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Why Me

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  1. Buffett's annual shareholder letters are a good source of his philosophy, more concentrated than the recorded meetings. https://www.berkshirehathaway.com/letters/letters.html Last year's was kind of a dud, as I recall, but many of the earlier ones are memorable. He devoted a section of one (2017?) to praise of Jack Bogle. “If a statue is ever erected to honor the person who has done the most for American investors, the hands down choice should be Jack Bogle. For decades, Jack has urged investors to invest in ultra-low-cost index funds. In his crusade, he amassed only a tiny percentage of the wealth that has typically flowed to managers who have promised their investors large rewards while delivering them nothing – or, as in our bet, less than nothing – of added value. In his early years, Jack was frequently mocked by the investment-management industry. Today, however, he has the satisfaction of knowing that he helped millions of investors realize far better returns on their savings than they otherwise would have earned. He is a hero to them and to me.”
  2. Kudos to you for doing this, Scott! I've sat through many a Flex day presentation and never once was the topic of retirement planning on the menu. I think your approach of presenting a simple solution-- open the account, choose Fidelity and a target date fund, etc.--is great. I think people are easily overwhelmed by the options, figures and claims attached to 403b accounts and it becomes all too easy for them to do nothing for fear of a "wrong" decision. So saying "here's exactly what to do, it's both simple and financially sound, you don't need to pay attention to all that other noise" is great. What I would add to your four point plan is a description of WHY they should open a 403b at all. Maybe that should come first? Perhaps some basic info about how much income a typical pension (+ social security, if that applies) will replace. As I recall, Calstrs has some kind of pie chart about the share of retirement income from pension and supplemented by a 403b--that might be something you could adapt. I'd also vote for some brief demonstration (light on the math) of the value of compounding over time, so your audience sees the advantage of starting now, not later. Personally, I'd advocate for larger contributions. Yes, they can get started by contributing ten or twenty dollars per pay period, but as you know, the amount contributed makes a huge difference in the eventual result--it's the most important single factor. Maybe mention the idea of directing future raises into the 403b? Anyway, hats off to you for providing this service to your colleagues.
  3. Hi, Scott. Dan seems to be a fine fellow indeed and I think he's performed a very valuable service by maintaining this site (not to mention a book, podcasts, etc.). I assume that Dan made a conscious decision to focus on Facebook as the group's discussion platform and as I said above, so be it; it's his decision to make. I've chimed in here as a reply to Tony's comments, not expecting to initiate changes to the web site. So I haven't approached Dan, though please feel free to alert him to this discussion thread if you think he would find the subject of interest.
  4. I think the board members' will need to know about the type of loan, (is it a loan from a traditional 403b account?) and as many details about the loan and "the money I been investing in it" as possible before we can give you advice (beyond paying off the loan).
  5. Exactly, Tony. I think the admin decided to euthanize this board by making it difficult to find: if there were a big link to "discussion board" or "discussion forum" on the home page of 403bwise (I believe that there was such a link, once upon a time), I'm sure more people would come here. Now, one has to bypass the big link about the Facebook group, instead click on the vague term "community," then click through another two or three pages to get to this discussion board. So it barely has a pulse and seems not long for the world. Of course the admin gets to do what he wants, if the Facebook option seems more user friendly to 403b info seekers and/or simplifies the administrative burden, so be it. I'm with you in preferring not to participate on Facebook--the Bogleheads forum remains a great resource for those who prefer this format.
  6. Just pitching in here to endorse Krow36's recommendation of the Bogleheads forum. It's a great resource. Some of the folks who respond there are genuine tax specialists. The IRS once sent me a scary letter claiming, to my astonishment, that I owed a five-figure sum on a previous year's return. It turned out that this was because of an IRA rollover that had been mischaracterized by a broker as a distribution. The experts at Bogleheads talked me through it, told me what documentation I needed to gather and what language to use to communicate (by mail) with the IRS. I mailed the recommended letter and documentation and the IRS wrote back declaring the matter resolved and that I owed zero. You may end up hiring someone to help with this, but I'd definitely go to the Bogleheads first. Lay out as many specifics of your situation as possible; they'll ask the right questions and give you good advice.
  7. The headline of the article is misleading: employees can opt-out under this proposal, so nobody is being required by law to save in this scenario. (I suppose one could say most employees--and employers--are "forced" to contribute to Social Security, though.) Opt-in by default seems like a clear improvement on the current situation, which leaves so many unprepared to fund a comfortable retirement. I agree with Thaler in the article, when he says a 3% contribution is probably too low; he suggests 6% as a default starting point, which can be adjusted if problems emerge. People sometimes can't spare a penny for savings and may not be able to meet basic expenses with their current income. But among those who get a regular paycheck as an employee with benefits like a retirement plan, many (the majority, I'm guessing) can get by with 2, 3 or 5% less in their take-home pay without major sacrifice, just as they manage to make due now after taxes are deducted from each check.
  8. Why Me


    I, also, have never heard of such an arrangement. Perhaps you should contact TIAA and ask them to explain before taking other action. CUNY benefits offices might also be a resource. We'd be interested to hear what they say, too.
