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  1. Edy

    Strategy Question

    Hi Steve. Actually I read about although I don't recall the authors calling it the bucket strategy. I do attend those free lunch presentations when I get the invitations mainly as part of self education process in learning about my own retirement planning. So you think the strategy sounds reasonably sound? BTW, I have about 9 years to go until retirement, so I am still saving and still pondering my strategy when I go. Thanks, Edy
  2. Greetings. I have read of a strategy that sounds reasonable to me and I was wondering about the thoughts of others on the strategy. It seems a given that in the retirement years, folks would like to reduce stress and not worry about whether they will have money each month. They would prefer to not worry about the markets ups and downs, recessions, etc., so they can live out their years with relatively little financial stress. If the above is true, then this strategy seems to make some sense. Take the wad a person has saved in 403b/IRA/401k etc. and divide it into three pots. One will be a stock type of pot diversified with many funds-large, small, foreign, domestic, growth, value, etc. that would help beat inflation over the 30 years or so of retirement. Another pot would be "consevative" with a broad mix of bonds/cash/CDs etc. The third pot would also be a "conservative" type and be lifetime fixed annuity type that provides a monthly check regardless of recession, market dips, etc. The percentages are according to the person's preference for stability, growth to hedge inflation, etc. This could be 40% stock, 30% bond, 30% annuity. Or, it could be 50% stock, 30% bond, and 20% annuity, etc. It seems a reasonable strategy to me particularly given that in those years, we want to minimize financial stress and "enjoy" life. This strategy seems appropriate for those with pensions such as teacher as well as those with only a 401k/403b type account. Of course, expenses of all three pots need to be kept to a minimum. Any thoughts? Thanks, Edy
  3. Hello. I am having trouble posting, sorry. Jim this is a great place to learn. Read on and pass the word. Edy
  4. Edy

    Vanguard 403(B)(7)

    Hello. I too gave Vanguard and decided to leave it in the perhaps foolish hope that sometime in the future VG would come back on my list. I am not optimistic. I have never worried about leaving it there. My plan was to leave it if it does not return, and convert to an Ira once I retire, in a few more years. Other informed opinions would be helpful. Edy
  5. Edy

    Vanguard 403(B)(7)

    I don't have an answer, just a few thoughts: There is information about inheriting a 403b and tax consequences all over the web. I would be careful about transferring from a low cost company to a higher cost company that will address a potential tax problem. There are many variables, how much are we talking about and what would be the tax if it were fully distributed? Most important, would the tax savings be higher than the costs when you transfer to a higher cost company? Those fees add up over the years, even if its "just a little bit higher."” I would be interested in what you find out. Steve Hi Steve, I am NOT going to transfer this account to her current vendor 403(b)Aspire Financial. The money is sitting in a 403b7 account at Vanguard and will remain there. It wouldn't make sense for us to transfer this money to Aspire since the costs of keeping it at Vanguard outweigh the slightly higher fees at Aspire. Our only concern is how the money is currently being titled. I beleive we should transfer this money out of her 403b7 and into a Rollover Ira (still at Vanguard) so that in the event something happened to the account holder, a beneficiary would have options, like doing a "stretch Ira". If the money is just left in the 403b7 acccount, I beleive this option would not exist and the primary benficiary, me, would have to take a lump sum distribution which I would like to avoid. Were talking about 150K. I will call Vanguard monday morning and I will report back with what they say for others that may be in the same boat. This comes down to possibly retitling the account so a beneficiary does not have to take a lump sum and can stretch out the distributions over their life expectancy and keep the tax shelter in place for the rest of the money so it can continue to compound tax free. At the time we never botherd to convert it to a Rollover IRA because I believe we wanted to avoid a yearly IRA fee which is no longer an issue due to our portfolio size. What's the saying, penny wise, pound foolish?
  6. Hello, Janet. This is not a silly question. Continue to ask your questions. Some advisors in the literature will recommend that your age is the % of bonds to own. Others in the past said take 110 and subtract your age and that would give you your stock allocation. All of that is variable because each person has a different circumstance. Your risk tolerance needs to be considered. Your current debts need to be considered. Etc. But you are on the right track to ponder and question. I would say to save as much as you can afford to save. If you wish to have more or less St/Bnd, you can always do 90% in your 2040 and then 10% in some other stock or bond fund in Pension 2, for example. Edy
  7. Edy


