prudential/empower 401k advice

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Topic Author
dsj7419
Posts: 6
Joined: Sat May 27, 2023 12:05 am

prudential/empower 401k advice

Post by dsj7419 »

Hi all,

I've just joined, very interested in the boglehead way. I (sadly) had been using morningstar to auto-allocate my 401k, and i'm over it. I want to get it into a set it and forget it allocation. I read a lot about VTI allocation and VT, but I have no idea how that translates to empower (who bought my account from prudential I guess.

I want to be agressive, no bonds. I am a bit older, but I need "catchup" so need to gamble a bit. In 10 or 15 years i'll re-allocate to some bonds.

Thank you for any help you can be on clarifying the below!

Here's my current allocation thanks to morningstar:


Vanguard Federal Money Market Fund Investor Shares 001 Fund Summary Fixed Income - Money Market 1%
DFA Inflation-Protected Securities Portfolio Institutional Class Fund Summary Fixed Income - Inflation Protected Bond 3%
Fidelity U.S. Bond Index Fund Fund Summary Fixed Income - Intermediate Core Bond 5%
PIMCO Total Return Fund Institutional Class Fund Summary Fixed Income - Intermediate Core-Plus Bond 5%
Fidelity 500 Index Fund Fund Summary Large Cap - Blend 19%
Fidelity Total Market Index Fund Fund Summary Large Cap - Blend 21%
Fidelity Mid Cap Index Fund Fund Summary Mid Cap - Blend 3%
Allspring Special Small Cap Value Fund - Class R6 002 Fund Summary Small Cap - Value 6%
Fidelity Small Cap Index Fund Fund Summary Small Cap - Blend 4%
Fidelity Total International Index Fund Fund Summary International - Large Blend 24%
American Funds EuroPacific Growth Fund Class R-6 Fund Summary International - Large Growth 9%


Here are all of my options (and the fees %)

Putnam Stable Value Fund: 25bps 001 Fund Summary Stable Value 0.36%
Vanguard Federal Money Market Fund Investor Shares 001 Fund Summary Fixed Income - Money Market 0.11%
DFA Inflation-Protected Securities Portfolio Institutional Class Fund Summary Fixed Income - Inflation Protected Bond 0.11%
Fidelity U.S. Bond Index Fund Fund Summary Fixed Income - Intermediate Core Bond 0.03%
PIMCO Total Return Fund Institutional Class Fund Summary Fixed Income - Intermediate Core-Plus Bond 0.46%
Vanguard Target Retirement Income Trust II Fund Summary Allocation - Target-Date Retirement Income 0.08%
Vanguard Target Retirement 2020 Trust II Fund Summary Allocation - Target-Date 2020 0.08%
Vanguard Target Retirement 2025 Trust II Fund Summary Allocation - Target-Date 2025 0.08%
Vanguard Target Retirement 2030 Trust II Fund Summary Allocation - Target-Date 2030 0.08%
Vanguard Target Retirement 2035 Trust II Fund Summary Allocation - Target-Date 2035 0.08%
Vanguard Target Retirement 2040 Trust II Fund Summary Allocation - Target-Date 2040 0.08%
Vanguard Target Retirement 2045 Trust II Fund Summary Allocation - Target-Date 2045 0.08%
Vanguard Target Retirement 2050 Trust II Fund Summary Allocation - Target-Date 2050 0.08%
Vanguard Target Retirement 2055 Trust II Fund Summary Allocation - Target-Date 2055 0.08%
Vanguard Target Retirement 2060 Trust II Fund Summary Allocation - Target-Date 2060 0.08%
Vanguard Target Retirement 2065 Trust II Fund Summary Allocation - Target-Date 2065+ 0.08%
Vanguard Target Retirement 2070 Trust II Fund Summary Allocation - Target-Date 2065+ 0.08%
American Funds Washington Mutual Investors Fund Class R-6 Fund Summary Large Cap - Blend 0.26%
Fidelity 500 Index Fund Fund Summary Large Cap - Blend 0.02%
Fidelity Total Market Index Fund Fund Summary Large Cap - Blend 0.02%
William Blair Growth Fund Class R6 Fund Summary Large Cap - Growth 0.84%
Fidelity Mid Cap Index Fund Fund Summary Mid Cap - Blend 0.03%
Allspring Special Small Cap Value Fund - Class R6 002 Fund Summary Small Cap - Value 0.81%
Fidelity Small Cap Index Fund Fund Summary Small Cap - Blend 0.03%
AB Small Cap Growth Portfolio Class Z Fund Summary Small Cap - Growth 0.76%
Vanguard International Value Fund Investor Shares Fund Summary International - Large Value 0.38%
Fidelity Total International Index Fund Fund Summary International - Large Blend 0.06%
American Funds EuroPacific Growth Fund Class R-6 Fund Summary International - Large Growth 0.46%
tenkuky
Posts: 2626
Joined: Sun Dec 14, 2014 3:28 pm

