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krow36

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Everything posted by krow36

  1. Invest4success, I like your ideas. Yes, I think moving the Roth IRA from TIAA to Vanguard for their lower fees is a good move. I think it makes sense to put your retirement financing ahead of financing your kids’ college. You can’t get a loan for your retirement, but loans are available for college. As you mention, you could use funds for college from your retirement accounts after age 59.5 if you felt you had plenty for retirement. I believe that the 529 must be used for educational purposes, so it’s not as flexible. I would max out your Roth IRA and then contribute as much to the 403b as possible. When you retire at age 60 or so, you can then convert some of your 403b to a traditional IRA. Then every year until age 70.5, you can convert some tIRA to Roth IRA, staying in the 15% income tax bracket. This will help reduce the tIRA balance which will reduce the required minimum distributions that start at age 70.5. By a brokerage account, do you mean a taxable account? You can have a taxable “Individual” account at Vanguard and invest in mutual funds for your retirement. Managing it can be very simple. Having a taxable account for living expenses between retirement ages (60?) and 70.5 can be a great way of reducing your taxable income and keeping you in the 15% tax bracket. See above. You’re doing great in focusing on improving your financial plans and accounts.
  2. It’s annoying when an interesting link is blocked by a request to subscribe or to register. I did a quick copy and paste. In case your view was blocked like mine was: Steve, this seems to be a law firm specializing in defending the financial industry against claims that “certain annuities are never in a purchaser’s best interest”. It sounds to me that they were the law firm for Security Benefit in the class action suit against SB’s NEA Value Builder 403b’s. It's great that they think the financial industry should be nervous. No doubt there's lots of money to be made. I just listened to the Episode #18 podcast on the lawsuit against the universities for not fixing their 401k's sooner. It's very interesting--Dan and Scott are fantastic at bringing out how complicated it all is. Law firms see LOTS of opportunities. There are so many moving parts! http://teachandretirerich.com/podcasts/
  3. That's a wonderful outcome! Congratulations! Hopefully you can convince others to switch?
  4. krow36

    Question

    Tony, I took SS at 62 because I retired early at 56 and we needed the income. If I were in your shoes and didn't need the income, I'd wait like you're doing and get the 8% increase for each year you wait. A guaranteed 8% increase per year to an annuity with a COLA is impossible to get anywhere else! I’ve got Jane Bryant Quinn’s 2016 book “How To Make Your Money Last, The Indispensable Retirement Guide” from the library and it’s got a very thorough chapter on SS. She advises waiting until at least Full Retirement Age of 65, and suggests waiting until age 70 is the smartest choice. I think she’s a great writer—she can make difficult stuff understandable. This article by Karrie Schwab-Pomerantz might explain your choice to your FIL, especially the section on Life Expectancy. http://www.schwab.com/public/schwab/nn/articles/Social-Security-Should-You-Wait-Until-Age-70-To-Collect
  5. All you really need is the TR fund--you don't need to have other funds in the account. VG TR funds have stock and bond funds that cover domestic and international. 403bwise on Target Retirement funds: http://403bwise.com/k12/content/59 Vanguard has lots of good educational material on investing—it’s worth prowling around their website. Links on Target Retirement funds: https://investor.vanguard.com/mutual-funds/target-retirement/#/ Click on a particular bar to get a details. You should choose a TR fund based on the asset allocation you want, not the retirement year. I agree with the other posters that Aspire is a good choice for you. You're making progress already!
  6. I agree with Tony that you don’t need an advisor for an “initial assessment”. Your own initial assessment is fine. get out of expensive MetLife 403b and start a low-cost mutual fund based 403b. start a college fund for daughter start Roth IRA accounts You don’t need to pay anyone to confirm the above. Once you get started, you’ll see that these are DIY chores. If you have questions you can ask the folks here for their opinions. You probably do need to do some more research about the above 3 topics and investing in general. I think first of all you need to stop contributions to the MetLife variable annuity. Then you need to decide on your new provider and fill out their forms and mail them in. If there’s a Third Party Administrator, check with them about the required forms and procedure. It may take several weeks or more to get the new account established. Then you can restart payroll deductions again. With the new account established, you can focus on moving the MetLife funds into the new account. You need to find out about the surrender fees and what it will cost you to delay vs getting out all at once. There are no tax penalties to transferring your funds from MetLife to another 403b provider. MetLife will have surrender fees that decline over a number of years after each contribution. The transfer no doubt involves forms from the old and new providers as well as the TPA if there is one. The process often takes several months.
