOT STK MKT IND ADM (VTSAX) Net Expense Ratio : 0.04%;
2) VANGUARD DVLPD MRKTS IND ADM (VTMGX) Net Expense Ratio : 0.07%; and
3) PIMCO TOTAL RETURN INSTL (PTTRX) Net Expense Ratio : 0.55%.
what would good percentages be? I was thinking 40/60. So maybe 27 in he vtsax, 13 vtmgx and 60 in the pttrx? So nothing in the money market ?
Thats the last decision they need to make. In my opinion it is not really possible to make the decision now as it so heavily depnds on the size of any gap between expenses and benefits, and whether or not they decide to use a Single Premium Immediate Annuity (SPIA) to fill any gap,
They will not use the SPIA right now, maybe will look into that once I become better informed.

reeko0530
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Re: Retiring in 2 weeks, Traditional 401k

Post by reeko0530 » Sat Dec 08, 2018 4:06 pm

I did receive further information. The monthly SS income will be substantially more which makes me relieved. I signed up online and saw he should be receiving 1900 a month. That will provide some much needed cushion for them. He was estimating 1200 as he was thinking it was like a paycheck where he only would get a percent of the check.

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teen persuasion
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Re: Retiring in 2 weeks, Traditional 401k

Post by teen persuasion » Sat Dec 08, 2018 4:44 pm

Is that his amount at FRA (full retirement age), or his reduced amount if he files early? Did you also check on mom's SS benefit, both at FRA, and early at age 62? Then compare those to her spousal SS, based on his FRA amount * .5 and then reduced for claiming early.

reeko0530
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Re: Retiring in 2 weeks, Traditional 401k

Post by reeko0530 » Sat Dec 08, 2018 4:47 pm

teen persuasion wrote:
Sat Dec 08, 2018 4:44 pm
Is that his amount at FRA (full retirement age), or his reduced amount if he files early? Did you also check on mom's SS benefit, both at FRA, and early at age 62? Then compare those to her spousal SS, based on his FRA amount * .5 and then reduced for claiming early.
That is what he gets when he retires this january. He is not waiting until his FRA and that is not an option. He is aware it is a reduced amount, and there is no talking him into waiting any longer. I have not checked my mothers information yet as I have been busy with so many other things. Can you check what she will get prior to her actually turning 62? The ACA website was a chore to dig up so much information, probably much easier if you are doing it for yourself.

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teen persuasion
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Re: Retiring in 2 weeks, Traditional 401k

Post by teen persuasion » Sat Dec 08, 2018 4:52 pm

Even if he won't wait to claim, the FRA figure is important to know, because it is the basis for the calculation of her spousal SS. Also remember that Medicare will be deducted from his check.

You can download a program to calculate her SS, but you have to input her earnings history, I believe: https://www.ssa.gov/OACT/anypia/anypia.html

There is another calculator at the SSA site, but she would need to create a SS account to access it officially (not you). https://www.ssa.gov/benefits/retireme ... ator.html

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Re: Retiring in 2 weeks, Traditional 401k

Post by Ben Mathew » Sat Dec 08, 2018 5:16 pm

You have some good 401K fund options. I would go with:

US STOCK: Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) Net Expense Ratio: 0.04%
INTERNATIONAL STOCK: Vanguard Developed Markets Index Fund Admiral Shares (VTMGX) Net Expense Ratio: 0.07%
BONDS: Vanguard Inflation-Protected Securities Fund Admiral Shares (VAIPX) Net Expense Ratio: 0.10%

All three are cheap (low expense ratios). Main deviations from the standard 3 fund portfolio recommendations are

(1) International stock is restricted to developed (no exposure to developing countries like China and India). This is not ideal, but I can live with it.

(2) Bonds are invested in inflation-protected US bonds, not total bond market. You might sacrifice some return, but you gain inflation protection. I'm in favor of inflation indexing, so I actually view this as a plus.

You can certainly choose to stay in the T. Rowe Price 401K with these funds. There is no immediate need to do a rollover to Vanguard. You can revisit the question down the line. The top priorities right now are:

(1) Purchase health care

(2) Find out details about social security and figure out whether it's better to postpone benefits. Usually the math favors waiting.

