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K. Cook

Beginner..

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Hi!

I just started a 403 b with AXA a couple of months ago, June 2019. My husband and I started talking more seriously about investing our money and have been doing our best to read up on things and then I came across this website which as been such a big eye opener.... and now my anxiety is kicking in .  I went to AXA because they had an "advisor"  come to my classroom saying they worked for the District and I trusted that. I am so upset to find out they have such high fees.  So I need to start searching for other vendors.  I am so new at all of this and my head is spinning with all this information. When looking for a new vendor.. what should exactly should I be looking for in a good vendor? 

Thanks! -Krystal

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Welcome to the forum! Please post your district’s 403b vendor list. We’ll help you select the lowest cost one. What state are you in?

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You’re looking for:

1. Vanguard

2. Fidelity

3. Security Benefit’s NEA DirectInvest

4. Low cost state run 457b

5. Aspire

...approximately in that order. Like krow said, post the list of available vendors and we will help.

Don't feel anxious. You caught this early. In the mean time, go ahead and tell the district to stop directing money to the AXA plan. They’ve got surrender fees so every dollar in will cost you pulling it out, may as well mitigate that pain right away. 

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Thank so much you for the help.  I will contact my district tomorrow to stop payments. I live in California and work with Vista Unified School District.  Below is the link to my list of vendors. 

https://www.403bcompare.com/employers/284

Also-how do I know if my district matches anything? I looked into our contract and didn't see anything for 403 b's or 457b's. Should I call them and ask? And if they they don't match anything, should I just put more money into my husbands TSP until we max it out? 

 

 

 

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Fidelity is by far the best (only?) low-cost vendor on that list. It’s admin fee is only $24/yr. You could use a single target retirement fund such as Fidelity Freedom Index 20XX. This type of fund has a balance of stock and bond funds which rebalances as necessary, and becomes more conservative as the 20XX year approaches. Its expense ratio is only 0.12% which is acceptably low.

https://www.403bcompare.com/products/68#/investmentoptions

You could also use the following very low-cost funds to construct a Three Fund Portfolio:

Total Market Index Premium, FSTVX, ER 0.02%

International Index Premium, FSIVX, ER 0.05%

US Bond Index Premium, FSITX, ER 0.03%

An example Portfolio might be something like:

64% Total Market Index Premium, FSTVX

16% International Index Premium, FSIVX

20% US Bond Index Premium, FSITX

Rebalancing to bring the account back to the desired percentages can be done once a year and usually takes only a few hours. 

An asset allocation is a personal decision that depends on your ability to accept the ups and downs of the markets without bailing out when there is a downturn. https://www.bogleheads.org/wiki/Three-fund_portfolio

https://www.bogleheads.org/wiki/Asset_allocation

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Great. Thanks both of you for looking into that. This is all very helpful information and I very much appreciate the help. So my other thought is.. my husband is military and we might be moving around a lot.  Which means me working in a lot of different states and districts. Is it better for me to have an IRA instead of a 403 b with all the potential moving around? 

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40 minutes ago, K. Cook said:

Great. Thanks both of you for looking into that. This is all very helpful information and I very much appreciate the help. So my other thought is.. my husband is military and we might be moving around a lot.  Which means me working in a lot of different states and districts. Is it better for me to have an IRA instead of a 403 b with all the potential moving around? 

Contributing to an IRA has advantages and disadvantages over a 403b or a 457. You get to pick your IRA's vender rather than those on your employer's 403b/457 vendor lists. Yes the IRA is totally portable. Your 403b or 457 can be rolled into your new employer's 403b or 457 plan, or into your IRA. While you can't make further contributions to that particular 403b or 457 account after you leave job, you can leave it to grow if its balance is at least $5000. You can have more than one 403b account. Because the current maximum contribution to an IRA is only $6000 ($7000 if age 50), using only the IRA may not give you much of a retirement supplement. The current maximum contribution to a 403b or 457 is $19,500 (+$6,500 if age 50), so it's possible to save a lot more. Saving at least 15% of your after-tax income is usually recommended. Early retirement would need a significantly higher percentage.

If $6000 is all you can afford to contribute, then yes, I would prioritize the IRA. But it would be a very good idea to contribute at least a small amount to a Fidelity 403b or 457. And maxing your husband's TSP is a great goal. If you teach in another state, you will be able to roll your pension contributions into your IRA.

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11 hours ago, K. Cook said:

should I just put more money into my husbands TSP until we max it out? 

The TSP is a great retirement plan because they only charge 0.042% for each fund. Luckily for you, you have Fidelity, which charges even less (if you ignore their $24/year administrative fee). Of course you may not always have Fidelity, but for now this decision is of little consequence.

However, I personally would NEVER do what you're suggesting. Even before I got divorced, I was adamant that everybody should invest with the clear understanding that a divorce may happen (forever is a long time), which I wrote about here. Personally, I had a prenuptial agreement that allowed each person to keep whatever was in their own accounts and I would never have allowed either one of us to use one person's paychecks to pay the bills while the other person loaded up their retirement savings. I don't pretend to know how all 50 states would handle the division of "shared" retirement accounts and I certainly wouldn't want to find out using my own money. Regardless of where you come down on this issue, please make your decision after having considered it.

7 hours ago, K. Cook said:

Is it better for me to have an IRA instead of a 403 b with all the potential moving around? 

I could give an incredibly detailed response covering a million corner cases, but the rule of thumb is to do whatever results in the lowest fees and still allows you to build a diversified portfolio.

You haven't said how much you invest in a year. However, falling back to the rule of thumb, I'd max out the IRA and put the rest in the Fidelity 403b.

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4 hours ago, EdLaFave said:

The TSP is a great retirement plan because they only charge 0.042% for each fund. Luckily for you, you have Fidelity, which charges even less (if you ignore their $24/year administrative fee). Of course you may not always have Fidelity, but for now this decision is of little consequence.

However, I personally would NEVER do what you're suggesting. Even before I got divorced, I was adamant that everybody should invest with the clear understanding that a divorce may happen (forever is a long time), which I wrote about here. Personally, I had a prenuptial agreement that allowed each person to keep whatever was in their own accounts and I would never have allowed either one of us to use one person's paychecks to pay the bills while the other person loaded up their retirement savings. I don't pretend to know how all 50 states would handle the division of "shared" retirement accounts and I certainly wouldn't want to find out using my own money. Regardless of where you come down on this issue, please make your decision after having considered it.

I could give an incredibly detailed response covering a million corner cases, but the rule of thumb is to do whatever results in the lowest fees and still allows you to build a diversified portfolio.

You haven't said how much you invest in a year. However, falling back to the rule of thumb, I'd max out the IRA and put the rest in the Fidelity 403b.

I agree with planning for divorce, I'm always on that track.  Just wanted to hear your thoughts so I appreciate the feedback.  I still l have a large amount of student debt to pay off which is where a good amount of my paycheck goes towards- so right now I'm only investing $3600/ year.  As I move over on the pay scale each year, I plan to add to my retirement fund. I'm 29 years old, so I have some time to add to how much I invest a year.  Once I get my student debt paid off, I plan to put all that I had going towards my loans into my retirement (which is a good amount).  Everything you both have said has been incredible helpful.  I am feeling a lot less lost and a lot less anxious.  I'm leaning towards investing with Fidelity 403b. Thanks again for all the information. Very helpful!  I sent this website out to a couple of schools in my district and I've had quite a but of e-mails some back to me from teachers who said it was extremely eye opening and helpful. 

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