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Everything posted by krow36

  1. 403(b) Choices

    My comments on the calculators were aimed at Kevin P and anyone else that hadn't played with the type that allows those kinds of inputs. I was addressing the lurkers, I guess. I was hoping that Steve, Tony, Kevin P and anyone else would give us feedback on it. Maybe I'm mistaken in thinking it's a very useful motivational tool? Maybe someone knows of a similar, better tool that has even more inputs for a more accurate prediction? Steve's table is great and directly applicable to those of us who are retired with our nest-egg that has to last. "My" calculator is directly applicable to those still working and contributing to a high-cost nest-egg. Or am I wrong?
  2. 403(b) Choices

    Tony, I think you left out a zero!? Steve, your table is impressive, and I've used similar tables to get folks' attention on fees. It's simple and easy to understand but it's based on the fees of a given principal. It may not be applicable to younger investors with small balances. I really like the calculator I linked above because it shows the effect of fees over time. Not just any time, but time left to retirement! It takes in to consideration current balance, continuing contributions, ERs, front-end loads, advisor fees, etc. It should attract the attention of anyone still working and contributing to their retirement every pay period.
  3. 403(b) Choices

    Kevin P, to help you and your wife get a longer term perspective on saving for retirement and the investment fees involved, I suggest you play around with this calculator. https://www.360financialliteracy.org/Calculators/403-b-Savings-Calculator3?fpath=197 First calculate the “Percent to contribute” by adding up the payroll deductions per year and divide that by “Annual salary”. If the loads on those funds average say 5%, you should subtract 5% from the “Percent to contribute” line. Her “Annual investment fee” will be the average expense ratio which looks like around 1% plus the advisor fee of 1.25%, for a total of around 2.25%! Then do the calculation with no loads, and an "Annual investment fee" of 0.1% or 0.2% which is the ER of Vanguard index funds. The difference in results should help motivate you and her to get into a lower cost 403b plan. You can use the same calculator on your SEP IRA.
  4. 403(b) Choices

    Thanks Steve, it’s great to be able to contribute to the cause! I’ve looked up the expense ratios of the funds and added them to Tony’s good work. LGLAX-Lord Abbott Growth Leaders Fund Class A Large cap growth, ER 0.95%, LOAD 5.75% FDBAX-Federated Bond Fund Class A Shares Corporate Bond, ER 0.86%, LOAD 4.5% GFAFX-Growth Fund Of America Class F-1 Large Cap Growth, ER 0.70%, NO LOAD FKINX-Franklin Income Fund-Large Cap Growth - Bond Allocation, ER 0.62%, LOAD 4.25% STIAX-Federated Strategic Income fund-Large Cap Stock -Bond Allocation, ER 0.97%, LOAD 4.5% PGSGX- JPMorgan Small Cap -Small Cap Fund, ER 1.32%, LOAD 5.25% 0SGIX-JPMORGAN Mid Cap Growth -Mid Cap, ER 1.24%, LOAD 5.25% SAMCX-Saratoga Moderately Aggressive Balanced Fund-Large Mid cap -Small Cap, ER 1.24%, LOAD 5.25%% PSOAX-JPMORGAN SMALL CAP VALUE FUND-Small Cap, ER 1.24%, LOAD 5.25%% FBTAX-Fidelity Biotechnology Fund-Large-Mid-Small Cap, ER 1.25%, LOAD 5.75% You are at a disadvantage in trying to improve your wife’s 403b. First of all, it’s her account, and it’s up to her to make decisions on it. Maybe you can do some of the necessary investigation for her? I know from first-hand experience that teachers don’t have much extra time or energy for what she needs to do. This advisor has loaded up her 403b with very expensive load funds and then on top of that is charging her 1.25%. That adds up to over 2% in annual fees not to mention a load of about 5% on average. This is a huge drag on on value over time of her account. She needs to get out of the advisor relationship and into a 403b plan that allows her to invest in no-load, low-cost, diversified index funds. She can contact a Lincoln Investment office and find out what Lincoln plans are possible for her. The Participant Directed plan would be outstanding, but Lincoln Investment’s other mutual fund based 403b plans could be much lower cost than what she has now.
  5. choosing a 403b plan

