Where Do I Go From Here - Asset Location [2022 Update]

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SnowBog
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Re: Where Do I Go From Here

Post by SnowBog »

AnnetteLouisan wrote: Mon Sep 27, 2021 9:15 am
SnowBog wrote: Sat Sep 25, 2021 3:11 pm
AnnetteLouisan wrote: Sat Sep 25, 2021 3:06 pm I had some issues getting my social security statement even though I have a mysocialsecurity account set up. Seemed there was a password issue. I’ll call them next week.
You actually don't want the statement... By default they assume you continue to work /earn what you make now until your full retirement age (presumably 67).

So unless that matches how long you intend to work, it's not accurate...

You'll ultimately need to get to your earnings history (which I think is on the statement, or can be accessed from the site once you can log in). I'd recommend taking that info and going to https://ssa.tools to better understand "your" numbers. You can use it to see what your benefits are now, and the impact of working longer, claiming earlier/later, etc.
yes this estimator was great and I only needed my 2020 ssa salary to access. what a great time saver! myssa still not accessible.
Assuming that you haven't always been paid the same, you'll still want to plug in your actual earnings history when you can get it. That will give you a much more accurate result.
cashheavy18
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Re: Where Do I Go From Here -Update for Soc Sec

Post by cashheavy18 »

After reading through this post and some of the others you've recently made, it's made me curious to follow up with these questions (and if you've thought through some of the behavioral ones):
  • How many years have you been earning your current salary?
  • What is causing you to live very frugally right now (as a single, no dependents, home paid for, high earner)?
  • Once you retire, what is going to change to help you spend differently than you do today?
  • Knowing that future actions can't be guaranteed or predicted: In a separate post you mention parents in their 80s that have $12M in real estate holdings, children are you and your brother and no future generation heirs; with good family dynamics. Even if some small amount of this wealth is transferred to you (which your parents should seriously consider before 2025) - will this affect any of your planning decisions/lifestyle spending?
Wishing you all the best as you plan for yourself and help your parents in their next phase and find a way to enjoy what you've worked hard for.
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AnnetteLouisan
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Re: Where Do I Go From Here -Update for Soc Sec

Post by AnnetteLouisan »

cashheavy18 wrote: Mon Sep 27, 2021 3:55 pm After reading through this post and some of the others you've recently made, it's made me curious to follow up with these questions (and if you've thought through some of the behavioral ones):
  • How many years have you been earning your current salary?
I’ve been earning six figures since the mid 1990s. The current range is not a new thing - its been a slow and steady increase.
  • What is causing you to live very frugally right now (as a single, no dependents, home paid for, high earner)?
Short answer: preparing for retirement.
Longer answer: fear, very high and increasing taxes, concern about having to “save” the RE by paying state and fedl estate taxes or long term cap gains, tiredness, and having been through a spendy period in my 30s.
See my post “Sensible Prudent Quality of Life Upgrade” where I discuss some of that background.
  • Once you retire, what is going to change to help you spend differently than you do today?
Not sure I understand the question. Maybe I could get out of this VHCOL ultra high tax area.
  • Knowing that future actions can't be guaranteed or predicted: In a separate post you mention parents in their 80s that have $12M in real estate holdings, children are you and your brother and no future generation heirs; with good family dynamics. Even if some small amount of this wealth is transferred to you (which your parents should seriously consider before 2025) - will this affect any of your planning decisions/lifestyle spending?
Anything can happen. They may need those funds. Probate may not be quick. I can’t rely on that money and I’ve always read never to count on inheritance. Also, RE has costs associated with it - you inherit a lot of obligations w RE like taxes, maintenance, tenant hassles, municipal ordinance issues.

Wishing you all the best as you plan for yourself and help your parents in their next phase and find a way to enjoy what you've worked hard for.
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Re: Where Do I Go From Here - Update 2 for Pension & SS

Post by AnnetteLouisan »

Updated numbers are in! 32k pension at 57, 39k at 59, 45k at 62 and 29k ss at 62, 39 at 67.

I guess I would tap the Roth IRA and 401k first to cover the gap between retiring and collecting pension and ss? Then use post tax bank savings to try to avoid the irmaa cliff?

Someone wrote that single people sometimes take ss at 62 because they are not supporting a spouse. But it doesn’t seem I will need to take it at 62. On the other hand, given the likelihood of changes to ss, perhaps taking it early would lock in the benefit.

Anyway, I won’t be barbara hutton but I wont be eliza doolittle either.
Last edited by AnnetteLouisan on Wed Oct 27, 2021 2:20 pm, edited 3 times in total.
KlangFool
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Re: Where Do I Go From Here - Update 2 for Pension & SS

Post by KlangFool »

OP,

In summary, you can retire at 57 years old as soon as you can collect pension. Then, you can decide whether you should collect social security at 62, 67, or 70 years old.

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AnnetteLouisan
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Re: Where Do I Go From Here - Update 2 for Pension & SS

Post by AnnetteLouisan »

KlangFool wrote: Tue Sep 28, 2021 9:53 pm OP,

In summary, you can retire at 57 years old as soon as you can collect pension. Then, you can decide whether you should collect social security at 62, 67, or 70 years old.

KlangFool
Thanks. The numbers do help concretize things. I’d take a haircut on the pension unless I defer collecting to 62, but I could bridge that with IRA, savings or, 401k money at 59. I hope I can work longer but it’s nice to know that if I choose to or have to retire at 57 it’s workable.
Last edited by AnnetteLouisan on Fri Oct 08, 2021 8:58 pm, edited 1 time in total.
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Re: Where Do I Go From Here - Update 3 - Reallocating in 401k

Post by AnnetteLouisan »

Updated today with question about changing future allocation in 401k to add ex-US, S&P and a lower ER bond fund, details in the updated OP.
02nz
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Re: Where Do I Go From Here - Update 3 - Reallocating in 401k

Post by 02nz »

Just wanted to provide perspective in that someone with almost $2M net worth is not "just coming up for air," even in their 50s. :happy
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AnnetteLouisan
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Re: Where Do I Go From Here - Update 3 - Reallocating in 401k

Post by AnnetteLouisan »

02nz wrote: Fri Oct 01, 2021 8:29 am Just wanted to provide perspective in that someone with almost $2M net worth is not "just coming up for air," even in their 50s. :happy
Thanks - however around here it makes me a laggard. 🤯
SnowBog
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Re: Where Do I Go From Here - Update 3 - Reallocating in 401k

Post by SnowBog »

AnnetteLouisan wrote: Fri Oct 01, 2021 8:40 am
02nz wrote: Fri Oct 01, 2021 8:29 am Just wanted to provide perspective in that someone with almost $2M net worth is not "just coming up for air," even in their 50s. :happy
Thanks - however around here it makes me a laggard. 🤯
Not necessarily true... There are always those with more, and always those with less.