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Re: Retiring in 2 weeks, Traditional 401k

Post by Ben Mathew » Sat Dec 08, 2018 5:52 pm

reeko0530 wrote:
Sat Dec 08, 2018 4:47 pm
teen persuasion wrote:
Sat Dec 08, 2018 4:44 pm
Is that his amount at FRA (full retirement age), or his reduced amount if he files early? Did you also check on mom's SS benefit, both at FRA, and early at age 62? Then compare those to her spousal SS, based on his FRA amount * .5 and then reduced for claiming early.
That is what he gets when he retires this january. He is not waiting until his FRA and that is not an option. He is aware it is a reduced amount, and there is no talking him into waiting any longer.
Is he assuming that waiting until FRA will require him to work longer? Make it clear that the option simply involves living off the 401K for a couple years so he can get higher benefits later for life. No sure why he would be dead set against that.

But if your parents feel that they are in poor health and have below average life expectancy, that might be a reason to claim benefits now rather than wait. But it would still be worth getting hold of the numbers and doing an analysis.

Katietsu
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Re: Retiring in 2 weeks, Traditional 401k

Post by Katietsu » Sat Dec 08, 2018 6:48 pm

More comments on health insurance:
-Does your Dad need a Medigap policy? Or is he signing up for a Medicare Advantage plan? I assume he has no retiree health insurance - is this correct?

-Know that the listed deductibles and copays do not apply if your Mom qualifies for cost sharing subsidies (income below 250% of federal poverty level.) So the ACA plan might say the person is going to be responsible for $5000 of the bills, but for those lower income enrollees, they might only be responsible for $250.

hawkfan55
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Re: Retiring in 2 weeks, Traditional 401k

Post by hawkfan55 » Sat Dec 08, 2018 8:02 pm

After reading through many of the posts in this thread, I would like to recommend that the OP get a book from the library and read it. They should have the parents read it as well. The book is Jane Bryant Quinn's "How to Make Your Money Last." The book will give an excellent overview of all the things discussed in this thread and more. Good luck!
I agree with Livesoft… great book.

Getting Health Care Insurance, Medigap or Medicare Advantage would be first priority.

I also think moving the 401k to a Vanguard Rollover IRA (let Vanguard handle the Trustee to Trustee Transfer paperwork and process) using Total Stock Market, Total International Stock Mkt, Short Term Bond Index and Total Bond Index funds makes sense and would lower costs. A conservative 30/70 Stock/Bond asset allocation would be appropriate.

A Single Premium Immediate Annuity might be beneficial at some point. Do NOT get a Variable Annuity.
Forum Library of Investing Advice: https://www.bogleheads.org/wiki/Main_Page

reeko0530
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Re: Retiring in 2 weeks, Traditional 401k

Post by reeko0530 » Sat Dec 08, 2018 10:35 pm

Katietsu wrote:
Sat Dec 08, 2018 6:48 pm
More comments on health insurance:
-Does your Dad need a Medigap policy? Or is he signing up for a Medicare Advantage plan? I assume he has no retiree health insurance - is this correct?

-Know that the listed deductibles and copays do not apply if your Mom qualifies for cost sharing subsidies (income below 250% of federal poverty level.) So the ACA plan might say the person is going to be responsible for $5000 of the bills, but for those lower income enrollees, they might only be responsible for $250.
Not gonna lie, this is overwhelming. I have no idea what any of that is. All we did was fill out Medicare papers and once he is on retirement, he said he can than get Medicare b. That's all I know about health insurance.

reeko0530
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Re: Retiring in 2 weeks, Traditional 401k

Post by reeko0530 » Sat Dec 08, 2018 10:52 pm

Who can I pay to help me with this? What should I look up? This is just too much for me and I will pay for them to get the proper guidance.

Katietsu
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Re: Retiring in 2 weeks, Traditional 401k

Post by Katietsu » Sat Dec 08, 2018 10:57 pm

Traditional Medicare only pays part of medical expenses without any out of pocket maximum. Therefore, most people purchase a medigap policy to go with it. A Medicare Advantage plan is an alternative type of Medicare plan that does have an out of pocket maximum. Start by reading this:
https://www.ssa.gov/pubs/EN-05-10043.pdf

You can usually get help from a SHIP counselor. This is a free service. You would find this person at the local Senior Center, Agency on Aging, Department of Aging, or similar organization. This is location dependent so you need to find someone in your Dad’s area.

