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Everything posted by MNGopher

  1. 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.
  2. What final asset value are you targeting? What are you planning for a withdrawal rate?
  3. 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.
  4. 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.
  5. 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.
  6. Only? What service does this advisor provide for 1.25%? Honest question, I'm not familiar with this plan.
  7. 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/
  8. 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.
  9. 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.
  10. 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.
  11. 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.
  12. 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.
  13. Not to nitpick, because you probably just mistyped, but there is no Traditional Roth. Traditional account means deferring taxes until later, such as: traditional IRA, 403(b), 401(k). Roth refers to accounts where you pay the taxes before the money even hits your direct deposit, such as: Roth IRA, Roth 401(k), Roth 403(b). Which is better for you means comparing your current marginal tax bracket (known) vs. future tax bracket in retirement (unknown). So the exact right answer is impossible to know for sure. I agree with Ed, that for most people in their peak earning years, the traditional route will work out best in most cases. The case where Roth is likely better is if you are in the 12% tax bracket in the year you are contributing (mostly new teachers, low on the salary scale).
  14. MNGopher


    In the past when my district eliminated a company from the approved vendor list, current enrollees were considered "grandfathered in" and allowed to continue making contributions. It might be worth asking about if you want to keep contributing to Fidelity.
  15. Yes, that's a neat feeling when your returns are that high compared to your gross salary. Mine were neck to neck, and at year end my returns were only about 2% less than my salary.
  16. MNGopher

    The Secure Act

    I agree with the WCI, that most of these changes are underwhelming to the average investor. More a case of congress wanting to do something before the elections.
  17. Part of my chart got cut off as I copied it. What's missing is that you can also accelerate to Full retirement age.
  18. Here are some projections they ran for me. "No Refund" refers to a single person and no beneficiary (benefits stop at death). The other rows are different beneficiary/survivor options. In my mind the benefit of accelerating is that you can leave more of your own investments alone to grow larger. Whereas if you don't accelerate you would have a larger guaranteed amount in your later years. There is a small COLA across all columns that I think is froze for a year or two, but will eventually be 1 or 1.5% annually. mikeajohns can correct me if that is not correct. Annuity Plan Regular Monthly Accel to 62 After 62 Accel to 65 After 65 Accel to NRA After NRA No Refund $ 4,218 $ 6,618 $ 3,234 $ 6,275 $ 2,601 $ 6,055 $ 2,179 Guaranteed Refund $ 4,213 $ 6,615 $ 3,230 $ 6,273 $ 2,598 $ 6,053 $ 2,177 15 Yrs Guaranteed $ 4,166 $ 6,579 $ 3,194 $ 6,244 $ 2,569 $ 6,029 $ 2,153 50% Survivorship $ 4,088 $ 6,519 $ 3,134 $ 6,195 $ 2,521 $ 5,988 $ 2,112 75% Survivorship $ 4,026 $ 6,471 $ 3,087 $ 6,157 $ 2,483 $ 5,956 $ 2,080 100% Survivorship $ 3,966 $ 6,425 $ 3,041 $ 6,120
  19. Congrats on paying off your student loans. That's a great step towards your future. Also a Roth IRA invested in broadly diversified low cost index funds is a great idea in your lower income, early years of teaching. This is because your tax bracket will likely be higher in the future than it is now, especially if it is true that your pension will be 91% of your highest salary. Who was the "retirement adviser" that spoke to you? If he came into your school he was probably an insurance salesman trying to sell you some type of terrible annuity product. I would verify from reliable sources anything that he told you about your pension. Talk to senior coworkers or call your state pension office to get more detailed information. 91% of highest salary is much better than normal for a defined benefit pension. Even if that amount is accurate, do you really want to teach until you are 65? I would get estimates of pension amounts at younger ages like 57-60. If the pension amount isn't as much as you were lead to believe, that the tax deferred 403(b) will likely be a better option as your wages go up and move into a higher tax bracket.
  20. I really don't like that Third Party Administrators are compensated differently for different vendors. Of course they're going to steer employees towards the companies that give them the biggest kickback.
  21. I agree with the other guys, that your allocation is too stock heavy. I wouldn't go more aggressive than about 70/30 at age 48. Bonds often get a bad rap as being boring and low growth, but there are years when they will out perform stocks, and with a lot less risk. My bond fund is up 8.9% YTD!
  22. And over 50 catch up also increased from 6,000 to 6,500. Looks like IRA contribution limits are unchanged.
  23. Thanks for the feedback everyone. Just to be clear, this is not a presentation that I am making to any person or group. I just give my written concern to a union rep. and they bring it up to the superintendent in a meeting that is meant to be the first step in discussing issues of concern.
  24. We already have Vanguard and Fidelity as options, since 2015. We don't need any administration action. I just want to help my millennial colleagues get their act together.
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