And sadly, I think some people are concerned when the see "big numbers" posted, that they are behind. But that's a false comparison... And I think often they hesitant to post their details, when they should not be hesitant.

The reality is its all relative. The BH concepts scale for pretty much anyone, from a family making $50k/year (or less) to one making $500k/year (or more). So long as they live below their means, save the difference, etc. to some extent it all works out the same.

When you break it down to having something like 25X (25 * expenses) saved for a normal retirement, it matters not how much that amount actually is.

Someone who has earned/saved less will likely end up having more of their expenses covered by social security. Someone who has a pension, may need a fraction of the amount as someone else. So someone might have only saved $100k and yet be in excellent financial health (assuming their X is healthy).

And if I remember correctly, your social security and deferred comp cover the bulk of your expenses, so if you retire when those kick in, you have vastly more than 25X. If you retire early, you need to cover those gap years, but if I recall you were in really good shape.

Bottom line, the actual dollar amount is irrelevant, and shouldn't be compared against others. The years of expenses covered is far more meaningful, which you can compare against thresholds like 25X (normal retirement age) to 33X (early retirement). (But comparing your X against others is also not relevant...)
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AnnetteLouisan
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Re: Where Do I Go From Here

Post by AnnetteLouisan »

ShowMeTheER wrote: Sun Sep 19, 2021 1:23 am Great expense control. You are racking up the cash with a good job.

Start a taxable account if you are comfortable, investing in equity index fund(s).

Ride your current situation for another 5 years (or more) and retire in style.
Thanks.
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AnnetteLouisan
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Re: Where Do I Go From Here

Post by AnnetteLouisan »

BogleFan510 wrote: Sun Sep 19, 2021 6:45 pm Since you are very risk adverse, I personally do not see a problem with your asset allocation, other than it will likely perform in a relatively narrow range of returns that are on average lower than more stock heavy portfolios. Others may comment in detail, but if you sincerely fear mistakes when experiencing stock market losses, an 80% fixed income portfolio seems a fine choice. Others can comment on which bond funds are most efficient, but your choices, while not the best, do not appear bad either. Over time as you research, you can shift pre tax fund choices to a better fund, without tax issues. I wouldn't make a setvof sudden changes, but rather read the wiki and links, occasionally update posts like yours on this site. This site offers the best investment advice in the world wide web, bar none.

I do not agree that inflation will destroy your nest egg. You will likely preserve your purchasing power, while not growing it all that quickly, but that is likely ok given your spending habits. A relative had a very bond heavy set of investments she left to heirs which exceeded 7 figures, mostly from investing SS checks while she grew her own food and paid taxes, her paid off home was hand built by her husband and herself. People who fear running out of money usually adapt well to changing circumstances so you should be comfortable being conservative.
Thank you! Good point, I agree about not making sudden changes. As you can well imagine, it has been suggested to me to take more risk with my money many times before and I generally haven’t, except with my 401k equity funds, and I waded in slowly there. I could post about where my risk aversion comes from (primarily, but not exclusively having interned at a brokerage that failed, long before it failed) but it seems unnecessary given that I do buy in to the idea of a 25 percent equities portfolio going forward (an AA I’ve had in the past).

So far all I have done since getting input on BH is check my pension and ss numbers, open a Fidelity tIRA and play with possible future allocation choices in my 401k. For some reason I would find it easier to change my future allocation and dollar cost average into a higher equities allocation, rather than make larger sudden moves. I haven’t converted my IRA to a Roth yet (couldn’t get through on the phone yet to do the backdoor Roth conversion) or selected an IRA investment fund (or funds). I’m also still considering Schwab for my taxable brokerage. I’d like to set up $200 or $500 a month (or whatever number makes sense, it could be $1,000) on automatic pilot from my paycheck to go into that. I also opened a Treasury Direct account earlier this year, buying the $10,000 max, and plan to buy more in January. Meantime I’m reading the links people posted and listening to the BH On Investing podcast. Open enrollment is fast approaching so I will seriously consider a HDHP/HSA.
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Re: Where Do I Go From Here

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AnnetteLouisan wrote: Fri Oct 01, 2021 4:15 pm ...open a Fidelity tIRA ... I haven’t converted my IRA to a Roth yet (couldn’t get through on the phone yet to do the backdoor Roth conversion) or selected an IRA investment fund (or funds).
FYI - no need to call Fidelity. You should be able to do the conversion online. And generally, its good to do so after the initial Traditional IRA as soon as possible (but at least 1- to 2-days after) to minimize any gains (and taxes).

https://www.thepainvestor.com/2020/06/1 ... -fidelity/
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AnnetteLouisan
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Re: Where Do I Go From Here

Post by AnnetteLouisan »

SnowBog wrote: Fri Oct 01, 2021 8:37 pm
AnnetteLouisan wrote: Fri Oct 01, 2021 4:15 pm ...open a Fidelity tIRA ... I haven’t converted my IRA to a Roth yet (couldn’t get through on the phone yet to do the backdoor Roth conversion) or selected an IRA investment fund (or funds).
FYI - no need to call Fidelity. You should be able to do the conversion online. And generally, its good to do so after the initial Traditional IRA as soon as possible (but at least 1- to 2-days after) to minimize any gains (and taxes).

https://www.thepainvestor.com/2020/06/1 ... -fidelity/
Perfect thanks!! Very doable!!
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AnnetteLouisan
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Re: Where Do I Go From Here

Post by AnnetteLouisan »

pwill112 wrote: Sat Sep 25, 2021 2:02 am What is your proposed AA that you are moving towards?
What is your proposed AA at retirement? I am assuming your AA will be more conservative in retirement?