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Re: Retiring in 2 weeks, Traditional 401k

Post by Katietsu » Sat Dec 08, 2018 11:09 pm

reeko0530 wrote:
Sat Dec 08, 2018 10:52 pm
Who can I pay to help me with this? What should I look up? This is just too much for me and I will pay for them to get the proper guidance.
I know we are throwing a lot at you. But much of it does not need done right away. And many people just wing it like your parents. It is just that people on this forum are the type who plan and worry about optimizing everything.

See the posts where the priorities are listed.

It sounds like your parents have Medicare and some type of workplace insurance in place for now. Find out who in your parent’s area can help with the other Medicare decisions. See my previous post for the types of places to look. Or post the location of your parents here and someone here can point you in the right direction.

Find out for sure, how long the Cobra type insurance will last. You will have that amount of time to work on alternative insurance for your Mom.

There is nothing wrong with your Dad’s retirement money as it is. Do not worry about it right now. Right now, just take a chunk of it for 3-6 months of expenses and put it in a safe savings account. You could also consider moving a couple years worth into the money market within the 401k while you decide on a longer term plan.

I hate to throw a new wrinkle into this while you are overwhelmed, but could your mother be considered disabled?

reeko0530
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Re: Retiring in 2 weeks, Traditional 401k

Post by reeko0530 » Sun Dec 09, 2018 12:00 am

Katietsu wrote:
Sat Dec 08, 2018 11:09 pm
reeko0530 wrote:
Sat Dec 08, 2018 10:52 pm
Who can I pay to help me with this? What should I look up? This is just too much for me and I will pay for them to get the proper guidance.
I know we are throwing a lot at you. But much of it does not need done right away. And many people just wing it like your parents. It is just that people on this forum are the type who plan and worry about optimizing everything.

See the posts where the priorities are listed.

It sounds like your parents have Medicare and some type of workplace insurance in place for now. Find out who in your parent’s area can help with the other Medicare decisions. See my previous post for the types of places to look. Or post the location of your parents here and someone here can point you in the right direction.

Find out for sure, how long the Cobra type insurance will last. You will have that amount of time to work on alternative insurance for your Mom.

There is nothing wrong with your Dad’s retirement money as it is. Do not worry about it right now. Right now, just take a chunk of it for 3-6 months of expenses and put it in a safe savings account. You could also consider moving a couple years worth into the money market within the 401k while you decide on a longer term plan.

I hate to throw a new wrinkle into this while you are overwhelmed, but could your mother be considered disabled?
Yes, she could be. We need to hire an attorney for that. My parents never wanted to before because of a pride thing. My dad never wanted to feel like he was dependent on anyone or anything. It's the old school hard nosed European in him.

reeko0530
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Re: Retiring in 2 weeks, Traditional 401k

Post by reeko0530 » Sun Dec 09, 2018 2:27 am

Ben Mathew wrote:
Sat Dec 08, 2018 5:16 pm
You have some good 401K fund options. I would go with:

US STOCK: Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) Net Expense Ratio: 0.04%
INTERNATIONAL STOCK: Vanguard Developed Markets Index Fund Admiral Shares (VTMGX) Net Expense Ratio: 0.07%
BONDS: Vanguard Inflation-Protected Securities Fund Admiral Shares (VAIPX) Net Expense Ratio: 0.10%

All three are cheap (low expense ratios). Main deviations from the standard 3 fund portfolio recommendations are

(1) International stock is restricted to developed (no exposure to developing countries like China and India). This is not ideal, but I can live with it.

(2) Bonds are invested in inflation-protected US bonds, not total bond market. You might sacrifice some return, but you gain inflation protection. I'm in favor of inflation indexing, so I actually view this as a plus.

You can certainly choose to stay in the T. Rowe Price 401K with these funds. There is no immediate need to do a rollover to Vanguard. You can revisit the question down the line. The top priorities right now are:

(1) Purchase health care

(2) Find out details about social security and figure out whether it's better to postpone benefits. Usually the math favors waiting.
OK, I plan on switching the total allocation to these three investments. Would we be better with a 40/60 stocks/bonds or 30/70? Then how do I split the stock percentage between us/foreign? Thanks

reeko0530
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Re: Retiring in 2 weeks, Traditional 401k

Post by reeko0530 » Sun Dec 09, 2018 2:42 am

Also, out of my choices for bonds, I have been advised by different members to choose different bonds. There are two choices, which is better and why? If I am investing 60% in bonds, should I do 30 and 30 in each bond?

