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MNGopher

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  1. With regard to investing...."Don't do something. Just stand there!" -Jack Bogle
  2. Tony, He can retire in 5 years at age 55 and he currently only has 35K in tax deferred accounts. If he does retire at around that time, that will give him 17 years in which he can spend from tax deferred and/or do Roth conversions. I don't see how RMDs will be a problem for him no matter how much he puts in traditional. Again though, I agree that a mix is probably smart.
  3. You are correct on those contribution date deadlines. 403b's and IRAs, Roth or Traditional are both great ways to save for retirement, and you seem to be in a situation where some of both will be best. In general these tax advantaged/tax deferred accounts are preferred to a regular taxable brokerage account, and most people would recommend maxing those out first. I do have a taxable brokerage account at Vanguard, that's about 40% of my portfolio. This is not ideal, but until 6 years ago I had terrible 403b choices, so invested a lot in taxable, so that is where I added money, rather than a 403b with a 2.5% expense ratio. However, It is nice to have all 3 types of accounts in retirement, for tax diversification and flexibility. I will draw down from my taxable account in early retirement, before I take 403b withdrawls. Ski-U-mah!
  4. Welcome! Third party administrators are pretty normal these days, and their fees are usually only a minor inconvenience, and shouldn't stop you from investing with Vanguard. As far as Roth vs. Traditional, it comes down to comparing your tax bracket in the current year to your expected tax bracket in retirement. There are a lot of variables that you haven't given us, like your age, income tax filling status, pension as a % of your final income, Social Security eligible, etc. When you say you are near the top of the 22% bracket, are you considering the standard deduction into the formula? Are you able to deduct your traditional IRA contributions, or is your income too high? This and/or a traditional 403b contribution can further reduce your taxable income. If this could get you down to the 12% bracket (or close to it) that would likely be a wise move. If you can defer taxes now at 22% now and pay them in the future at either 0, 10, or 12% you should do that. My hunch is that since you have a relatively small traditional IRA balance (35K) and are only 5 years from retirement, you could definitely be saving more in tax deferred without creating a tax problem. The exception might be if your pension and social security would immediately upon retirement put you at a higher income than you are at now. Many teachers have a gap of a decade or so between retirement and pension/SS/RMDs, when they can safely spend down a traditional (tax deferred) account without putting themselves in a higher tax bracket. Doing some of both pre and post tax is usually a good idea. A traditional 403b and a Roth IRA is a good combination for many people (instead of the other way around).
  5. Vanguard Total Stock Market Index Hits the Trillion Dollar Milestone | Morningstar The growth of this fund over the past 8 years or so is pretty incredible.
  6. Ed and Tony are having one of their classic left brain/right brain friendly disagreements. It think it can be shown that mathematically, investing the money will beat paying off the mortgage more often than not, but that doesn't necessarily make it the best choice for everyone. You can't really put a price on peace of mind. Let me be the centrist here. In my case I bought a new construction 2,000 sf home in a medium cost of living area for $104,000. This was in 1995 and my original interest rate was 7 point something. I didn't know a lot about investing and only had annuities through my employer plan, so I plowed most of my extra money into the mortgage and paid it off in a little over 11 years. With the mortgage paid off, I started saving and eventually started investing more around the time of the great recession, which turned out to be a good time to start. Now, I was lucky on the timing here, and looking back at the rate of return of the stock market during the years that I held the mortgage, it probably would have worked about the same if I had invested the money vs. paying off the mortgage. My timing was lucky and it worked out for me, but in today's environment it certainly seems that keeping the mortgage and investing is the better choice. However in the future, who knows? Jim Dahle, "The White Coat Investor", wrote an interesting blog recently on the this topic of paying off debt vs. investing. https://www.whitecoatinvestor.com/pay-off-debt-or-invest/
  7. Yes, this. VFINX is not listed on Vanguard's site as an available fund, but I could still find today's price via google. There isn't a huge difference between the Admiral share S&P and VTSAX. Their performance and expense ratio are very close. I like that you get a little more diversification with VTSAX, and would use it when available.
  8. For what it's worth Vanguard upgraded my investor share fund to admiral shares at about the same time that they started working with the Newport Group. This was a target date fund, so I'm not sure if they also do this for the S&P fund. It does look like VFINX might be a fund that they are phasing out and not offering to new customers. I would get the total stock market (VTSAX) before either S&P fund if given the choice.
  9. Interesting to hear the perspectives from the retirees here. I'm in about the same position as Whyme (1-2 years away from retirement). I have considered going earlier but would take a big pension hit, so I think I'll wait it out until 2022. I'm glad I ramped up my savings in my 40's-early 50's, but wish I would have done more saving in my 30's.
  10. Welcome to the forum! At my school, insurance changes can only be made during open enrollment periods, but 403b changes can be made at any time of the year. It might be worth asking about.
  11. Welcome! I don't think it is "dumb" to be a 100% stock in your retirement accounts at age 35, as long as you have a solid emergency fund. I also don't think there is anything wrong with being 80/20 or 70/30 at that age. Either way, if you are maxing out both your backdoor Roth IRA and 403b, plus maybe a pension, you are going to be very well set for a fairly early retirement.
  12. What is the reason for wanting to move assets from your IRA to your spending account, if you don't need the income? I would just convert traditional to Roth to the top of your current tax bracket, if you are in a lower bracket.
  13. We don't have all the information on the relative, but from the clues given: 1) charter school, 2) young with only a couple years experience, 3) no match, 4) less than perfect 403b vendor, 5) under $6K to invest annually......Roth IRA seems like the logical choice. She can start making tax deferred investments as her income rises.
  14. Many Vanguard funds are covered by a patent that lets them keep their funds more tax efficient than other companies. Bloomberg article about this. https://www.bloomberg.com/graphics/2019-vanguard-mutual-fund-tax-dodge/ I would guess not having shareholders, local offices, or a lot of advertising all help to keep costs low as well.
  15. Ferri interviewed Merriman in this episode of the Bogleheads podcast. https://bogleheads.podbean.com/e/episode-018-paul-merriman-host-rick-ferri/ I'm in the camp that the average investor doesn't need to "tilt". I mean it might work out better and it might not. I think the main thing is that if you decide to do it, you don't chase performance, by changing your tilt every few years, or you are bound to underperform the total market by doing this. You have to commit to it for your investing life, as Rick Ferri often says.
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