You mention your coop is not as pleasing as it once was. Is this mostly covid related? If so, I do believe that will pass. How far does your family live from you now? How far do you want to be from them? I mention this only because I care for a 91 year old elderly parent and proximity to them is critical. If you were to move now will you move again at age 58 upon retirement? Moving 2 times in 4 years is not easy.

Double check on your potential of working from home arrangement. Can you live anywhere or do you need to go to the office periodically?

Do all the other stuff like HSA, etc but that will all work itself out now that you are on top of things. One more idea is the potential for Roth conversions when you retire. Social Security should pay you more at 70 than it does at 67.

Your financial situation is good with the pension being key. I am just guessing but I think your job is stressful. I believe you could consider a less stressful job now and still be in good financial shape save perhaps working a few more years.

Your biggest considerations that you have posted about are AA, where to live, and a review of the stress on the current job.
Not sure I ever replied to these excellent comments- no doubt because they were so perfect they left me without any obvious rejoinder. :beer

After input here, I’m looking to shift to a 25/75 allocation and maybe decrease to 20 percent in retirement. My family lives within am hour’s drive now. We are waiting to hear about remote work options but I think I will need to go to the office 1-2/week. I would love going fully remote. Having checked my pension and ss, the absolute worst case scenario seems to be 32kss at 62 and 29k pension at 65 (retiring at 57 and deferring both), both COLA adjusted. Realistic base case is 39k ss at 67 and 39k pension at 65 (retiring at 59 and deferring collecting). Very unlikely best case is 49k ss at 70 and 49k pension, retiring at 62.

I really love my job. The only stressful part comes from certain individuals and the unknown of who my boss will be after the current one retires.
Last edited by AnnetteLouisan on Mon Oct 11, 2021 2:47 pm, edited 2 times in total.
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Re: Where Do I Go From Here - Update 4 - Learning More; Drafting Investment Plan

Post by AnnetteLouisan »

It has been an exhilarating 3 weeks since joining. I have learned so much my 🤯. I’ve taken the time the past week or so to educate myself on the wiki and with some of the On Investing and other commenter recommended podcasts. I also commented up a storm but will be easing up on that now a bit.

People here have been so friendly, helpful, fun, knowledgeable, encouraging and patient. Even the ones who weren’t- and especially the one who asked me where the rest of my money got to that I only had $1.8 mil (and a portfolio of only $1.2 mil) despite being a long time reasonably high earner - I learned a lot from. I’d say that is the comment I learned the most from, so thank you, commenter.

My latest?
-I opened a tIRA (my first IRA ever) w Fidelity, funded it with the max ($7k) and successfully backdoor converted it to a Roth, starting my five year timeline as of 1/1/21. I’m evaluating what equity index fund(s) to put in.
-I checked out the Schwab interface and will probably put my taxable brokerage account there. That will be my first ever taxable brokerage account.
-I obtained my ss and pension estimates ($64k combined, worst case) and realized they put me in a position where I can afford an asset allocation that includes more equities.
-Today I read about how to craft an Investment Policy Statement. I had some general goals in my OP ($2.2 mil by age 58, moderating volatility; avoiding fraud and financial shocks in retirement) but I will get more specific.
-I reviewed my 9/30 401k numbers and resolved to be steely and dispassionate through whatever comes. but since I’m mostly in bonds, it’s unlikely to be too dramatic for me anyway.

Thank you again to all who commented, and to the admins, mods and sponsors of this extraordinary site.
Last edited by AnnetteLouisan on Mon Oct 04, 2021 10:43 pm, edited 1 time in total.
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Re: Where Do I Go From Here - Update 4 - Learning More; Drafting Investment Plan

Post by retired@50 »

AnnetteLouisan wrote: Mon Oct 04, 2021 6:50 pm Thank you again to all who commented, and to the admins, mods and sponsors of this extraordinary site.
The "tip jar" is located at the top of the page behind the "Support this Site" link. :wink:

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
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AnnetteLouisan
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Re: Where Do I Go From Here - Update 4 - Learning More; Drafting Investment Plan

Post by AnnetteLouisan »

Just donated! - using my real name of course tho...
ShowMeTheER
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Re: Where Do I Go From Here - Update 4 - Learning More; Drafting Investment Plan

Post by ShowMeTheER »

AnnetteLouisan wrote: Mon Oct 04, 2021 6:50 pm It has been an exhilarating 3 weeks since joining. I have learned so much my 🤯. I’ve taken the time the past week or so to educate myself on the wiki and with some of the On Investing and other commenter recommended podcasts. I also commented up a storm but will be easing up on that now a bit.

People here have been so friendly, helpful, fun, knowledgeable, encouraging and patient. Even the ones who weren’t- and especially the one who asked me where the rest of my money got to that I only had $1.8 mil (and a portfolio of only $1.2 mil) despite being a long time reasonably high earner - I learned a lot from. I’d say that is the comment I learned the most from, so thank you, commenter.

My latest?
-I opened a tIRA (my first IRA ever) w Fidelity, funded it with the max ($7k) and successfully backdoor converted it to a Roth, starting my five year timeline as of 1/1/21. I’m evaluating what equity index fund(s) to put in.
-I checked out the Schwab interface and will probably put my taxable brokerage account there. That will be my first ever taxable brokerage account.
-I obtained my ss and pension estimates ($64k combined, worst case) and realized they put me in a position where I can afford an asset allocation that includes more equities.
-Today I read about how to craft an Investment Policy Statement. I had some general goals in my OP ($2.2 mil by age 58, moderating volatility; avoiding fraud and financial shocks in retirement) but I will get more specific.
-I reviewed my 9/30 401k numbers and resolved to be steely and dispassionate through whatever comes. but since I’m mostly in bonds, it’s unlikely to be too dramatic for me anyway.

Thank you again to all who commented, and to the admins, mods and sponsors of this extraordinary site.
This is a great story/result - good for you!!
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Re: Where Do I Go From Here - Update 2 for Pension & SS

Post by OpenDelta »

AnnetteLouisan wrote: Tue Sep 28, 2021 9:32 pm Updated numbers are in! 32k pension at 57, 39k at 59, 29k ss at 62, 39 at 67.

I guess I would tap the Roth IRA and 401k first to cover the gap between retiring and collecting pension and ss? Then use post tax bank savings to try to avoid the irmaa cliff?