    It looks like your district is offering a “25% retirement incentive” to their employees who qualify for it. This is sometimes referred to as a “golden handshake”. The union and the superintendent have set up a 457 plan that can receive that 25% as well as cashed out sick leave. Otherwise the retirees would have to pay income tax on these moneys. Ouch! It could be a 457 plan available to all employees, although I think it’s more likely one set up for just this one purpose. The justification for encouraging employees to retire is to reduce the number of the most expensive employees, replacing them with young inexpensive employees. My district didn’t offer an incentive, just lowered the number of years employment required to retire to 15, and the minimum age to 50. The offer only existed for a year. I took it and went sailing! You should ask your union about the NY state 457 plan! It’s outrageous that it’s not available to all district employees!
  6. 403(b) Choices

    Thanks Tony. Give 403bcompare.com a lot of the credit. It may only apply to CA for sure, but still. And the BH forum where good 403b things turn up every so often! And I have learned a lot from your posts, not just the links which I do read! Sometimes I wonder if it's a case of "Fools rush in . . . ." (For me, not you!)
  7. 403(b) Choices

    There is another possibility with Lincoln Investment (LI) and that is their Participant Directed Platform. It seems to be available to all districts in NJ that have LI on their provider list. I think it is allowed in a few NY school districts. Permission to use it must be received by a LI regional office (not from a local rep). Lincoln obviously wants to restrict its use and publishes nothing about it on the internet. Here’s a recent thread on it:
  8. 403(b) Choices

    Can you provide a link to the Legend website? Who does the "advisor" work for? Is Legend the third party administrator (TPA)? I assume the 4 vendors you listed are on the 403b vendor list. Is there a 457 list? Because your wife teaches in NY state, she should be able to contribute to the NY state 457 plan which is available to all NY state teachers. However it may not be on her district’s list of 457 vendor choices. In fact her district may not even have a 457 vender list!? There could be several reasons for that possibility, none of which are valid. So I think finding out about the NY state 457 should be a priority. It’s an excellent low-cost plan. NY state 457 plan: guide to investing https://www.nysdcp.com/tcm/nysdcp/static/Brochure_NYSDCP_Education_Kit.pdf?r=1 plan partners & fees https://www.nysdcp.com/tcm/nysdcp/static/fee_transparency.pdf?r=1 update to recent changes https://www.nysdcp.com/iApp/tcm/nysdcp/about/fund_change_2017.jsp#_ Your wife cannot move her 403b account money into the 457 plan if both plans are with the current school district. So even if she can set up and contribute to the state 457 plan, she needs to find a better 403b solution. Please post a link to the Legend website. I think I've read that Legend and Lincoln have recently joined to form one company.
  9. choosing a 403b plan

    Yes with Aspire you choose the funds you want. If that makes you uneasy, Vanguard has an excellent low-cost solution. First you have to decide on the stock to bond ratio you want. That is an individual decision and only you can decide that. Vanguard has a quiz you can take which can be useful. We can offer opinions based on years to retirement, your past investment experience, etc. Vanguard's solution is a series of Target Retirement funds. https://investor.vanguard.com/mutual-funds/target-retirement/#/ They are made up of 4 diversified low-cost index funds--Total Stock Mkt (all US stocks), Total Int'l Stock Mkt (all Int'l stocks), Total Bond Mkt (all US bond mkt), and Total Int'l Bond Mkt (Int'l bonds). Depending on the year you select, the series varies from very aggressive (90% stocks, 10% bonds) to very conservative (10% stocks, 90% bonds). You could choose a fund with the date of your expected retirement. It makes more sense to me to select a fund with your desired asset allocation, say 60/40?). But that's up to you. Target Retirement funds change their asset allocation over the years to become more conservative as retirement nears. Remember if you decide in a few years that you want to change the stock/bond ratio (either way), you can do so in your 403b or 457 accounts without any tax consequences or penalties. If you decide you want to invest in individual funds instead of a Target Retirement fund, no problem.
  10. 403(b) Choices

    Kevin, that list of funds reflects an "advisor" that is doing very well for himself and for those various fund companies. But not so well for your wife! Those loads and ERs are really awful! Is she also paying an advisor a fee for this collection? I haven't looked up to see how those funds have done over the years because the fees are so high that I wouldn't want to own them no matter how well they have done in the past! Please find out the exact name of the Lincoln Investment plan. They call them Platforms. Let's hope that the list of 403b and 457 vendors that her school district allows her to use has some lower cost options. Even if she is stuck with Lincoln Investment, I think there are lower cost options possible. What state are you in? Some states have low-cost 457 plans available to teachers.
  11. 403b Investment Advice