    Hello. Not to argue, but I don't agree that the lowest wage earners cannot save. Even the 10 year old selling lemonade on the corner can save some. Of course, if someone has a family to support, etc., he/she cannot save large amounts--understood. But, IMHO, even those folks can save a little tax deferred. TRPrice, has or had, a minimum of $50 per month with no intial amount required. That might be around $36 per month as tax deferred. Many folks can cut out some items that are not absolutely necessary to find $36 each month. Coffee, soda, chips, cigarettes, fancy cell phone plans, fancy cable tv plans, driving fast on the freeway uses more gasoline than staying at 60mph, etc. These are only illustrative examples and may not work for everyone, but maybe other ways to save a bit will work. You spoke of my case. In my case, I cannot save in a Roth IRA. I personally have good 403b options. Those teachers who do not have good options should, IMHO, be able to save small or big in an IRA in VG/Fido/TRP, etc. Edy
  8. Edy


    Thanks for the input. As has been discussed previously, if more folks save, in any profession that is, the less the fed and state government has to put in for SS and public pensions. Edy
  9. Edy


    What you are proposing is universal IRA eligibility which was available from 1982 to 1986 under legislation signed by President Reagan. Universal availablility for deuctible IRA contributions was curtailed by the Tax Reform Act of 1986 which eliminated many other personal income tax deductions such as personal interest, $30,000 employee contributions to 401k/403b plans, etc in return for lower tax rates of 15% and 28%. The Tax Reform Act of 1986 replaced universal availability with the current system of allowing full deductible IRA contributions only for taxpayers with AGI below certain levels ($89K for a married couple) who participate in an employer retirement plan. You can write to Rep. Sander Levin, Chairman of the House Ways and Means Committee which controls the introduction of all tax legislation in Congress. George Miller carries no weight in the House on IRA deductions because Miller does not have any input on offsetting the revenue loss that would result from increasing deductible contributions to an IRA. Given the $1.7T deficits that the federal budget is incurring this year and for future years it is highly unlikely that Ways and Means will propose increasing the availability or the limits for full deductible IRA contributions to benefit the top 20% of taxpayers who also participate in an employer retirement plan (e.g., AGI over $89k for a married couple) instead of extending the current tax rates for 95% of all taxpayers into 2011.
  10. Edy


    Hello. I would like to write some letters to the appropriate committees/politicians about IRAs. Whenever I have written to my own representatives, I eventually get what appears to be nothing more than a form letter back. I know they are not on the IRA (retirement accounts) committee that has authority over them. IRA limits should be increased and they should be available to anyone with earned income. If this were to come about, all those stinko 403b options would be a moot point. Also, someone told me a hand written letter is the most likely to actually be read rather than a typed letter or even an email. They all have email address for "Contact Me" but that seems like it will only be read by an aide and will be a waste of time. To whom do I write? What form of letter should I write? Thanks much Edy
  11. Hello. Actually, anyone can save regardless of income level. Of course, a person earning little will likely not be able to save the max in an IRA or a 403b. However, any income level should see some amount of saving. Over a lifetime, that will add up. As I always tell colleagues--having a portfolio of $25,000 is better than nothing at all--$50,000 is better than $25,000, $100,000 is better than $50,000, etc. We need to encourage everyone with any level of income to save at least a little--even children so they develop this good habit. My 2cents for a lonely Friday evening. (Wife is visiting colleges with senior daughter.) Edy
  12. Darn, if it weren't for all of those public workers who have those "lavish" pension, the enconomy would be terrific and there would be no state deficits. People wondered why we would go into a profession that demanded much in education and paid so little. Now those same people are screaming that we are making too much and our pensions are lavish. Steve Once the facts about STRS "lavish" pensions are presented, things look a little different. A while back you showed that the average STRS pension goes to someone who retired at about age 60-61, and was for the munificent amount of about $38,000. You are right on about this, Steve. Teachers are the whipping boys for California's fiscal woes. Hello. We truly need to "create a culture of saving" in this country as is correctly stated in the wsj article. Edy
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