Someone wrote that single people sometimes take ss at 62 because they are not supporting a spouse. But it doesn’t seem I will need to take it at 62. On the other hand, given the likelihood of changes to ss, perhaps taking it early would lock in the benefit.

Anyway, I wont be barbara hutton but I wont be eliza doolittle either.
Wouldn't it be better to use the bank savings first, while your Roth IRA and 401K amounts continue to increase?
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Re: Where Do I Go From Here - Update 2 for Pension & SS

Post by AnnetteLouisan »

OpenDelta wrote: Thu Oct 07, 2021 6:20 pm
AnnetteLouisan wrote: Tue Sep 28, 2021 9:32 pm Updated numbers are in! 32k pension at 57, 39k at 59, 29k ss at 62, 39 at 67.

I guess I would tap the Roth IRA and 401k first to cover the gap between retiring and collecting pension and ss? Then use post tax bank savings to try to avoid the irmaa cliff?

Someone wrote that single people sometimes take ss at 62 because they are not supporting a spouse. But it doesn’t seem I will need to take it at 62. On the other hand, given the likelihood of changes to ss, perhaps taking it early would lock in the benefit.

Anyway, I wont be barbara hutton but I wont be eliza doolittle either.
Wouldn't it be better to use the bank savings first, while your Roth IRA and 401K amounts continue to increase?
That sounds smart too. Is there a standard order I can write down? I am feeling my way here blindfolded. It’s unbelievable. I had no idea having a little extra $ would be so complicated. I wasn’t taught this (clearly!) I don’t even know what an IRMAA cliff is, but my understanding is you need taxable and nontaxable income to avoid unnecessarily high taxes.
Last edited by AnnetteLouisan on Thu Oct 07, 2021 8:52 pm, edited 1 time in total.
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Re: Where Do I Go From Here

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AnnetteLouisan wrote: Sat Oct 02, 2021 2:03 pm
After input here, I’m looking to shift to a 25/75 allocation and maybe decrease to 20 percent in retirement.
AnnetteLouisan,

25/75 is about lowest that I would go. 20/80 is not safer.

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Re: Where Do I Go From Here - Update 4 - Learning More; Drafting Investment Plan

Post by AnnetteLouisan »

When I toggle up all my retirement and tax advantaged investing it comes to over $60,000/yr being invested, including matching, catch up contributions, pension contributions and Treasury Direct, not counting earnings on those or very significant social security contributions. Plus an additional $83k going into banks.

On a salary of $230k ($290 including bonuses, matching, earnings, interest etc, but not counting other benefits or pension), and nearing retirement, isn’t $60k a year invested in index funds enough? I.e., since I don’t have a spouse to help, or heirs, are benefits outweighed by the risks of opening a taxable brokerage (impulsiveness, duress, lack of experience and expertise, rank ignorance and dare I say it… diminishing faculties over time)? I was frankly stunned by the ease of transferring large amounts at the click of a mouse, and this past volatile week made me realize I may not have nerves of steel in a real bear market, which I’ve never experienced as an investor because I started investing late.

So would sticking to these guardrailed accounts be like doing “Bogle-light,” assuming i can adjust my AA within these accounts? I get that I would not be able to benefit from long term cap gains rates, but (not permitted to say what direction those are headed). 😙 😇

I’ll probably do the taxable brokerage after kicking it around a bit, but I tend to really test the ideas before making big changes.

Bogle-light, or Bogle w/ training wheels, for me would look like:
- maxing my backdoor Roth IRA every year in VTI or equivalent
- maxing my Series I bond every January
- maxing my 401k and catch up contribution every year, increasing equities until I am at my target AA
- continuing to contribute to pension and ss
- doing an HSA and HDHP during benefits open enrollment
- opening a taxable brokerage in 2022 and putting equity funds only in there, once I get comfy w my Fidelity IRA and my increased equity exposure
Last edited by AnnetteLouisan on Sun Oct 10, 2021 8:22 pm, edited 1 time in total.
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Re: Where Do I Go From Here - Update 4 - Learning More; Drafting Investment Plan

Post by AnnetteLouisan »

Wondering since I kinda screwed up and am not a sophisticated investor, can I really right the ship at 54 and make things a lot better for my (hopefully) future 64 and 74 year old me? Or is it sort of too late? My goal was $2.2 mil networth at 58 (have 1.8 now, of which 1.2 is a portfolio) and now I see I need to adjust that to, say, a 3.5 mil portfolio at 70.

I suppose it isn’t too late to prevent things from deteriorating further, even if it is too late for 3.5 at 70. It’s tough to have an idea of what life could or will be like at 70, just as I found my mid 50s hard to contemplate in my early 40s.
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Re: Where Do I Go From Here - Update 4 - Learning More; Drafting Investment Plan

Post by clip651 »

AnnetteLouisan wrote: Sun Oct 10, 2021 11:30 am Wondering since I kinda screwed up and am not a sophisticated investor, can I really right the ship at 54 and make things a lot better for my (hopefully) future 64 and 74 year old me? Or is it sort of too late? My goal was $2.2 mil networth at 58 (have 1.8 now, of which 1.2 is a portfolio) and now I see I need to adjust that to, say, a 3.5 mil portfolio at 70.

I suppose it isn’t too late to prevent things from deteriorating further, even if it is too late for 3.5 at 70. It’s tough to have an idea of what life could or will be like at 70, just as I found my mid 50s hard to contemplate in my early 40s.
You can right the ship in terms of:

Making a solid plan you've thought through (ready to weather whatever may come next)
Executing that plan whatever the market may bring
Stop second guessing yourself

You don't need to be a sophisticated investor. You need to make a solid plan, which will likely include educating yourself a bit more on the mechanics of various account types, taxes, etc, and then execute it. You already have the living below your means and savings part figured out. Those are the hardest parts.

You can't accurately predict what the market will do, neither can the rest of us. So you can't guarantee yourself a particular portfolio value at a particular age if you have some of your portfolio in stocks (or real estate, for that matter). The solid plan you decide on may end up with better or worse results than you hope. If it does worse, this doesn't mean you had the wrong plan. It means you can't control the market, neither can any of the rest of us. Unless you can achieve your goals with zero market risk (for instance via a very high savings rate and a portfolio of TIPS or similar) there will be some uncertainty in the account balance at a given date. This is normal for a portfolio that includes some stocks, such as 25% or more in stocks. But if your solid plan contains enough fixed income, you'll know an approximate minimum you will have going forward. And a lower stock allocation will give you less uncertainty about future account balances, though with more risk to inflation in general.