    Here's a table that was in a Vanguard blog. As you can see, high fees greatly reduce your wealth over longer time periods. A 1% fee reduces a principal by over 25% over 30 years.
  12. choosing a 403b plan

    How much is the MM balance? It might be such a small amount that it rounds off to 0%? At some point in the past, you must have had some money in the MM account, maybe when you first started? If your current balance is very low in this fund, then that's fine. I was concerned that you had a significant amount in the MM account, which is not a good idea. It earns very little interest these days and doesn't count as an investment, just as a handy place to park money temporarily.
  13. 403b Investment Advice

    PurpleReign, it really is criminal that the Washington DC school district has no obvious low-cost, mutual fund based provider for their 403b (and maybe their 457?) plan. That list sucks: https://dcps.dc.gov/sites/default/files/dc/sites/dcps/publication/attachments/403b%20and%20457%20Vendor%20List.pdf I believe DC is a tough district to teach in and it could be likely that you will move to another district in a few years. That makes the higher fees of your 403b and 457 plans somewhat less important. It’s high fees over many years that really kill the retirement kitty. I guess you realize that the more you can contribute to tax-deferred accounts, the less income tax you will pay on that higher than average DC School District income. So I’m rethinking my suggestion that you consider a taxable account, and I now think you should defer as much to your 403b and 457 plans (and contribute to your Roth IRA) as possible. If you leave the DC district in 2 or 3 or 5 years, you can roll the 403b into another 403b with your new district, or into an low-fee IRA. Likewise with the 457 account. Hopefully the new district will have low-cost 403b and 457 providers! Have you confirmed with Holistic Planners that their 403b plan has no additional fees other than the 0.80% in addition to each fund’s expense ratio? Unless you can get the Lincoln Investment’s Participant-Directed platform which adds no percent to VG’s low ERs, just $35 or maybe $60/year, Holisitic Planners looks like your best 403b provider. I would call the Lincoln Investment 800 number and ask about their Participant-Directed Platform. Nothing ventured, . . . .
  14. choosing a 403b plan

    If you agree that you should stop making further contributions to your AF 403b account, then yes, fill out a new salary reduction agreement that makes that happen. There is no harm to just letting your AF account just sit there for a while and hopefully grow while you make up your mind about what to do with it. In the meantime you can get the Aspire 403b account set up. After Aspire tells you it's ready, you can fill out a new salary reduction agreement. These things usually take a week or so, although I bet Aspire will be faster than 403b insurance companies usually are. Are you able to get online access to your AF account? If you don't have it, I suggest you set it up with them. There's usually a lot more information on your account online than there is on the paper statements.
  15. 403b Investment Advice

    PurpleReign, is it true that you are able to choose Vanguard funds (as Tony was able to) with your 457 run by ICMA-RC (457)? When I google “ICMA-RC (457)”, I get a plan that uses only VT VantagePoint funds. http://www.icmarc.org/products-and-services/457-and-401-plans.html Is that your plan? No doubt the funds allowed in a 457 ICMA-RC will vary depending on the plan.
  16. choosing a 403b plan

    Kevin P, welcome to the forum! It's wonderful when a thread here motivates a lurker to join in! Would you mind starting a new thread? This one is getting long and we don't want to highjack it. I think your 403b situation deserves its own thread.
  17. choosing a 403b plan

    American Funds doesn't wave the 5.75% load on their class A funds for their K-12 403b, according to 403bcompare. https://www.403bcompare.com/products/55#/investmentoptions
  18. choosing a 403b plan

    I think all of us here think you would be better off making future contributions to a low-cost index target retirement fund at Aspire rather than to AF's load funds with their higher ERs. And I think we agree that there is no big hurry about deciding on what to do with your AF account, as long as you don't make further contributions. I second Tony's suggestion on signing up with Aspire, using the Vanguard TR fund he mentioned. After it is all set up, I think you should stop contributions to the AF account (if you haven't already done so). By the way, what percentage of your AF 403b is in the money market fund?
  19. 403b Investment Advice