Re: prudential/empower 401k advice

Post by tenkuky »

For "set it and forget it", just go with one of the Target Date Index funds.
You can look at portfolio composition below and decide which one fits your current needs.
Then see how that changes over time and see if that fits your needs.
Set and forget.
Expense is low and they adjust over time.
https://institutional.vanguard.com/inve ... /fund/1480
Topic Author
dsj7419
Posts: 6
Joined: Sat May 27, 2023 12:05 am

Re: prudential/empower 401k advice

Post by dsj7419 »

there isnt a better option? I thought those werent good, and most of those have bonds involved which I dont want to do at this time.

Any other bogleheads out there have a different perspective for these funds?

Thanks!
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rterickson
Posts: 421
Joined: Fri May 01, 2015 3:48 pm

Re: prudential/empower 401k advice

Post by rterickson »

You really can't get any more "set it and forget it" than a good low-expense target date fund from Vanguard. And the 2070 target date fund only holds 10% bonds, which wouldn't bother me as a fellow older individual.

However, if you really want to avoid bonds completely, I would focus primarily on low expenses and use some combination of the following funds:

Fidelity Total Market Index Fund Fund Summary Large Cap - Blend 0.02%
Fidelity Mid Cap Index Fund Fund Summary Mid Cap - Blend 0.03%
Fidelity Small Cap Index Fund Fund Summary Small Cap - Blend 0.03%
Fidelity Total International Index Fund Fund Summary International - Large Blend 0.06%
steadyosmosis
Posts: 978
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Re: prudential/empower 401k advice

Post by steadyosmosis »

dsj7419 wrote: Sat May 27, 2023 9:19 am there isnt a better option? I thought those werent good, and most of those have bonds involved which I dont want to do at this time.

Any other bogleheads out there have a different perspective for these funds?

Thanks!
+1 ... Vanguard Target 2070.
Age<59.5. Early-retired. AA ~55/45. Taxable account, Roth IRA, HSA...all are 100% equities. 100% of fixed income is in tIRA. I spend from taxable and re-balance in tIRA.
Topic Author
dsj7419
Posts: 6
Joined: Sat May 27, 2023 12:05 am

Re: prudential/empower 401k advice

Post by dsj7419 »

I get the 2070, but thats .08 fee as opposed to .02 or .03% to do it manually.

I assume you all just think thats a small enough difference (aka all low fees anyway)?
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MrMars
Posts: 163
Joined: Thu Jan 07, 2021 3:26 pm

Re: prudential/empower 401k advice

Post by MrMars »

dsj7419 wrote: Sat May 27, 2023 9:19 am there isnt a better option? I thought those werent good, and most of those have bonds involved which I dont want to do at this time.

Any other bogleheads out there have a different perspective for these funds?

Thanks!
Why do you think TDF aren't good? They are the epitome of set and forget. They are fine in retirement account. The ER isn't 0.03% but it is still very reasonable. If you want to manage your funds or don't want international expsoure then absolutely use the recs above to recreate a total stock market index. But there's nothing innately bad about a Vanguard TDF in a retirement account if you're comfortable with their constituent parts.
wetgear
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Re: prudential/empower 401k advice

Post by wetgear »

dsj7419 wrote: Sat May 27, 2023 3:50 pm I get the 2070, but thats .08 fee as opposed to .02 or .03% to do it manually.

I assume you all just think thats a small enough difference (aka all low fees anyway)?
Low fees are very important to bogleheads and all of those fees would be considered excellent.

Not a hard consensus on this but below is likely not too far off what folks here think.

> 1.0 bad
< 1.0 meh
< 0.5 ok
< 0.2 good
< 0.1 excellent
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arcticpineapplecorp.
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Re: prudential/empower 401k advice

Post by arcticpineapplecorp. »

dsj7419 wrote: Sat May 27, 2023 3:50 pm I get the 2070, but thats .08 fee as opposed to .02 or .03% to do it manually.

