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Everything posted by EdLaFave

  1. Is there a reason you're asking what district is the "gold standard" as opposed to what a "gold standard" would look like? I certainly haven't reviewed every district in the nation, so I can't award a "gold standard". However, I can tell you what I would do if I were given complete control over a district: I'd have exactly one vendor for the 403b and one vendor for the 457b...neither would have agents. That vendor would offered fixed allocation funds (Vanguard LifeStrategy), target date funds, total domestic stock fund, total international stock fund, and a total bond fund. That's it. Every employee would be automatically enrolled, they'd have a "reasonable" percentage of their salary allocated towards it, and they'd be invested in a target date fund based on their age. Every employee would be able to override this automatic enrollment. My Retirement Services department would offer information very similar to what I've posted on my Investing 101 page. That is the gold standard, but I'm not aware of any districts that have implemented it.
  2. EdLaFave


    ...also, if you have access to a 457b, then take advantage of that too. You can put 19k in a 403b and another 19k in a 457b.
  3. EdLaFave


    I'm not sure how to break the tie between Vanguard and Fidelity. I'll let you decide. Vanguard is documented here. Fidelity is documented here. There may be corner cases where that is sub-optimal, but generally that is the right decision because you have total control over an IRA, whereas a 403b is up to the whims of your employer. I don't understand the question. I assume you're asking what type of account you should move your 200k (from an old employer's 403b) to? I think you've already answered your own question. Vanguard or Fidelity, pick what feels good to you. It is very common to use the word "Roth" as if it fully describes an account. It does not. Tax advantaged accounts (401k, 403b, 457b, IRA, etc.) come in two variants: Roth and Traditional. Please ask questions if you don't understand that. I assume you're asking if half of your 403b contribution can be Traditional and half can be Roth...yes that is allowable. Is it advisable? Well, you haven't provided enough information to say...again ask questions if that's what you're getting at. IRAs have income contribution limits whereas other tax advantaged accounts (401k, 403b, 457b) do not. Some people make too much to directly contribute to a Roth IRA. However, Congress wrote the law in a fairly ridiculous way that allows those folks to contribute to a Roth IRA indirectly through something that has come to be known as a "backdoor Roth contribution". You haven't told us much about you, so I can't answer that really. I think you're going to want to read my Investing 101 page. Your main decision is to decide what percentage of your portfolio should be in bonds. I personally do that by recognizing that stocks can drop by 50% fairly quickly and take many years to recover...then I ask myself how much of my portfolio I can financially and emotionally afford to lose. If you would do something foolish like selling stocks during a crash if you lost 50% of your portfolio then guess what, you can't handle a 100% stock portfolio. If you can only handle losing 25% of your portfolio then you need a 50% stock and 50% bond portfolio. Once you know what stock/bond split is appropriate for you (something only you can answer, by the way). Then picking the funds is easy. If you want to save a little bit of cash in fees then you invest in what's known as the 3 Fund Portfolio...if you don't mind paying a little extra to not have to manage anything at all (3 fund portfolio takes hours per year to manage) then you can go with an all-in-one fund (fixed allocation or target date). In the Vanguard/Fidelity links I gave you, I point out the funds to use. In the Investing 101 link I gave you, I describe all of this in detail. Ask questions. ...all my comments are in regard to your entire portfolio as a whole. Each account does not have to be a stand-alone portfolio if you will. Ask questions. Very generally speaking, it doesn't matter what account type you have, my fund recommendations will be the same. However, bond funds in a taxable account can generate "large" tax bills (especially for somebody in a high tax bracket). I'd also like to put my highest performing assets in the account that is guaranteed to never be taxed (Roth accounts) so I'd avoid putting bonds in those accounts (Roth). So there are exceptions to the rules, but I can't give comprehensive input because you haven't laid out your entire financial situation. It seems like you've really grabbed onto the idea that some funds are "better" in one type of account than others, but as a general rule of thumb (with a few caveats) that isn't how this works. You build a fully diversified portfolio with rock bottom costs (in short that means, you buy total market index funds). Then you buy those funds in the accounts where they're the cheapest and/or most tax efficient. You view your portfolio as the summation of all of those accounts. Yes, you apparently will spend money on your kids college, but it doesn't come from a single fund...it comes from your portfolio as a whole. You may do some mental accounting to imagine it coming from a particular source, but that's essentially a fallacy (one lots and lots of people fall into).
  4. Based on OCPS (FL), which I think is the same everywhere: AXA is documented here. Vanguard is documented here. If your state doesn’t have a great 457b then you’re also going to want to add a vendor for that too. Fidelity is the best, they’re documented here. I’m happy to help you reform your district’s plans. I’ve successfully done it in my district. You can navigate to my blog to read some of posts about it. I also answered a question about this over on a bogleheads thread. Reach out if you want help.
  5. You’re going to want to define terms. What is a straight average fee? Why do I care what the average participant fee is? Based on your post, I can’t tell, with any confidence, what you’d be paying at both vendors. Lincoln offers a cheap PDP plan in select areas. It is a good idea to list all available vendors because we might know something that you don’t. have you considered a 457b? Some states sponsor good plans even if your vendor list is bad.