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Re: Retiring in 2 weeks, Traditional 401k

Post by ColoRetiredGirl » Sun Dec 09, 2018 11:14 am

reeko0530 wrote:
Thu Dec 06, 2018 10:01 pm
billfromct wrote:
Thu Dec 06, 2018 9:51 pm
Your mom should get on to Obamacare. It will probably be less expensive then Cobra.

Also a general rule of thumb is to take 4% from one's retirement accounts. So with about $300k in a 401k or rollover IRA, $12k/year of IRA distributions should make his retirement savings last into his 90s. Taking out 5% or 6%/year from his 401k or rollover IRA will deplete that account sooner.

Your mother can apply for spousal SS benefits, which at age 62 may be 40% (just a guess) of his SS benefit. If she waits until her full retirement age (between 66 & 67) she will get about 50% of your father's SS payment.

bill
Thanks Bill, I will look into that as well. She turns 62 in a few months.
OP, as a side note: while I do not live paycheck to paycheck, I use YNAB (you need a budget) recommended by a few on this site to stay within my safe withdrawal rate. I have less stress and more peace on mind as I am a relatively new retiree. You can also use it to get out out the paycheck to paycheck cycle. It is life a charger and worth every penny!

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Re: Retiring in 2 weeks, Traditional 401k

Post by Ben Mathew » Sun Dec 09, 2018 11:33 am

reeko0530 wrote:
Sun Dec 09, 2018 2:27 am
Ben Mathew wrote:
Sat Dec 08, 2018 5:16 pm
You have some good 401K fund options. I would go with:

US STOCK: Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) Net Expense Ratio: 0.04%
INTERNATIONAL STOCK: Vanguard Developed Markets Index Fund Admiral Shares (VTMGX) Net Expense Ratio: 0.07%
BONDS: Vanguard Inflation-Protected Securities Fund Admiral Shares (VAIPX) Net Expense Ratio: 0.10%

All three are cheap (low expense ratios). Main deviations from the standard 3 fund portfolio recommendations are

(1) International stock is restricted to developed (no exposure to developing countries like China and India). This is not ideal, but I can live with it.

(2) Bonds are invested in inflation-protected US bonds, not total bond market. You might sacrifice some return, but you gain inflation protection. I'm in favor of inflation indexing, so I actually view this as a plus.

You can certainly choose to stay in the T. Rowe Price 401K with these funds. There is no immediate need to do a rollover to Vanguard. You can revisit the question down the line. The top priorities right now are:

(1) Purchase health care

(2) Find out details about social security and figure out whether it's better to postpone benefits. Usually the math favors waiting.
OK, I plan on switching the total allocation to these three investments. Would we be better with a 40/60 stocks/bonds or 30/70? Then how do I split the stock percentage between us/foreign? Thanks
The right allocation to stocks is the one that your parents can stick to. A good exercise to do is to imagine stocks drop by 50% next year. A 40/60 portfolio would drop 20% whereas a 30/70 portfolio would drop 15%. Can they tolerate a 20% drop? Will they stay put and stick to the plan? They won't freak out and sell all their stocks? If they think they can handle it, go with 40/60. If they can't tolerate a 20% drop, but will do better with a 15% drop, go with 30/70.

Bogleheads are not united on US versus international allocation. Some (and I fall into this camp) think roughly 50% reflects global marketcap and is good. Some prefer less for various reasons. Some don't include international at all. Since your international stock fund does not include developing countries, I'd go with a less than 50% anyway to stay with global market cap. If you want a number to prevent analysis paralysis, just go with 2/3 US and 1/3 international. Could be better, could be worse. So if you go with 40% stocks, you have

2/3 * 40% = 27% US Stocks
1/3 * 40% = 13% International Stocks

If instead you go with 30% stocks, you have

2/3 * 30% = 20% US Stocks
1/3 * 30% = 10% International Stocks

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Re: Retiring in 2 weeks, Traditional 401k

Post by Ben Mathew » Sun Dec 09, 2018 11:55 am

reeko0530 wrote:
Sun Dec 09, 2018 2:42 am
Also, out of my choices for bonds, I have been advised by different members to choose different bonds. There are two choices, which is better and why? If I am investing 60% in bonds, should I do 30 and 30 in each bond?
Vanguard Inflation-Protected Securities Fund Admiral Shares (VAIPX) Net Expense Ratio: 0.10%

- lower fees (.10%)
- safer (inflation indexed, US govt)

Pimco Total Return (PTTRX) Net Expense Ratio : 0.55%.