  7. It’s interesting that the district's list is divided into the annuity based 403b providers, and the mutual fund based 403b7 providers. Usually they are all mixed up together. Many of the insurance companies sell both annuity based and mutual fund based 403b plans. I guess you now realize that an annuity based 403b is far from ideal for retirement investing. I think you’re getting good advice on finding out more about your MetLife variable annuity. Although 403bcompare.com shows that USAA has several index funds in their mutual fund based 403b, your district’s list has them with the annuity sellers but not with the mutual fund based sellers. Their S&P500 Index fund has an ER of 0.26% and a $10/yr acct. maint. fee. USAA is a respected firm which specializes in banking and insurance but does do investing and mutual funds. I think a total fund fee of 0.26% is low enough to be considered if it’s available. Lincoln Investment Planning, with its Retirement Solutions Premier plan adds a 0.90% fee that adds to Vanguard’s very low priced ERs (plus about a $45/yr custodial fee). So a VG Total Stock Mkt fund would cost about 1%. The poster A440 on the Boglehead forum, with the help of his union the NJEA, has been able to talk Lincoln out of the 0.90% fee. I see you are in NJ so perhaps you can take advantage of this? https://www.bogleheads.org/forum/viewtopic.php?f=1&t=175295 Finally there’s Aspire. They call themselves an Aggregator, and they allow investors to choose from a wide variety of funds and fund providers, including Vanguard's low-fee index funds. They add 0.15% to the fund’s ER and a $40/yr account fee, part of which they keep and part of which goes to the provider. They allow investors to be “self-directed” and avoid an advisor fee. So you have at least 3 good possibilities for a much better 403b than the one you have.
  8. One of the teachers featured in the first NY Times article on problems with 403b plans in K-12 school districts was a Ms. Jusinski. She ended up moving her account from an outrageously expensive annuity with Legend Group to the NEA Direct Invest plan. http://www.nytimes.com/2016/10/23/your-money/403-b-retirement-plans-fees-teachers.html?smid=tw-share&_r=0 Thank you Tara Siegel Bernard, the NY Times, and Ms. Jusinski for sharing your story! In the article, the NEA Member Benefit CEO says they are offering the Direct Invest option along with the outrageously expensive annuity and MF based options “to meet the diverse needs and comfort levels of members.” Of course the Security Benefit reps sell the expensive plans, and the offered low cost plan isn't mentioned or explained by the reps. The NEA Direct Invest option is not included in the information that Security Benefit submits to 403bcompare.com. This information is used throughout the country to understand the offerings and fees of vendors of 403b plans. NEA could insist that Security Benefit submit this information, but it has not done so. Is NEA looking out for their union members, or for the over $2 million they receive from Security Benefit for the use of their name? I think we know the answer.
  9. idietel, thanks for NH. I'm adding NH and CT to the OP. NH Teachers are members of the NH Retirement System so should be eligible for the NH DCP plan. https://nhdcp.gwrs.com/login.do?accu=NHampshireWR CT There are a few districts on the list but it also seems that State employment is required (see application form)? Can other districts be added to the list? http://www3.prudential.com/email/retirement/IMFPWeb/hosted_websites/ts/ctdcp/enroll-detail-page.html http://www3.prudential.com/email/retirement/IMFPWeb/hosted_websites/ts/ctdcp/your-plan.html
  10. Maine teachers are State employees and receive their pension through MaineSTRS. They can use the Maine Saves 457 which has a choice of 3 providers: Mass Mutual, VALIC and Voya. http://www.mainesaves457.com/my-investment-options/ VALIC funds: http://www.mainesaves457.com/wp-content/uploads/2016/08/Valic-Fund-Fact-Sheets.pdf The other two providers include low-cost funds as well. I'll correct the Maine entry in the OP. Does anyone have a State 457b for K-12 employees to add to the OP? (I think CT will be added soon.)
  11. The 3rd 403b article is on line now. Great stuff!! http://www.nytimes.com/2016/10/29/your-money/403b-teachers-annuities.html?ref=business&_r=0
  12. I agree that your friends' best bet appears to be Security Benefit's NEA Direct Invest. As far as the difficulty in signing up, it's hard to be patient when you feel you're being ripped off, and want to flee as soon as possible. Threads on boglehead.com about long waits to process transfers in to Vanguard are all too frequent recently. Vanguard's CEO has sent out emails to many apologizing for the delay (of up to several months!). I remember having to wait months to get my VALIC account moved to Fidelity, and it sure was frustrating! I view SB Direct Invest plan as a temporary solution to 403b scene in your friends' schools. I think the present free-for-all that the insurance and high fee MF companies enjoy with K-12 schools will not last much longer. Mr Fiduciary is on the march. OK I admit I'm an optimist! I think it's great that you've decided to help your fellow teachers learn enough of the basics to become better investors! If we had a lot more of that in the schools, we'd be able to make serious progress in pushing the money changers out of the temples!
