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MNGopher

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  1. ^ That is a good job of explaining the tax brackets, Ed. I think most people do err on the side of putting too much in Roth accounts. That's not to say there isn't a place for both, but during your peak earning years most should be going into traditional accounts IMO. While most teachers have a pension that will fill up the 0 and 10% space in retirement, most pensions will not fill up the 12% bracket, especially if you are MFJ tax status and your spouse doesn't have a pension. The best time to use Roth accounts are early in your career, or any year your income drops for whatever reason. Also many teachers will have a decade or more (about 13 years in my case) after retirement but before collecting Social Security when they can convert to a Roth up to the top of the 12% bracket. Putting money in a Roth during peak earning years is locking in your taxes at 22% (currently) and that can't be undone. There is a pretty good chance you will be able to take it out of traditional for expenses or convert it to Roth at a lower rate later, if you decide to defer it during high income years. If a saver does err on the side of contributing too much in a traditional account and ends up in a higher bracket in retirement, this would mean your investments did really well, and it's not really the worst problem to have.
  2. MNGopher

    RMD

    I haven't heard much about people in the public sector being worried much about RMD's. What is your concern? Is it pushing you into a higher tax bracket? The IRS doesn't require that you spend your RMD. You can always reinvest it in a taxable account. In fact if you are still working as an adjunct professor after the age age of 72, you can still invest in a Roth IRA at any age as long as you have earned income.
  3. Whether you should be contributing to traditional (pre-tax) or Roth (post-tax) really comes down to comparing your tax bracket in the year you earned the money vs. your tax bracket in the year that you will withdraw the money in retirement. The latter, is of course an estimate. You're going to pay taxes one way or another. You just want to pay them when it's most beneficial for you to do so. General rule of thumb that I would recommend: If you are currently in the 10 or 12% bracket do all Roth. If in the 22% bracket favor the traditional contribution, but some of both is fine. In the 24% bracket or higher, max traditional before doing any Roth. As far as if tax brackets go up or down in the future, I agree with most people that they will probably go up, since we are at historically low rates that are currently set to expire in 2025. I don't really expect them to go up all that much though. The 12% bracket may revert back to 15 or so, and 22% may go to 25. These small changes in tax rates wouldn't affect my basic strategy for determining which type of account to contribute to.
  4. With a 3% withdrawal rate it seems like any portfolio will have pretty close to a 100% chance of success with anything more than half stocks, even for a 60 year retirement. It's interesting that you have a very aggressive asset allocation, yet you have a very conservative withdrawal rate. There is nothing wrong with that, since you know yourself and your risk tolerance. Your fears/concerns aren't volatility, because you know you aren't going to succumb to behavioral errors like panic selling. Your concerns, I would assume, are more longevity and maybe inflation. I think that this ties back to many people's responses to Tricia's original question; that your risk tolerance is a very personal decision based on a compromise of your own need, ability, and willingness to take risk. My biggest concern with your plan, Ed, would be sequence of return risk. I'm sure you have researched this and taken it in to consideration. If someone achieves FIRE status at a young age and pulls the trigger, the first 5-10 years of retirement becomes very important. A long bear market or a sharp drop with a stagnant recovery can put a FIRE plan at risk because you would be forced to sell depreciated stock for (possibly) many years, thus reducing the odds of success. On the other hand if the decade after you retire has above average returns, you will likely do very well, and could even increase your withdrawal rate and still not outlive your portfolio. Personally I'm at about 70/30 (65/35 if you count emergency and new vehicle fund as part of portfolio), with 2-3 years until retirement. I plan to stay somewhere between 60/40 and 50/50 in retirement. Full disclosure: my pension will keep me housed, fed, and the utilities on, so I am investing for the "wants" more than the needs. I plan to use some type of "variable withdrawal rate", starting at 4% but will adjust based on the economy.
  5. What final asset value are you targeting? What are you planning for a withdrawal rate?
  6. Yes, 100% stock had better performance than 70%, but it was less than 1% better (for this particular time period), while taking on considerably more risk. I am also in a higher allocation of stocks than is typically recommended for my age. The thing I don't like about 100% though, is it's tough to rebalance during sharp downturns like we've had this year. During Bull markets rebalancing is a preservation/safety move, but during Bear markets rebalancing from bonds to stocks can improve performance.
  7. The Efficient Frontier graph can be helpful when trying to balance risk vs. reward. The -axis is expected return (although it seems too high) and the Y axis is volatility/risk. For most people the sweet spot is in the 60-70 stock zone where you get the most return for the risk level. The main takeaway for me is that anything more than about 75% bonds actually increases risk while reducing return, and as you approach 100% stock, risk increases considerably more than return. As others have said it is ultimately a very personal decision based on a great number of factors.
  8. I agree that there are different advantages to both platforms (FB and this forum). You can usually get quicker responses on FB, but I think it's also easier to miss some of the responses if a discussion thread gets longer. It's also more difficult to find discussions from the past on FB, whereas here you can just scroll down to it, if you know what you're looking for. I think younger teachers are much more likely to use social media like FB, twitter, Instagram, etc. than a forum.
  9. Only? What service does this advisor provide for 1.25%? Honest question, I'm not familiar with this plan.
  10. Rick Ferri is one of the original (or very early) Bogleheads. He has been an advocate for a simple low cost passively managed index fund portfolio before it became popular. He is also the host of the Bogleheads on Investing podcasts, who's guest list features some of the biggest names in the world of financial planning. https://bogleheads.podbean.com/
  11. The problem with transferring between companies during these periods of extreme market volatility, is that your account will be liquidated and your money will be out of the market for at least a few days. The markets have been up or down 5% or more almost every day for the last few weeks. You might get lucky and make a lot, or just as easily lose a lot if the market jumps back up while you are out of the market. I would wait until things calm down. What you can do in the meantime is open your new account at Vanguard, and redirect your new contributions there instead of to Equitable. Then when the dust settles, transfer the balance over if the surrender fee isn't too high.
  12. Welcome. You did indeed have very good luck with the timing of that transaction. Probably saved yourself 10's of thousands, selling high and buying back in much lower.
  13. I'm sure Skelly has done the math for their situation. As a reminder to others though, if you retire in your late 50's-60ish you could still have over a decade before starting Social Security benefits. This is a great time to spend down an inflated deferred 401k/403b plan and do Roth IRA conversions while you are in a lower tax bracket.
  14. The FA's response confuses me because there is currently no fiduciary standard as a law. Fiduciary is just an adjective that means only about as much as you trust that individual. Without the fiduciary standard, which has been dropped by the current administration, it's basically the same as saying I'm a "good" or "fair" advisor. It sounds nice but doesn't mean a whole lot. If you have absolutely no interest in personal finance, then it might be worth it to find a good AUM advisor to keep an eye on it for you. I think Vanguard's Personal Advisory Service for .30% is about as much as anyone should pay unless their situation is extremely complicated. Or better yet, read a few books, listen to a few podcasts, etc. and you'll learn more than enough in no time.
  15. Welcome to the forum jcarlson8282. I teach just down the road from you in Monticello. We added Vanguard and Fidelity to our approved vendor list about 5 or 6 years ago, in case you want to mention that to your administrators. In the meanwhile Aspire is a good option.
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