  9. There are many ways to set up a retirement portfolio (using Vanguard funds, for example) that will regularly deposit income into a checking account. An annuity could make sense, but you need to consider the whole picture when deciding how to set this up and whether an annuity is a good option for all or part of the lump sum. Does she need (or already have) a fund set aside for unexpected expenses? Does it matter to her whether she leaves money to others? If her house sale involved a move, are her future housing expenses covered by the Social Security payments? Could she accept some variation in her monthly income (this would allow more to be safely withdrawn from a portfolio that has a stock component)? Etc. Your question falls a bit outside the usual 403b advice doled out here. You might consider also posting this question on the Bogleheads forum, where you'll be sure to find people with experience making decisions like the one facing you and your mom. The more specifics of the situation you can offer, the better the advice you can expect.
  10. PS: Here's a view that dissents from Bogle, suggesting that Social Security (again, I assume any pension would be treated the same way) should be viewed not as a bond asset but as income, and that asset allocation should be determined, in part at least, by one's need for portfolio-based income (in combination with that coming from other sources). https://paulmerriman.com/social-security-asset/
  11. Kudos on getting the 457 option! I feel your pain about the two funds with separate annual fees. As you say, those fees are not devastating to your savings, so if you want to pay a little extra to serve as a good example to others, go for it. I'd use the fees as motivation to contribute more--push the amount of your paycheck contributions a little further than your comfort zone. A few years from now, you'll have more than 50k in both accounts, and the effect of those fees will have diminished accordingly.
  12. Bogle advised that the present value of Social Security be considered as part of one's "bond" allocation. I don't have a specific reference for this offhand; I think he discusses it in his "Little Book," and there's a good chance you could find him talking about it in one of his many interviews that are archived on You Tube. I don't recall whether he specifically extended that principal to include state pensions, but it seems logical to me that pensions would be considered the same way, so long as there is good reason to believe that they will pay out for life. This is a topic that investing hobbyists like to disagree about, I'm sure you'll find threads putting forward different approaches to pension income if one were venture into the Bogleheads board. Of course nobody knows the future, but FWIW, my 2¢ on the future of Social Security and pensions: barring outright collapse of the US government (very unlikely, though it seems closer to the realm of possibility after our encounter with Trumpism than it did in prior years), I think that you can count on some version of Social Security being there in twenty, fifty or a hundred years. The pols may nibble at it— higher contribution rates, tax the benefits more heavily, "full" retirement age creeps up, COLA becomes less generous—but the basic benefit is overwhelmingly likely to persist. State pensions are more vulnerable, in a few states in particular (if memory serves, New Jersey, Kentucky and Illinois have severe funding issues). Like you, Scott, I'm expecting a pension in California, CalStrs as opposed to CalPers but I'm guessing their situations parallel each other pretty closely. Under Gov. Jerry Brown a few years ago, California made changes that erode benefits a little and help out the solvency of the pensions a lot. (This included significantly increased contributions from both employers and employees and changes that effectively reduced benefits for those who entered the system after a certain date.) I'm confident that the pension will be there--in California's case, I believe that the state constitution mandates the state to guarantee pension payments, even if that means diverting funds from other government priorities. So barring collapse of the state government, the pension should remain, subject to being nibbled at as I described above.
  13. If you want some safe fixed income in your retirement mix, 2% is well above average these days, I'd take that option seriously. Otherwise, I'd just put up with the Nationwide fees for 8 years (or less if you turn 59 1/2 before then) to fatten your tax-favored nestegg. I don't know anything about backdoor Roths, but if you are planning to convert from a traditional to a Roth, in many cases there is a period of a few years after retiring and before RMDs are required when your taxable income is reduced--that is a good time to make the conversions and potentially pay less tax than you might during your peak earning years.
  14. The administration fee is obnoxious but not devastating. The tax benefits of either a traditional or Roth 403b/457b are likely to greatly outweigh the cost of those fees. You need to look at your overall financial situation when making this decision, but as a rule of thumb I'd say maxing out the retirement accounts is the best move for retirement money. Separately, if you want money for emergencies or expected pre-retirement expenses (e.g. house down payment or remodeling costs, car purchase, international vacation, help for a relative) you might additionally start a taxable non-retirement account (and in that case, consider a less volatile asset allocation than 100% stocks, so the money is there when you need it).
  15. My system has schools first FCU as the TPA and Nationwide is, obnoxiously, the only 457 fund provider option (though read on...). Nationwide takes a large admin fee on top of the fund expenses: the fee is .65 % per year, if memory serves, though you should check that as I'm no longer contributing there. There is one other option through the Schools First FCU 457: something called a DCP or share certificate, which is very much like a bank CD but pays a better rate than current CDs (though these days I'm sure the rate on a new certificate is pretty low, like everyplace). That is a decent fixed-asset alternative you can fund within the 457, and you completely avoid Nationwide and their fees--talk to a schoolsfirst rep about that if you are interested. I don't think there are any Roth options in that 457 plan. If you decide to contribute excess (above the 403b limit) funds to the 457, be aware that the 457 regs have changed, so that you can now roll that 457b money over into a conventional IRA after age 59 1/2, even when still employed (I did this), and you can still continue to make contributions to the Nationwide account after the rollover. So there is a way to escape the Nationwide fees once you reach that age.
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