- actively managed
- higher fees (.55%)
- riskier (not inflation indexed, non US govt bonds including global)
- higher expected returns
- invests in a variety of bonds which makes it more like Vanguard Total Bond, which is the Boglehead bond fund recommendation for the three fund portfolio

You can certainly split your allocation 50-50 between VAIPX and PTTRX if you have trouble deciding. My main issue with PTTRX is the higher fees (.55%). If you go with PTTRX, I'd suggest that in a year or so when you've taken care of the other pressing issues like health insurance and social security, you consider rolling the 401K over to an IRA at Vanguard and purchasing Vanguard Total Bond (VBTLX) instead. The fees are much lower (.05%).

reeko0530
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Re: Retiring in 2 weeks, Traditional 401k

Post by reeko0530 » Sun Dec 09, 2018 12:12 pm

Ben Mathew wrote:
Sun Dec 09, 2018 11:33 am
reeko0530 wrote:
Sun Dec 09, 2018 2:27 am
Ben Mathew wrote:
Sat Dec 08, 2018 5:16 pm
You have some good 401K fund options. I would go with:

US STOCK: Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) Net Expense Ratio: 0.04%
INTERNATIONAL STOCK: Vanguard Developed Markets Index Fund Admiral Shares (VTMGX) Net Expense Ratio: 0.07%
BONDS: Vanguard Inflation-Protected Securities Fund Admiral Shares (VAIPX) Net Expense Ratio: 0.10%

All three are cheap (low expense ratios). Main deviations from the standard 3 fund portfolio recommendations are

(1) International stock is restricted to developed (no exposure to developing countries like China and India). This is not ideal, but I can live with it.

(2) Bonds are invested in inflation-protected US bonds, not total bond market. You might sacrifice some return, but you gain inflation protection. I'm in favor of inflation indexing, so I actually view this as a plus.

You can certainly choose to stay in the T. Rowe Price 401K with these funds. There is no immediate need to do a rollover to Vanguard. You can revisit the question down the line. The top priorities right now are:

(1) Purchase health care

(2) Find out details about social security and figure out whether it's better to postpone benefits. Usually the math favors waiting.
OK, I plan on switching the total allocation to these three investments. Would we be better with a 40/60 stocks/bonds or 30/70? Then how do I split the stock percentage between us/foreign? Thanks
The right allocation to stocks is the one that your parents can stick to. A good exercise to do is to imagine stocks drop by 50% next year. A 40/60 portfolio would drop 20% whereas a 30/70 portfolio would drop 15%. Can they tolerate a 20% drop? Will they stay put and stick to the plan? They won't freak out and sell all their stocks? If they think they can handle it, go with 40/60. If they can't tolerate a 20% drop, but will do better with a 15% drop, go with 30/70.

Bogleheads are not united on US versus international allocation. Some (and I fall into this camp) think roughly 50% reflects global marketcap and is good. Some prefer less for various reasons. Some don't include international at all. Since your international stock fund does not include developing countries, I'd go with a less than 50% anyway to stay with global market cap. If you want a number to prevent analysis paralysis, just go with 2/3 US and 1/3 international. Could be better, could be worse. So if you go with 40% stocks, you have

2/3 * 40% = 27% US Stocks
1/3 * 40% = 13% International Stocks

If instead you go with 30% stocks, you have

2/3 * 30% = 20% US Stocks
1/3 * 30% = 10% International Stocks
Thanks. I think we should be good with the 40/60 allocation or I may split the difference with 35/65. This way we still have some good opportunity for growth as well. I looked at the target 2020 and it appears it has an expense ratio or 0.61 currently. It says it charges us 6.10 per 1k dollars annually. These are the top 5 stocks that are included.