  13. Have you looked at this thread on the Security Benefit NEA Direct Invest? http://board.403bwise.com/index.php?showtopic=6120&hl= If you click on Performance you'll see all the funds' performance and ER. Click on Plan Agreement to find the plan fees in section roman numeral 10. It might not be a good idea to recommend it unless you've studied it carefully. No one that we know of has used the plan for a full year. corysold has had it since Jan 1. It is a DIY plan with limited phone help and no adviser help. You might post the complete list of providers for your friends' district.
  14. 403b problems, Where to focus efforts? There are so many problems with the K-12 public school 403b world, it’s difficult to know where we advocates-for-change should focus. The recent NYT article discussed some of them and hopefully will cover others in future articles. Here’s a list in no particular order that I cooked up in an hour or two. I’m sure it’s incomplete. When there are many venders vying for customers, multiple salespeople are pressuring uninformed employees. Insurance and high fee MF companies take advantage of uninformed district employees. Insurance and high fee MF companies have strong lobbies and political power to prevent change in the 403b regulations. District employees don’t make an effort to inform themselves of the basics of investing for retirement. There is no district-wide education of employees on using a 403b for retirement savings. School districts don’t have a fiduciary relationship with their employees the way a small business employer has when it comes to defined contribution plans. Congress has not updated the 403b regulations to be equivalent to 401k regs in protecting employees. The unions are seldom active in pushing for or sponsoring low-cost 403b plans. Some States have laws that prohibit the districts from restricting the number of venders. Because school district employees have pensions, the tax paying public doesn’t see the need to pay for a district 401k or an ERISA 403B. Third Party Administrators and Aggregators allow the school district to contract out most of their 403b plan fiduciary responsibility. Third Party Administrators and Aggregators have business plans that are based on dealing with the long list of providers. School district employees often want to keep their expensive annuity based 403b plans even when low-cost MF based plans are available. Many employees don’t contribute to a 403b, even a good low-cost one, because they don’t realize their value in retirement. School districts vary tremendously in size and wealth and it’s difficult to treat them all the same way. If we could wave a magic wand, what single action would we take? What would you propose, to whom, to start on the road to improved 403b’s? Should Congress put the 403b plans under the same ERISA regulations that 401k plans are under? Would this force school districts to accept fiduciary responsibility for their plans and select a single provider, and get rid of the long list of insurance company providers? Would this be too expensive for the school districts? I know many of you have been thinking about this for decades. Is there a magic bullet? If not, what should we push for as a first step? What is our goal?
  15. Check out the Garrett Planning Network. There’s an excellent podcast with Sheryl Garrett you should listen to. http://teachandretirerich.com/podcasts/ It’s Episode #15. The Garrett website is http://www.garrettplanningnetwork.com
  16. Thanks for the update! Can you give some idea of the "initial hiccup"? It might help others going through account setup.
  17. Hi terragram66, You asked for updated information back in July, and I wonder if you've seen this thread? https://www.bogleheads.org/forum/viewtopic.php?f=1&t=183188 corrysold reported as of July that his wife's Direct Invest 403b (started Jan 1, 2016) is running without any unpleasant surprises. Teacher88's experience in moving his old accounts into Direct Invest is also interesting.
  18. Wonderful article! Maybe it will get the attention of the regulators and Congress and they will finally focus on improving the 403b for K-12 school employees. I'm hopeful that low-cost investing is on the move! Thank you John Bogle!!
  19. I believe there is no significant downside to moving a 403b from Oppenheimer to Aspire/Vanguard at any stage! I don’t have any experience with Aspire but I think your friend would need to set up a 403b account with Aspire as a first step. Once it’s set up, doing the paperwork to move the Oppy 403b money to Aspire can be done. april17th, are you yourself going through this process now? Oppenheimer is well-known to be a very expensive mutual fund company and your friend should be delighted to be able to move out to Aspire/Vanguard! She should contact Aspire and find out how to get started. She doesn’t have to deal with the Oppenheimer rep because Aspire will deal with the Oppy main office. Remember to choose “self-directed”, and avoid the advisor fee. Depending on the class of mutual funds (A, B, C or R) that your friend has in her Oppenheimer 403b, there could be some fees for selling the funds. By using the index funds of a low cost provider like Vanguard, I think she will recover any surrender fees within a relatively short time.