If part of your plan includes making a solid plan, executing it, and adjusting discretionary spending to match the reality of your portfolio in the future, I think you will do just fine.
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Re: Where Do I Go From Here - Update 4 - Learning More; Drafting Investment Plan

Post by tashnewbie »

You don’t seem to spend a lot of money.

How did you come up with the goal of x amount by y age?

Do you need that amount to support your spending for the next 40 years?
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Re: Where Do I Go From Here - Update 4 - Learning More; Drafting Investment Plan

Post by AnnetteLouisan »

tashnewbie wrote: Sun Oct 10, 2021 2:38 pm You don’t seem to spend a lot of money.

How did you come up with the goal of x amount by y age?

Do you need that amount to support your spending for the next 40 years?
No I don’t spend a lot of money. Long story, but there was a time that I did, relatively speaking. It’s been quite the ride.

I pulled $2.2 mil by age 58 out of a hat, pretty much. Age 57 is my earliest retirement date. Back in the day I read that I had to have short, medium and long term specific financial goals and based on my savings rate $2.2 was a stretch but seemed achievable if I just saved up a storm each year. Also I read something in a wealth management magazine in the 90s about everyone needing at least $2.2 to cover their lifetime costs.

I don’t really know if I will need $2.2 mil. there are so many variables. Will my ss or pension be reduced? Possible. Will inflation be longer term? Possible. Will I have to stop working sooner? Possible. Will I suffer market losses or be the victim of fraud / lawsuits / other? possible.

Based on what I learned here, I was thinking of revising it to $3 mil by 70 but that seems unrealistic and unnecessary.
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Re: Where Do I Go From Here

Post by Wiggums »

AnnetteLouisan wrote: Sun Sep 19, 2021 8:43 pm
Wiggums wrote: Sun Sep 19, 2021 7:44 pm I retired at 56 and I became more conservative with our portfolio. Having said that, we still buy into an index fund because we have a long time in retirement. I can see holding cash for Roth conversions, a few years of annual expenditures, etc. beyond that, the money would serve you better by being in the market. My mother is 92 and she is in the Wellesley fund. Having 30% equities should beat inflation and is quite conservative. I would encourage you to invest some of your cash.
Are you glad you retired at 56? I have an early retirement option at 57 and that may well be what I do. Thanks for the perspective on your mom. My mom is 88 and my dad is 86, both still very active thank goodness. They are not in the market at all but would have benefitted. My brother cackles with glee as he is thoroughly invested in individual stocks that he chose via his own self-developed investment philosophy. I’d love for him to take the Series 63 and do it for a living.
Yes, VERY happy that I retired at 56. I’m much more active and I exercise everyday. I don’t watch the stock market, but I do spent a little time on tax efficiency and estate planning. We are doing Roth conversions now. My Mom is 92 and has been slowing down in the past two years. Our AA is 65/35 and our fixed income includes about 8% cash. My DW feels more comfortable with some cash. There is no perfect portfolio, but the three fund portfolio has treated us well. Right now the bond and bank yields are terrible, but this will change. I feel like we got compensated When the Fed reduce the interest-rate, and we with get compensated since we will hold the bonds to duration.

Your $2.2 million portfolio target is more than enough given your annual expense and that’s before you consider Social Security, pension and very conservative market returns. 3 million would easily give you $120,000 per year from the portfolio alone. A bigger portfolio can make sense if you want to leave a portion to your heirs. Our two sons are in college and have their own brokerage accounts which were opened when they were young. They will be in great shape if they stick with low cost index funds. The market will always go up and down. We have taught them to save for tomorrow and enjoy their life every day.
"I started with nothing and I still have most of it left."
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VTI vs. ITOT vs. Fidelity Zero in a Roth IRA?

Post by AnnetteLouisan »

[Thread merged into here --admin LadyGeek]

54F, $1.2 mil portfolio 10/90, NY, single, no Ds, 35 percent bracket & 14 percent state and local, own $600k apt outright, very timid risk tolerance. Total comp $290k, maxing out my 401k and catch up, with over $50k/yr going into tax advantaged, $83k/yr into banks. Now selecting a total market index for my first-ever (backdoor converted) Roth IRA with Fidelity, as part of my strategy to put equity in a non tax deferred account and up my AA to 25/75. Details of my specific holdings, goals etc are in my recent post, “Where Do I Go from here- Update 4.”

Question:I see Barrons recommends ITOT over VTI and Fidelity Zero, “by a nose,” as it says. VTI seems much better known among our nation’s youth (so perhaps liquidity will be better when I need to redeem in 15 or 20 years). However both supposedly have features that limit cap gains taxes, so are these better in taxable?

What say you, ITOT, Fidelity Zero or VTI for the Roth IRA?

Thank you for your thoughts as always.

Annette
Last edited by AnnetteLouisan on Mon Oct 11, 2021 9:35 am, edited 1 time in total.
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Re: VTI vs. ITOT vs. Fidelity Zero in a Roth IRA?

Post by fwellimort »

For ROTH IRA, they are all the same.

VTI/ITOT/SCHB/SPTM all return about the same. Just personal preference (?) I guess with ticker names?
FZROX/FSKAX are mutual fund equivalents while the above are ETFs.

There's basically no difference in a tax advantaged vehicle.
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Re: VTI vs. ITOT vs. Fidelity Zero in a Roth IRA?

Post by RickyGold »

AnnetteLouisan wrote: Mon Oct 11, 2021 9:14 am 54F, $1.2 mil portfolio 10/90, NY, single, no Ds, 35 percent bracket & 14 percent state and local, own $600k apt outright, very timid risk tolerance. Total comp $290k, maxing out my 401k and catch up, with over $50k/yr going into tax advantaged, $83k/yr into banks. Selecting a total market index for my first-ever (backdoor converted) Roth IRA with Fidelity, as part of my strategy to put equity in a non tax deferred account and up my AA to 25/75. Details of my specific holdings, goals etc are in my recent post, “Where Do I Go from here- Update 4.”