Top 5 Holdings as of 06-30-18 % Assets
T. Rowe Price New Income 16.67
T. Rowe Price Equity Index 500 16.56
T. Rowe Price Ltd Dur Infl Focus Bd 7.61
T. Rowe Price Growth Stock 6.01
T. Rowe Price Value 5.66

Total Number of Holdings 22
Turnover Ratio % 29.50

Fees and Expenses as of 10-01-18
Prospectus Net Expense Ratio 0.61 %
Total Annual Operating Exp per $1000 $ 6.10

Volatility And Risk
Low to Low/moderate

Best 3 Month Return Worst 3 Month Return
25.51% -29.39%
(Mar '09 - May '09) (Sep '08 - Nov '08)



With that said, we should be much better off switching to the vanguard 3 investment approach correct? If so, I will make the switch today. Thanks

Rudedog
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Re: Retiring in 2 weeks, Traditional 401k

Post by Rudedog » Sun Dec 09, 2018 12:19 pm

Illinois--You have (1) Federal COBRA law and (2) Illinois COBRA law. For an employee who is retiring, Illinois COBRA for the spouse may run longer than the Federal 18 months. You may want to talk to his company's HR people, or health insurance specialist.

Ben Mathew
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Re: Retiring in 2 weeks, Traditional 401k

Post by Ben Mathew » Sun Dec 09, 2018 2:27 pm

reeko0530 wrote:
Sun Dec 09, 2018 12:12 pm
Thanks. I think we should be good with the 40/60 allocation or I may split the difference with 35/65. This way we still have some good opportunity for growth as well. I looked at the target 2020 and it appears it has an expense ratio or 0.61 currently. It says it charges us 6.10 per 1k dollars annually. These are the top 5 stocks that are included.

Top 5 Holdings as of 06-30-18 % Assets
T. Rowe Price New Income 16.67
T. Rowe Price Equity Index 500 16.56
T. Rowe Price Ltd Dur Infl Focus Bd 7.61
T. Rowe Price Growth Stock 6.01
T. Rowe Price Value 5.66

Total Number of Holdings 22
Turnover Ratio % 29.50

Fees and Expenses as of 10-01-18
Prospectus Net Expense Ratio 0.61 %
Total Annual Operating Exp per $1000 $ 6.10

Volatility And Risk
Low to Low/moderate

Best 3 Month Return Worst 3 Month Return
25.51% -29.39%
(Mar '09 - May '09) (Sep '08 - Nov '08)



With that said, we should be much better off switching to the vanguard 3 investment approach correct? If so, I will make the switch today. Thanks
0.61 for the target fund is expensive, and it's not buying you anything. No reason not to switch to the low cost Vanguard 3 fund portfolio. Just so you're aware, the Target 2020 fund they're currently in is 36.1% US stock + 17.9% international stock = 54% stock. So switching to 40/60 or 35/65 will be more conservative than what your parents had so far. And that's fine--it's about taking on as much risk as they can handle and no more.

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onthecusp
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Re: Retiring in 2 weeks, Traditional 401k

Post by onthecusp » Sun Dec 09, 2018 7:32 pm

So much advice here, it must be overwhelming. I read these forums every day and I have not seen any bad advice for you and your parents just a few differences on optimization. You are right to take this slow, I don't think there is anything horrible about their current investments or plan.

In the original post a couple of the fees sounded unnecessary, but as they are not huge it might be worth putting up with them to leave it in a 401k vs transfer to an IRA. Sounds like you have a handle on the health insurance options. The real estate tax question might the the most productive to focus on for now. Enjoy the holidays then decide what you and they want to attack next from the long list above. Ask more specific questions here.

reeko0530
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Re: Retiring in 2 weeks, Traditional 401k

Post by reeko0530 » Mon Dec 10, 2018 2:57 am

OK, I changed his investment as follows.