  6. You can absolutely eliminate a vendor from the approved list. It has happened in many places. I’m not sure exactly how it happens. Are people forced to rollover their plan to a currently approved vendor? Are they allowed to keep the account but no longer contribute to it? Are they allowed to keep and contribute to the account, but no new accounts can be opened? Maybe the specifics are negotiated on a case by case basis, maybe each vendor has a policy, or maybe the school district has a policy. Let us know what you find. Be prepared to counter the argument that removing a bad vendor will be disruptive to employees and is thus a “bad” thing to do.
  7. I also want to add one more thing. The best solutions are the ones that don’t require ongoing effort and resources to maintain and enforce. That’s why eliminating exploítative vendors and starting auto enrollment is an absolute winner. Set it and forget it, if you will.
  8. Let me go further than Tony has. There is no guess work here. We have the data. This is a proven winner. Google it and see or start with what Vanguard has to say on the issue: https://institutional.vanguard.com/iam/pdf/CIRAE.pdf
  9. I don’t think your hopeful suggestions are hopeful enough. I don’t believe in negotiating with myself. This is where I’d start: 1. Fidelity is the only approved vendor. 2. The Fidelity plan only offers target date index funds and the three fund portfolio. 3. Employees are automatically enrolled into a target date fund based on their age and they default a percentage of their pay into the plan. Then the negotiation moves from there. I certainly wouldn’t start by conceding the approval of exploítative plans in the hopes of stopping agents from being on campus.
  10. I totally understand the throwing up and collapsing aspect of the story. Put me under a bunch of pressure and conflict in an environment where neither fight or flight are legitimate options and my body wouldn’t be able to handle it. I agree with MNGopher, living on 17k/year per person is risky. Perhaps if they’re living in inexpensive places abroad then it is more reasonable? I also wouldn’t feel comfortable with the 3.5% withdrawal rate for a 50-70 year retirement. The Early Retirement Now “study” found that a 75% stock portfolio has a 7% chance of losing value over that period and a 3% chance of reaching $0. I feel much safer at a 3% withdrawal rate.
  11. I don’t have any personal experience with this. Intuit answered this question for a 401k, which I imagine is very similar to a 403b. https://ttlc.intuit.com/community/retirement/help/what-happens-if-i-have-a-401-k-loan-but-later-lose-or-quit-my-job/00/25699 If I were you I’d start googling, read the paperwork you presumably signed, and get a hold of the institution you took the loan from to get details on the exact terms.
  12. Sorry to read that. In another life I’m an uncompromising union boss that is entirely focused on teacher pay, benefits, and working conditions. I am 100% behind unions, but sometimes the things they focus on really upsets me.
  13. So most people don’t know math. Depressing. I’m always shocked when I hear a full grown adult claim they never use algebra. How different is their life than mine? I use it to properly space out medications, to water and treat my lawn, to plan my investments, to track and adjust weight loss, to adjust my weight lifting program, to determine if purchases (house, car, AC, etc) are worthwhile, to order the proper amount of mulch, and on and on it goes. I guess everybody else is just winging it?
  14. I don’t entirely share this quality, but I can fully understand the basic human desire to do and accomplish things. What fascinates me is that so many people choose to direct this energy towards their employer’s goals and interests rather than their own. There’s a pretty big difference between my little Millennial bubble, which is overpopulated with software engineers, and my perception of the general population. In my bubble there is a significant minority (40% maybe) of people who believe: 1. Corporations are amoral at best and immoral at worst. 2. The short term profit motive combined with #1 cultivates a culture where employees are objects standing in the way of additional profit. 3. The economy is structured against workers and it’s only going to get worse. These folks tend to complain loudly and have no problem envisioning and planning for their lives post-FIRE.
  15. The author claims: 1. Identity crisis. 2. Lack of productivity leading to doubt, depression, and negativity. 3. People won’t like you because you’re retired. 4. You won’t be as happy as you think (or happy at all) and then you’ll beat yourself up. 5. With nothing to do, you’ll question the point and hollowness of life. I feel like 1, 2, and 5 are all the same point. We really have conditioned society into becoming human machines that find joy in maximizing productivity for their employers. It’s like Stockholm Syndrome, just wild. I think 3 just saves you time from dealing with folks you’re better off avoiding. 4 is interesting because of course you adjust to happiness, but a lot of people struggle to adjust to their soul sucking jobs. The choice seems obvious.
  16. So you’re going to be retired and NOT receive a pension for several years? I think I’d basically ignore what is or isn’t actuarially neutral for them and think entirely about my circumstances. The most naive approach is to estimate when you’ll die and calculate (in inflation adjusted terms) which payout gave you more money. Of course this is incomplete because you’d have to model opportunity cost. Delaying will lower your taxes now, but increase them later. Delaying might mean that you can’t take the early pension payouts and invest them for a nice return. I’m sure there are more opportunity costs. If you want to be precise you’d have to build them all into a model and see what looks better. Of course at that point you’d want to tweak your assumptions (like life expectancy) to see how much they affect the end result...that’ll allow you to better account for risk/uncertainty. For example it probably wouldn’t be worth delaying to get an extra dollar if your assumptions are right, but risk 100k if your assumptions are wrong.