Question:I see Barrons recommends ITOT over VTI and Fidelity Zero, “by a nose,” as it says. VTI seems much better known among our nation’s youth (so perhaps liquidity will be better when I need to redeem in 15 or 20 years). However both supposedly have features that limit cap gains taxes, so are these better in taxable?

What say you, ITOT, Fidelity Zero or VTI for the Roth IRA?

Thank you for your thoughts as always.

Annette

I have a Fidelity taxable account as well, and I am thinking of going with FSKAX, which is Fidelity's mutual fund version of VTI and ITOT. The reason is that I don't like ETFs for my own behavioral deficiencies (i.e., ETFs make me look at my portfolio way too much and I'm tempted to trade). So to keep me from doing something stupid, I prefer mutual funds (which, for some reason, I'm not tempted to tinker with).

You will hear that VTI and ITOT are more tax efficient that FSKAX...and that is true, but FSKAX is still an index fund an pretty darn tax efficient anyway.

So I am probably going to go with FSKAX when I am ready....
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Re: VTI vs. ITOT vs. Fidelity Zero in a Roth IRA?

Post by ruralavalon »

All are good choices in an IRA. It's hardly worth thinking about any differences. Portfolio Visualizer.

Personally I dislike the ZERO funds because gimmicky.
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Re: VTI vs. ITOT vs. Fidelity Zero in a Roth IRA?

Post by exodusNH »

AnnetteLouisan wrote: Mon Oct 11, 2021 9:14 am 54F, $1.2 mil portfolio 10/90, NY, single, no Ds, 35 percent bracket & 14 percent state and local, own $600k apt outright, very timid risk tolerance. Total comp $290k, maxing out my 401k and catch up, with over $50k/yr going into tax advantaged, $83k/yr into banks. Now selecting a total market index for my first-ever (backdoor converted) Roth IRA with Fidelity, as part of my strategy to put equity in a non tax deferred account and up my AA to 25/75. Details of my specific holdings, goals etc are in my recent post, “Where Do I Go from here- Update 4.”

Question:I see Barrons recommends ITOT over VTI and Fidelity Zero, “by a nose,” as it says. VTI seems much better known among our nation’s youth (so perhaps liquidity will be better when I need to redeem in 15 or 20 years). However both supposedly have features that limit cap gains taxes, so are these better in taxable?

What say you, ITOT, Fidelity Zero or VTI for the Roth IRA?

Thank you for your thoughts as always.

Annette
Avoid the zero funds in taxable if you ever think you might switch brokerages. The funds aren't portable and need to be sold, potentially triggering a big tax bill, to move the money elsewhere.

They're fine in tax advantaged since the sale doesn't trigger any taxable events.

Other than that, those funds are basically the same.
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Re: VTI vs. ITOT vs. Fidelity Zero in a Roth IRA?

Post by stan1 »

AnnetteLouisan wrote: Mon Oct 11, 2021 9:14 am What say you, ITOT, Fidelity Zero or VTI for the Roth IRA?
They are equally fine for an IRA. I would put the Zero in the Roth IRA (with dividend reinvestment turned on if you want) and then use VTI and ITOT as tax loss harvest pairs in your taxable account. This will avoid any potential wash sales if you decide to tax loss harvest in the future.

https://www.investopedia.com/articles/r ... e-rule.asp

It's good to have multiple very good choices.
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Re: VTI vs. ITOT vs. Fidelity Zero in a Roth IRA?

Post by White Coat Investor »

If this is your biggest investing concern, you win.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
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Re: VTI vs. ITOT vs. Fidelity Zero in a Roth IRA?

Post by mervinj7 »

White Coat Investor wrote: Mon Oct 11, 2021 10:32 am If this is your biggest investing concern, you win.
+1
AnnetteLouisan wrote: Mon Oct 11, 2021 9:14 am 54F, $1.2 mil portfolio 10/90, NY, single, no Ds, 35 percent bracket & 14 percent state and local, own $600k apt outright, very timid risk tolerance. Total comp $290k, maxing out my 401k and catch up, with over $50k/yr going into tax advantaged, $83k/yr into banks. Now selecting a total market index for my first-ever (backdoor converted) Roth IRA with Fidelity, as part of my strategy to put equity in a non tax deferred account and up my AA to 25/75. Details of my specific holdings, goals etc are in my recent post, “Where Do I Go from here- Update 4.”

Question:I see Barrons recommends ITOT over VTI and Fidelity Zero, “by a nose,” as it says. VTI seems much better known among our nation’s youth (so perhaps liquidity will be better when I need to redeem in 15 or 20 years). However both supposedly have features that limit cap gains taxes, so are these better in taxable?

What say you, ITOT, Fidelity Zero or VTI for the Roth IRA?
Annette you are in really good shape regardless. All three funds are essentially equivalent in a tax-advantaged account. Personally, I use VTI/ITOT in my Fidelity taxable brokerage (they are tax loss harvesting pairs) and Fidelity Zero funds in my Roth IRA. As long as you don't use Fidelity Zero funds in your taxable, you will be fine.
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Re: VTI vs. ITOT vs. Fidelity Zero in a Roth IRA?

Post by AnnetteLouisan »

White Coat Investor wrote: Mon Oct 11, 2021 10:32 am If this is your biggest investing concern, you win.
Thanks. Check out my post, Where Do I Go from here?, for my 5,000 other investing concerns. This is just my immediate one today. 🙂
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Re: VTI vs. ITOT vs. Fidelity Zero in a Roth IRA?

Post by yules »

AnnetteLouisan wrote: Mon Oct 11, 2021 9:14 am 54F, $1.2 mil portfolio 10/90, NY, single, no Ds, 35 percent bracket & 14 percent state and local, own $600k apt outright, very timid risk tolerance. Total comp $290k, maxing out my 401k and catch up, with over $50k/yr going into tax advantaged, $83k/yr into banks. Now selecting a total market index for my first-ever (backdoor converted) Roth IRA with Fidelity, as part of my strategy to put equity in a non tax deferred account and up my AA to 25/75. Details of my specific holdings, goals etc are in my recent post, “Where Do I Go from here- Update 4.”
I’m surprised that more posters aren’t concerned about the very conservative 10% stocks / 90% bonds (and even only getting it up to a still- very conservative 25/75) with “only” a $1.2 mil portfolio in a high cost of living state.