Vanguard total stock market us funds 24%
Vanguard developed market 11%
Vanguard protected bonds 50%
Pimco total bonds 15%


Hope that looks good enough. I am locked in for 30 days now. Now I have reading that it's hard to outperform the target date groups cause the 3 investment portfolio requires tinkering to adjust funds when markets are volatile. Is this true? Would I have been better off just switching to a different target fund date that was more conservative such as the 2010 target fund? I just want to set and forget and not have to continue to check on investments. I am not sure if with three investments, how well diversified we are to absorb a major downturn in the market and if we may lose less if we were in a target fund if that makes sense because they can change investments to better insulate the market.

pennywise
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Re: Retiring in 2 weeks, Traditional 401k

Post by pennywise » Mon Dec 10, 2018 7:46 am

reeko0530 wrote:
Sat Dec 08, 2018 10:52 pm
Who can I pay to help me with this? What should I look up? This is just too much for me and I will pay for them to get the proper guidance.
Please don’t panic! Remember you’ve jumped into the deep end of the pool here, this group is made up of folks who generally find navigating the minutiae of personal finance to be bracing and enjoyable unlike normal folks :wink:

If you haven’t already done this, make an appointment for your parents to speak to a rep at Social Security. We just did this for my husband who is also turning 65. Although it was aggravating getting seen, once we sat down with the customer service agent he was wonderful. You should also find a resource you can call or visit re getting ACA coverage, since your parents may indeed be far better off using that-or not. Right now you are in triage mode so spend your time helping them with major financial decisions that have major long term implications. Social Security, Medicare and your moms bridge health insurance are those top three. Making bad choices on those can derail a comfortable or sufficient retirement so take care of that ASAP.

You can wade through decisions about how to allocate retirement funds later, there aren’t such hard deadlines.

Ben Mathew
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Re: Retiring in 2 weeks, Traditional 401k

Post by Ben Mathew » Mon Dec 10, 2018 9:52 am

reeko0530 wrote:
Mon Dec 10, 2018 2:57 am
OK, I changed his investment as follows.

Vanguard total stock market us funds 24%
Vanguard developed market 11%
Vanguard protected bonds 50%
Pimco total bonds 15%

Hope that looks good enough.
That looks great. You have an excellent portfolio--better than the vast majority of people out there do.
I am locked in for 30 days now. Now I have reading that it's hard to outperform the target date groups cause the 3 investment portfolio requires tinkering to adjust funds when markets are volatile. Is this true? Would I have been better off just switching to a different target fund date that was more conservative such as the 2010 target fund? I just want to set and forget and not have to continue to check on investments.
Your feelings of panic are normal--it's your parents' nest egg that they've built over a lifetime and you feel the weight of that responsibility. But you have done well. Don't second guess your decision. It is not true that target date funds have some magic tinkering moves up their sleeves that will let them ride out volatility better. If they did, Bogleheads would be all over it. There would be a chapter in the Bogleheads books about the special things you need to do when things are volatile. Instead, the advice is to stick to the plan and leave it alone. Don't pay the markets any attention--calm or storm. You just need to rebalance your portfolio once in a while to get back to your target 35/65 allocation. Once a year is enough. If a big drop drives your portfolio out of whack sooner, and you are so motivated, then you could do it sooner--say six months, or three months. But it's not a critical 24-hour job. This is not an airplane and you are not the pilot. You can relax. There is nothing you need to do.
I am not sure if with three investments, how well diversified we are to absorb a major downturn in the market and if we may lose less if we were in a target fund if that makes sense because they can change investments to better insulate the market.
These are not three investments. These are thousands and thousands of investments all over the world. You have a very well diversified and solid portfolio. What determines how exposed you are to a major downturn in the market is your 35/65 asset allocation. You've already picked that and now you just have to stick to it.

Congratulations on getting one job done. You should now forget about this for a while and turn your attention to health insurance and social security.

reeko0530
Posts: 49
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Re: Retiring in 2 weeks, Traditional 401k

Post by reeko0530 » Mon Dec 10, 2018 10:20 am

Ben Mathew wrote:
Mon Dec 10, 2018 9:52 am
reeko0530 wrote:
Mon Dec 10, 2018 2:57 am
OK, I changed his investment as follows.