I assume you all just think thats a small enough difference (aka all low fees anyway)?
life's full of tradeoffs.
if you want to save money it will cost you time (manual rebalancing and changing glidepath over time).
If you want to save time, it will cost you money (auto rebalancing and changing glidepath over time).

so there are two considerations:
1. how much money will you save?
2. will you be able to rebalance when required in times of extreme duress?

Let's take 1 first.

For every $100,000 invested the difference in fees between 0.08% and 0.03% is $80 vs $30 per year for every $100k invested.

We don't know whether you've got $100k or $500k but the difference would be $80 or $30 per year if $100k is invested and $400 vs $150 per year if $500k is invested.

So it may matter when your account is larger than it is (you say you have to catch up). It may or may not matter now. It may matter later. Sure it's an annual fee but the dividends alone are going to far exceed the expense ratio. If stocks dividend is around 2% and you pay 0.08% you still are making in dividends way more than you're spending in fees. This is not even counting capital appreciation.

2nd point is more important. Investor know thyself.

If you are the type of person (and many are) that can't stomach having to sell bonds to buy stocks after stocks have fallen 30% or more, then just own the target date retirement fund. Many say they'll rebalance. Few actually do.

welcome to the group!
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
Topic Author
dsj7419
Posts: 6
Joined: Sat May 27, 2023 12:05 am

Re: prudential/empower 401k advice

Post by dsj7419 »

Appreciate all the comments, just trying to learn as well. all sounds like sage advice.. 2070 it is!
Topic Author
dsj7419
Posts: 6
Joined: Sat May 27, 2023 12:05 am

Re: prudential/empower 401k advice

Post by dsj7419 »

oh, one more thing.. you mention auto rebalancing, I assume I should have that option on then? I never turned that on (though morningstar probably did it for me)
Uniballer
Posts: 481
Joined: Thu Apr 20, 2017 9:55 am

Re: prudential/empower 401k advice

Post by Uniballer »

The Target Date 2070 Fund will automatically rebalance daily.
cacophony
Posts: 1363
Joined: Tue Oct 16, 2007 9:12 pm

Re: prudential/empower 401k advice

Post by cacophony »

Just note that the target date funds are a bad idea for a taxable account, should you have extra funds to invest in taxable.
Topic Author
dsj7419
Posts: 6
Joined: Sat May 27, 2023 12:05 am

Re: prudential/empower 401k advice

Post by dsj7419 »

this is just my 401k pre-tax one
billfromct
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Joined: Tue Dec 03, 2013 8:05 am

Re: prudential/empower 401k advice

Post by billfromct »

Here are the basics of the Vanguard Target Retirement 2070 Fund:

-it starts out 90% stocks (60% domestic/40% international) & 10% fixed income
-over the years, it gradually moves to about 50% stocks/50% fixed income at the target year
-from the target year, it gradually moves to about 30% stocks/70% fixed income at 7 years after the target year
-it stays at the 30%/70% asset allocation after 7 years past the target year & stays there, same as the Target Retirement Income Fund, VTINX

You need to understand the asset allocation over the years to make sure that fits your goals & asset allocation over that time frame.

I’ve recommended to my kids (yes they asked for my opinion) to move into the Target Retirement Funds as they get older, but to a Target Retirement Fund with a target year when they turn 75 years old which would give them a 50% stock/50% fixed income allocation at 75 years old.

I plan to keep a 65% stock/35% fixed income throughout my retirement years. Some people think that is overly aggressive, but that fixed income asset allocation covers 8-9 years of required minimum distributions (RMDs) which should cover me through any bear Market time frame.

bill
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ruralavalon
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Location: Illinois

Re: prudential/empower 401k advice

Post by ruralavalon »

wetgear wrote: Sat May 27, 2023 4:29 pm

. . . . .

Not a hard consensus on this but below is likely not too far off what folks here think.

> 1.0 bad
< 1.0 meh
< 0.5 ok
< 0.2 good
< 0.1 excellent
I think that is a good summary of attitudes about expense ratios.

This plan offers some index funds with excellent, very low expense ratios.

The target date funds with expense ratios of just 0.08% are excellent choices in my opinion for an all-in-one hands off portfolio in a 401k account.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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