  20. April17th, congratulations on getting Aspire added to your district's list of providers! And it's great that you are trying to spread the word about investing in a 403b to your colleagues! I don't know much about about annuities, but I found these articles very informative. Mel Lindauer, one of the founders of the Boglehead website, wrote the series of easy to read articles on annuities for Forbes magazine. This first article is a great introduction to the expense of annuities. http://www.forbes.com/2010/06/04/variable-annuities-high-cost-surrender-fees-personal-finance-bogleheads-view-lindauer.html The 2nd article discussed how to cut the cost of a variable index annuity. I think this pertains to annuities in a taxable account, not a retirement account like a 403b. http://www.forbes.com/2010/06/18/variable-annuities-lower-cost-1035-exchange-personal-finance-bogleheads-view-lindauer.html The 3rd article discusses variable annuities in retirement plans such as a 403b so this one should be read by every teacher before they sign up for a 403b! http://www.forbes.com/2010/07/02/variable-annuities-high-cost-401k-403b-personal-finance-bogleheads-view-lindauer.html The 4th article discusses fixed deferred annuities: http://www.forbes.com/2010/07/16/fixed-deferred-annuities-surrender-fees-teaser-rates-personal-finance-bogleheads-view-lindauer.html The 5th article discusses SPIA’s: single premium immediate annuities, which have there uses and are sometimes recommended by Bogleheads: http://www.forbes.com/2010/07/29/single-premium-immediate-annuity-social-security-personal-finance-bogleheads-view-lindauer.html
  21. Hi MoeMoney, How many years ago was your last contribution to the "3% guaranteed interest" fund? I'm wondering if you are in an annuity based 403b where the surrender fee time period starts with each contribution? Or, has it been 13 yrs since your last contribution? You should ask the AXA rep about possible surrender fees.
  22. Fireman44, you're getting great advice. I agree with Tony, and I suggest you invest annually in a IRA for both you and your wife. Remember your wife doesn't have to be employed, she can contribute based on your salary. Either a Roth or a traditional would be OK. You can do some of both, and change which to use later when you learn about the pros and cons of each. I don't think you can go wrong with a Roth IRA at this stage of your career. If you can confirm that the VALIC 457b has a total fee of 0.80% using the LSMG, I think it would be worth contributing to since it's your best deferred compensation choice. If you can contribute 11k in IRAs and 18k in the 457b, and are able to contribute more to your retirement, then I think it comes down to either the SACT or using a taxable account at Vanguard. I think I would vote for Vanguard. I think I misstated the NJ policy on tax deductibility in my post above. I should have said that deferred contributions are not deferred from NJ state income tax, but are deferred from federal income tax. Perhaps NJ firefighters are exempted from this?
  23. Fireman44, I'm online only occasionally this summer and just spotted your thread. I don't envy you trying to decide whether SACT is worth using or not. My guess it's a "black box" designed to make money for the financial industry. SACT earns a return but takes a greater risk than a VG balanced fund like their Life Strategy fund of funds. You might be better using a mutual fund product with VALIC (not an annuity product!). You'd know the expense ratio and other fees. A further problem you need to consider is that NJ doesn't let you defer your 403b (and 457b?) contributions from your income. It seems to me that a big advantage to contributing to tax-deferred accounts isn't there for you. I think a taxable account for retirement at VG has some advantages over deferred accounts for NJ residents that you should consider.
  24. Have you read this thread on the Security Benefit Direct Invest 403b? http://board.403bwise.com/index.php?showtopic=6120&do=findComment&comment=33634 Also this thread adds some interesting information on the probable origins of Direct Invest. http://board.403bwise.com/index.php?showtopic=6184&do=findComment&comment=33805 I think you should certainly work to get Fidelity, Vanguard or TIAA added to your district's vendor list. In the main time you might consider SB's Direct Invest's Vanguard index funds.
  25. Tony, I just noticed you said "If you are married your spouse can also do a Roth if he/she works." above. Actually an unemployed spouse can use the employed spouse's income to set up an IRA if they are married and file their income tax jointly (MFJ). It would be a shame not to make use of this rule. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits
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