  17. I suspect I’ll hold the minority opinion here, I didn’t find the 5 listed arguments to be particularly persuasive: 1. This argument is as old as time and I’m tired of hearing it. Every generation gets labeled as inferior to the last, yet somehow when you look through the volatility, civilization manages to improve rather than regress. In this case, I guess she is arguing that this generation of parents/society is getting it all wrong relative to older generations. I’m not buying it. 2. She didn’t even provide evidence that relationship building is hindered by preferring teachers with a basic understanding of technology or giving children one to one access to technology. She just states it as fact, a fact that I suspect isn’t actually true. The access I had to technology as a student changed my life and prepared me for my career as a Software Engineer. 3. She seems to be arguing that training diminishes quality instruction rather than adding to. Obviously that isn’t generally true. It would be reasonable to ask for better training or the ability to “test out” of training that is beneath you, but to argue that training hurts quality instruction conflicts with every experience I’ve ever had with training/education. It’s an investment that generally pays off because you’re able to stand on the knowledge and experience of so many people who are probably smarter than you. 4. I have no idea how she proposes we hold parents accountable. While I sympathize with the annoyances that the general public (in this case parents) can often provide...that’s part of the job of a teacher. 5. It isn’t clear what she needed for the kids that was being withheld. I guess dealing with all of the sad aspects of society (poverty, disability, etc) and seeing that show up in children had a negative affect on her mental state, which then affected her physical state. That’s fine, I sympathize. There are lots of jobs I’m not emotionally capable of holding, but it is because of who I am, not a defect in the job.
  18. I’m confused. The Facebook post author is a different person than MoeMoney, right?
  19. That should certainly create uncertainty on their end, but such is the nature of predictions. For most professions, the employer absolutely has immense control. To add to that general topic, I’ve argued (to companies) that making certain changes to directly benefit employees would provide an indirect, but significant benefit to the company. They disagreed because they viewed everything as a zero sum game; if the employee benefits, it can only be at the expense of the company. Naturally they came to view me as their opposition.
  20. It’s true that the income taxes are being paid, but as long as the money remains in the Roth account, the heir isn’t paying taxes on distributions. I’m fully in support of any policy that prevents generational wealth and dynasties.
  21. Why were you surprised that your decision to quit caught them off guard? If I were them, I would have predicted that you’d stay put (possibly finding a way to earn the other half credit through sub-ing or whatever) for two reasons: 1. You love the work and want to continue working even after having quit. 2. It would have doubled your pension, which is of course equivalent to earning a massive sum of money. The blog kind of reads like there may be some unstated reasons for being unhappy.
  22. If you inherit an IRA from somebody other than your spouse then you have to setup a plan to withdraw money from the account. https://www.schwab.com/public/schwab/investing/retirement_and_planning/understanding_iras/inherited_ira/withdrawal_rules The link above indicates the lifetime expectancy option still exists. I think you’re referring to legislation that may or may not pass and whose differences between the House and Senate has yet to be rectified. I believe the House is trying to do away with the lifetime expectancy for non-spouses and you’d have 10 years to deplete the account. I believe the Senate is allowing the first 400k to be handled via lifetime expectancy and the rest has to be depleted in 5 years. I understand this passed with overwhelming support in the House, but I’m not ready to bet that it becomes law. Keep watching it, we’ll see. https://www.forbes.com/sites/leonlabrecque/2019/04/23/new-proposed-stretch-ira-rules-will-have-a-big-effect-on-iras-and-it-could-cost-your-kids-thousands/
  23. I’ve taught financially illiterate people how to invest in a couple hours and I bet I could have the same outcome with children. Can they speak sophisticatedly about tax policy and the intricacies of different types of investment accounts? No, but they know that they need to invest every dollar in a target date fund or they know how to split money across three total market funds. Cutting through the financial BS on your own is tricky. Following a total market index investment philosophy that is laid out for you, well that can be done by anybody. ...people in my real life would laugh at me having faith in humanity because the bar I have set for humanity is beyond low, some may say I’m overly pessimistic.
  24. If you have a 403b with Vanguard can you utilize Vanguard’s Personal Advisor Services (PAS) for a 0.3% fee? There’s just a built in conflict of interest even for an ethical Financial Advisor because they can only sustain themselves by eating into their clients’ profits. That pill would be easier to swallow if they were bringing serious knowledge/skill to the table, but if they’re picking appropriate investments then what they’re providing can be taught to the clients in an afternoon instead of charging them a lifetime of AUM fees.
  25. I thought I read half of teachers quit within 5 years. With respect to the 30k/1M numbers, that just speaks to the reality that you need enormous capital to safely support modest annual withdrawals. 4% withdrawals are pretty safe for somebody at normal retirement age. 4% of $750,000 is $30,000. 3% withdrawals are pretty safe if you want your portfolio to last forever. 3% of $1,000,000 is $30,000. The OCPS (FL) pension does NOT come with cost of living adjustments. I suspect most employees don’t realize that...they may learn about inflation in real time as it eats them alive.
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