    Either way? Seems like I remember that an Aspire-approved advisor adds a fee of 0.60% per year? I agree with MoeMoney that asking the district to add Aspire is a good idea. The more teachers etc. ask for it, the more likely the district is to add it to the list. I agree with Tony that a balanced fund like an index-based Target Retirement date funds with Aspire is all Purple Reign needs and an advisor would add an unneeded expense.
  20. choosing a 403b plan

    Gina, I think your AF funds are not terrible funds, but I wouldn't want to own them. They tend to include both US and International stocks, as well as bonds in some cases (Cap Inc Bldr). Figuring out your asset allocation is more tedious than necessary, as is rebalancing. I think you have already paid the front-end load, so that's a sunk cost which you won't pay again (unless you buy more). The reinvestment of their annual dividends and capital gain distributions doesn't pay the load. So you could keep the account but not make any further contributions. You don't have to transfer it to the Aspire 403b. You can have more than one 403b account. Just don't contribute further and pay more load fees. After a year or two you could compare how it's done with your new Aspire 403b and then decide what to do with it.
  21. choosing a 403b plan

    The Management Fee and the 12b-1 fee are included in the expense ratio. This is from the AF website on Capital Income Builder A fund: https://www.americanfunds.com/individual/investments/fund/caibx Fees & Expenses Fees Annual Management Fees 0.23% Other Expenses 0.11% Service 12b-1 0.25% As of each fund's most recent prospectus. Expense Ratio CAIBX 1 0.59% Lipper Global Equity Income Funds Average 14 --%
  22. choosing a 403b plan

    That "A" after each fund name indicates your funds are class A funds, which means you very likely paid their 5.75% front end load. You can confirm that by comparing your pay stubs showing the amount of your payroll deduction, with your AF statement, showing the amount actually added to your account. I think it's very unlikely that the loads were waived but I guess it's possible? I googled your funds and their ERs are 0.59%, 0.60%, 0.56%, I didn't look up the MM, and 0.64% (in order). These ERs are higher than ideal and over time they are a drag on the return of your account. Whether AF's management adds enough outperformance to overcome that drag is the question. Growth Fund of Amer. has done very well recently but it is not diversified and bets on a narrow segment of the stock market (large cap growth). I'm not familiar with the other funds. I'm a believer in using broadly diversified, very low-cost index funds, as is Tony I think, so that's our bias.
  23. choosing a 403b plan

    You haven't told us very much about your American Funds, their ERs and their relative percentages. AFs are all actively-managed funds, which results in their have higher costs, both expense ratios and undisclosed costs. Although AF is a well-managed financial company (John Bogle the founder of Vanguard has said so), they levy a 5.75% load and have higher ERs of 0.6% to 0.7%. We have drunk the koolaid that broad-based index funds, over the long term, will outperform actively-managed funds, at least 80-90% of the time. Whether your particular group of AF funds will outperformed our suggested group of index funds (or an equivalent target retirement fund) is not known. It's possible to compare individual fund's past performance and we can help you do that if you want.
  24. choosing a 403b plan

    Gina, Tony explains your choice well. Use the Security Benefit NEA Direct Invest and the 3 index funds he listed, and rebalance once a year or so if needed. This is the lowest cost 403b plan for you. Or, use Aspire, choose to self-direct (an advisor costs 0.60% I think so don't buy that, you don't need it with a TR fund) and use a single Vanguard Target Retirement fund. This fund is as diversified as you can get and rebalances for you. It's a bit more expensive because Aspire adds a 0.15% fee to your balance, but I think it's probably an excellent choice for you. I would cross Lincoln Investment off your list of vendors, unless you are willing to work on long-s for a NY school district. I see your latest post about growth in 10 years. There's a handy rule of thumb called the Rule of 72. The average rate of return divided into 72 will give an estimate of the time to doubling. If the rate of return is 7%, the principal will double in 10 yrs.
  25. choosing a 403b plan

    The only providers that we recommend are 403b plans that are (MF) mutual fund based. F, FI and VA are varieties of annuity based 403b plans, are very expensive and produce very low returns. As you see, many providers provide both MF and annuity based plans, but usually the MF plans of insurance companies are very expensive.