To answer OP’s specific question, any of the 3 funds are fine in a Roth IRA

Yules
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Re: VTI vs. ITOT vs. Fidelity Zero in a Roth IRA?

Post by AnnetteLouisan »

yules wrote: Mon Oct 11, 2021 11:11 am
AnnetteLouisan wrote: Mon Oct 11, 2021 9:14 am 54F, $1.2 mil portfolio 10/90, NY, single, no Ds, 35 percent bracket & 14 percent state and local, own $600k apt outright, very timid risk tolerance. Total comp $290k, maxing out my 401k and catch up, with over $50k/yr going into tax advantaged, $83k/yr into banks. Now selecting a total market index for my first-ever (backdoor converted) Roth IRA with Fidelity, as part of my strategy to put equity in a non tax deferred account and up my AA to 25/75. Details of my specific holdings, goals etc are in my recent post, “Where Do I Go from here- Update 4.”
I’m surprised that more posters aren’t concerned about the very conservative 10% stocks / 90% bonds (and even only getting it up to a still- very conservative 25/75) with “only” a $1.2 mil portfolio in a high cost of living state.

To answer OP’s specific question, any of the 3 funds are fine in a Roth IRA

Yules
They are, thank you - I’ve been thoroughly roasted for it on my other post - Where Do I Go From Here, Update 4. I’m working on my IPS as we speak. The “only” is a reference to comments that I have left $ on the table, which is quite true, and should be farther along by now. Feel free to chime in on any of my other posts as well. I’m new, and learning fast, all comments welcome!
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Re: VTI vs. ITOT vs. Fidelity Zero in a Roth IRA?

Post by yules »

AnnetteLouisan wrote: Mon Oct 11, 2021 11:18 am
yules wrote: Mon Oct 11, 2021 11:11 am
AnnetteLouisan wrote: Mon Oct 11, 2021 9:14 am 54F, $1.2 mil portfolio 10/90, NY, single, no Ds, 35 percent bracket & 14 percent state and local, own $600k apt outright, very timid risk tolerance. Total comp $290k, maxing out my 401k and catch up, with over $50k/yr going into tax advantaged, $83k/yr into banks. Now selecting a total market index for my first-ever (backdoor converted) Roth IRA with Fidelity, as part of my strategy to put equity in a non tax deferred account and up my AA to 25/75. Details of my specific holdings, goals etc are in my recent post, “Where Do I Go from here- Update 4.”
I’m surprised that more posters aren’t concerned about the very conservative 10% stocks / 90% bonds (and even only getting it up to a still- very conservative 25/75) with “only” a $1.2 mil portfolio in a high cost of living state.

To answer OP’s specific question, any of the 3 funds are fine in a Roth IRA

Yules
They are - I’ve been thoroughly roasted for it on my other post - Where Do I Go From Here, Update 4. I’m working on my IPS as we speak. Feel free to chime in on any of my other posts as well. I’m new, and learning fast, all comments welcome!
LOL, sorry, I didn’t check your post history and didn’t mean to pile on. :happy

Just want to chime in that you of have a good salary and have a great savings mindset and presumably low expenses relative to your salary, and IMO that self discipline is even more important that a gigantic nest egg. (Having a $2 mil nest egg and discipline is better in 5e long run than having a $10 mil nest egg without discipline.) Even though you do need a sufficient nest egg, of course. So as much as you may feel burned from the roasting, know that you have the building blocks for success.

Good luck!

Yules
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Re: VTI vs. ITOT vs. Fidelity Zero in a Roth IRA?

Post by AnnetteLouisan »

yules wrote: Mon Oct 11, 2021 11:26 am
AnnetteLouisan wrote: Mon Oct 11, 2021 11:18 am
yules wrote: Mon Oct 11, 2021 11:11 am
AnnetteLouisan wrote: Mon Oct 11, 2021 9:14 am 54F, $1.2 mil portfolio 10/90, NY, single, no Ds, 35 percent bracket & 14 percent state and local, own $600k apt outright, very timid risk tolerance. Total comp $290k, maxing out my 401k and catch up, with over $50k/yr going into tax advantaged, $83k/yr into banks. Now selecting a total market index for my first-ever (backdoor converted) Roth IRA with Fidelity, as part of my strategy to put equity in a non tax deferred account and up my AA to 25/75. Details of my specific holdings, goals etc are in my recent post, “Where Do I Go from here- Update 4.”
I’m surprised that more posters aren’t concerned about the very conservative 10% stocks / 90% bonds (and even only getting it up to a still- very conservative 25/75) with “only” a $1.2 mil portfolio in a high cost of living state.

To answer OP’s specific question, any of the 3 funds are fine in a Roth IRA

Yules
They are - I’ve been thoroughly roasted for it on my other post - Where Do I Go From Here, Update 4. I’m working on my IPS as we speak. Feel free to chime in on any of my other posts as well. I’m new, and learning fast, all comments welcome!
LOL, sorry, I didn’t check your post history and didn’t mean to pile on. :happy

Just want to chime in that you of have a good salary and have a great savings mindset and presumably low expenses relative to your salary, and IMO that self discipline is even more important that a gigantic nest egg. (Having a $2 mil nest egg and discipline is better in 5e long run than having a $10 mil nest egg without discipline.) Even though you do need a sufficient nest egg, of course. So as much as you may feel burned from the roasting, know that you have the building blocks for success.

Good luck!

Yules
Thanks! I’m ok. I’m here to learn and believe it or not straight talk has jerked me out of my complacency and triumphalism and and toward an even higher goal - poss $3 mil at 70! Still working on goal setting and my path. And I do want to unclench my fists a little as I age and become more comfortable if possible. I spend 38-45k and while it is doable for now it’s not optimal.
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Re: Where Do I Go From Here - Update 4 - Learning More; Drafting Investment Plan

Post by LadyGeek »

AnnetteLouisan - In order to provide appropriate advice, it's best to keep all the information in one spot. I merged your update back into the original thread. If you have any questions, ask them here.

(Thanks to the member who reported the post and provided a link to this thread.)
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Re: Where Do I Go From Here - Update 4 - Learning More; Drafting Investment Plan

Post by AnnetteLouisan »

Was glad to learn that we can contribute 1k more to the 401ks next year. So for 2022, I‘m looking at:
$27k into 401k and catch up, plus match
10k into ibonds
7k into my IRA
=$44k

Investment Policy Statement:

Goals: $2.5 million portfolio by 58; be able to retire at 60; swr: 3.5 percent; $3.2mm by age 70. Target AA: 30/70 by 1/31/22; learn more.