Vanguard total stock market us funds 24%
Vanguard developed market 11%
Vanguard protected bonds 50%
Pimco total bonds 15%

Hope that looks good enough.
That looks great. You have an excellent portfolio--better than the vast majority of people out there do.
I am locked in for 30 days now. Now I have reading that it's hard to outperform the target date groups cause the 3 investment portfolio requires tinkering to adjust funds when markets are volatile. Is this true? Would I have been better off just switching to a different target fund date that was more conservative such as the 2010 target fund? I just want to set and forget and not have to continue to check on investments.
Your feelings of panic are normal--it's your parents' nest egg that they've built over a lifetime and you feel the weight of that responsibility. But you have done well. Don't second guess your decision. It is not true that target date funds have some magic tinkering moves up their sleeves that will let them ride out volatility better. If they did, Bogleheads would be all over it. There would be a chapter in the Bogleheads books about the special things you need to do when things are volatile. Instead, the advice is to stick to the plan and leave it alone. Don't pay the markets any attention--calm or storm. You just need to rebalance your portfolio once in a while to get back to your target 35/65 allocation. Once a year is enough. If a big drop drives your portfolio out of whack sooner, and you are so motivated, then you could do it sooner--say six months, or three months. But it's not a critical 24-hour job. This is not an airplane and you are not the pilot. You can relax. There is nothing you need to do.
I am not sure if with three investments, how well diversified we are to absorb a major downturn in the market and if we may lose less if we were in a target fund if that makes sense because they can change investments to better insulate the market.
These are not three investments. These are thousands and thousands of investments all over the world. You have a very well diversified and solid portfolio. What determines how exposed you are to a major downturn in the market is your 35/65 asset allocation. You've already picked that and now you just have to stick to it.

Congratulations on getting one job done. You should now forget about this for a while and turn your attention to health insurance and social security.
Thanks, meeting with their tax assessor this week to appeal, freeze and get exemptions for their property tax. I have been in contact on Facebook with him and he seems great.

On a side note, I took a look at my retirement. I have fidelity and use a target fund Vanguard 2045. It appears my expense rate is 0.06%. I should just leave it their then correct?

Ben Mathew
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Re: Retiring in 2 weeks, Traditional 401k

Post by Ben Mathew » Mon Dec 10, 2018 10:52 am

reeko0530 wrote:
Mon Dec 10, 2018 10:20 am
Thanks, meeting with their tax assessor this week to appeal, freeze and get exemptions for their property tax. I have been in contact on Facebook with him and he seems great.

On a side note, I took a look at my retirement. I have fidelity and use a target fund Vanguard 2045. It appears my expense rate is 0.06%. I should just leave it their then correct?
Great!

Yes, the .06 for the Vanguard target fund is cheap. The asset allocation is 90/10. You can leave that as is!

jj45
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Re: Retiring in 2 weeks, Traditional 401k

Post by jj45 » Mon Dec 10, 2018 11:51 am

i would strongly encourage them to not start taking SS right away. Rather, use money from the retirement account to fund living expenses for a few months until you figure it all out. In some cases delaying SS to full retirement age and spending down the retirement account is a better strategy. In other cases not. It depends on the details of their situation. But either way, a few months of spending from the retirement account will not be a terrible mistake and you can use the time to learn and avoid being locked in to taking SS early.

TBillT
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Re: Retiring in 2 weeks, Traditional 401k

Post by TBillT » Mon Dec 10, 2018 7:28 pm

My spouse has a T Rowe Price 401k and we had the T Rowe Price Stable Value Fund (SVF) which is a consevative safe 2.2% right now.
We kept the 401K because for some years, money market funds were paying zero.

Now we are ready to roll it over to IRA probably Fidelity because money market funds are now just as good as TRP SVF. Also we will probably be doing conversion tIRA to Roth IRA the next years.

TRPrice is good though. The truth is VOYA took over her 401k from TRP, but we still have the TRP SVF. If she were still at TRP I'd consider staying if I thought it was good for tIRA and Roth IRA.

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LadyGeek
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Re: Retiring in 2 weeks, Traditional 401k

Post by LadyGeek » Mon Dec 10, 2018 7:44 pm

reeko0530 - I moved your question regarding your wife's retirement plan into a new thread, as this discussion is about your father.

See: [Help with my wife's retirement plan]
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

OnTrack
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Re: Retiring in 2 weeks, Traditional 401k

Post by OnTrack » Tue Dec 11, 2018 11:27 pm

billfromct wrote:
Thu Dec 06, 2018 9:30 pm
I have about 10-12 years of RMDs in my retirement accounts so I can ride out any stock market correction or bear market.
What does this mean? So after 10-12 years of taking RMDs, your retirement accounts will be empty?

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