Philosophy:
low volatility, slow and steady progress, set it and forget it

Location of Assets:

1. tax advantaged:
TRowe 401k: $261,000
20% State Street S&P Index ER 0.01
40% Baird Core Plus Institutional Bond ER 0.30
40% Stable Value Common Trust Fund ER 0.15

may set future allocation:

stable value ER 0.15 - 25 percent
State Street Global All Cap Ex-US Idx ER0.05 - 10 %,
State Street Mid Cap ER 0.02 15 percent
S&P 500 Index - 30 percent ER 0.01
State Street US Bond Index ER 0.05, 20 percent
switch out of Baird fund above?

TSP: $311,000 - all ER 0.049
73% G Fund - govt securities
22% C Fund - S&P Index
2 percent S Fund - midcap
3 percent International

Fidelity Roth IRA: $7,000 Spaxx- moving to ITOT, VOO or both
TD Series I bonds: $10,000
will open HSA in November

cola‘d pension: 39k if I retire at 59 (cash out value: 19k)
ss: 39k if I start at 67
apartment: $600k, no debt

2. taxable:
$607,000, 3 banks
will open taxable brokerage - add equity indexes only

Contributing:
$44k yr to tax advantaged, plus very good match
plus $82k a year to banks and taxable brokerage;
salary is 290 gross, 35 percent fedl, 14 percent local tax bracket

Asset Classes:
US stock indexes, bond indexes, 5 percent ex US index and utilities (VPU?). munis?

No leaps, hedge funds, crypto, commodities, REITs, microcap, actively managed funds, target date funds or annuities

Other goals:
-3 yr emergency fund (not ten year)
-limit volatility
-tax effectiveness: limit surprises re IRMAA cliffs, RMDs etc
Last edited by AnnetteLouisan on Tue Oct 19, 2021 10:29 pm, edited 22 times in total.
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Re: Where Do I Go From Here - Update 5 - 401k limit increase and Investment Plan

Post by HomeStretch »

If you would like any feedback on whether your holdings are placed tax efficiently, add the holdings in each account in your last post.

I scrolled through the thread again and I didn’t see whether or not your TRP 401k plan offers a Mega Backdoor Roth (MBR):
https://www.bogleheads.org/wiki/Mega-backdoor_Roth
If it does, consider doing the maximum MBR each year. You can use the dividends/sale proceeds from your Taxable account for living expenses to offset lower take-home pay due to higher 401k after-tax contributions for a MBR. This allows you to shift $ from your Taxable account to $ in Roth. Roth accounts grow tax free, Taxable accounts do not.
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Re: Where Do I Go From Here - Update 5 - 401k limit increase and Investment Plan

Post by AnnetteLouisan »

HomeStretch wrote: Thu Oct 14, 2021 7:11 pm If you would like any feedback on whether your holdings are placed tax efficiently, add the holdings in each account in your last post.

I scrolled through the thread again and I didn’t see whether or not your TRP 401k plan offers a Mega Backdoor Roth (MBR):
https://www.bogleheads.org/wiki/Mega-backdoor_Roth
If it does, consider doing the maximum MBR each year. You can use the dividends/sale proceeds from your Taxable account for living expenses to offset lower take-home pay due to higher 401k after-tax contributions for a MBR. This allows you to shift $ from your Taxable account to $ in Roth. Roth accounts grow tax free, Taxable accounts do not.
thanks! done! no MBR at my workplace 😖
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Re: Where Do I Go From Here

Post by AnnetteLouisan »

KlangFool wrote: Thu Oct 07, 2021 7:23 pm
AnnetteLouisan wrote: Sat Oct 02, 2021 2:03 pm
After input here, I’m looking to shift to a 25/75 allocation and maybe decrease to 20 percent in retirement.
AnnetteLouisan,

25/75 is about lowest that I would go. 20/80 is not safer.

KlangFool
KlangFool-

I‘ve been thinking about your comment above. It is not safer because with rising interest rates and inflation bonds would decline in value? I am too focused on stock risk and not on other risks? It is a good point.
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Re: Where Do I Go From Here

Post by KlangFool »

AnnetteLouisan wrote: Fri Oct 15, 2021 7:27 am
KlangFool wrote: Thu Oct 07, 2021 7:23 pm
AnnetteLouisan wrote: Sat Oct 02, 2021 2:03 pm
After input here, I’m looking to shift to a 25/75 allocation and maybe decrease to 20 percent in retirement.
AnnetteLouisan,

25/75 is about lowest that I would go. 20/80 is not safer.

KlangFool
KlangFool-

I‘ve been thinking about your comment above. It is not safer because with rising interest rates and inflation bonds would decline in value? I am too focused on stock risk and not on other risks? It is a good point.
Be balance. Be diversified. Protect yourself from the unknowable. Do not be too smart and/or extreme.

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Re: Where Do I Go From Here - Update 5 - Investment Policy Statement - New

Post by goodenyou »

If there are no legacy concerns, and your spending needs are reasonable, why don’t you consider annuity? You would be a prime candidate for a Safety-First approach to investing or a least a blend including an annuity. Probability centric investing can be mentally exhausting for the “timid”.
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Re: Where Do I Go From Here - Update 5 - Investment Policy Statement - New

Post by AnnetteLouisan »

I would love a fixed rate guaranteed CD annuity-like product, but I‘m concerned about being dependent on the issuer‘s credit rating. My pension must be taken as an annuity, and social security can be considered like an annuity, so in a way I‘m covered there. I‘m building a Series I bond ladder and may do EEs as well, although I‘m getting a late start. Plus all of those are protected from creditors in bankruptcy arent they? On top of all that I will gave medicare and LTCI.

But to what kind if annuity were you referring? Most kinds have too many adverse features such as teaser rates, surrender charges and high commissions, as I‘ve heard. Plus regulation is limited to underfunded state insurance commissions, isnt it?

Timidity isn’t always a bad thing. 😂
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Re: Where Do I Go From Here - Update 5 - Investment Policy Statement - New

Post by SnowBog »

Single Premium Immediate Annuity (SPIA) are generally the only ones recommended.
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