|
Steampunk Hitler posted:Oh, so it doesn't matter *who* made that money, as long as combined we've made more than $11,000? That's correct. The maximum contribution limits are per person ($5,500 each), but the minimum contribution is a combined sum of the earned income of the married couple. If you together had a combined earned income of only $8,000 then you could split that up as $4,000 each or 3k/5k, or 2.5k/5.5k for example. Each person cannot exceed the 5.5k limit within their own IRA, however.
|
#
?
Jun 8, 2014 21:42
|
|
|
|
| # ? May 26, 2024 22:04 |
|
|
flowinprose posted:That's correct. The maximum contribution limits are per person ($5,500 each), but the minimum contribution is a combined sum of the earned income of the married couple. Awesome, $28,500/year in tax sheltered retirement for myself and my wife then between my 401k and a Roth IRA for myself and her.
|
|
#
?
Jun 8, 2014 21:47
|
|
|
Vilgan posted:Teachers are one of the most preyed upon people in the entire retirement industry. They do not have a 401k committee looking out for them like real companies, they are seen as "low value" by the big boys so there is limited competition, and the options they do have tend to be godawful. Yes variable interest annuities are terrible, as are almost all of the annuity options. This is a list of approved vendors for her district. AXA is the company that contacted her. 403(b) Ameriprise Financial AXA Equitable Life Insurance Company First Investors Corporation Great American-Annuity Investors Life Horace Mann Insurance Company ING Life Insurance and Annuity Company Lincoln National Life Insurance Company Metropolitan Life Insurance Company PFS Investments (Primerica) Reliastar Life Insurance Co Security Benefit Group VALIC I haven't looked into them in detail, but there might be some good options available. I never knew about annuities before this. I can see why they need aggressive salespeople. They are intimidating. EugeneJ posted:It's funny you just mentioned this, because a teacher in the documentary posted on this page fell for the same scam: I'm going to find time to watch this. Thanks. Her financial "advisor" is on vacation until the 16th. Looks like we won't find out about the penalties for a while. I'm predicting he is going to dodge the question a few times before giving us an exact figure.
|
|
#
?
Jun 8, 2014 22:08
|
|
|
manic mike posted:This is a list of approved vendors for her district. AXA is the company that contacted her. I don't suppose you'd want to link to the school district's website? Most school district's HR departments will have an employee benefits book which describes in detail each vendor's 403b specifics. My wife had VALIC at one time and they had good index fund options.
|
|
#
?
Jun 9, 2014 00:38
|
|
|
If enough teachers in a district make a stink about it you can get the approved list of vendors changed. For example my wife's district just added Vanguard and TIAA-CREF. Apparently getting Vanguard took a lot of effort though, above and beyond what they normally have to do to add a vendor. I don't know why.
|
|
#
?
Jun 9, 2014 12:31
|
|
|
What would you guys do if you hypothetically didn't *need* to save for retirement - if your every basic need is covered. However, this isn't enough for real luxury. For arguments sake, someone died and left you $2m - enough to buy a small real estate portfolio in NYC. If you earned that much yourself then you probably have a high income (say, $200k), but if it's been handed to you then it's out of kilter with your income and changes the game slightly. The aims for saving for retirement are totally different in this situation as it's not about making sure you have enough to live after you lose your main income. Also, adding to your savings makes a larger dent in your quality of life and has a smaller % effect on your total net worth.
|
|
#
?
Jun 9, 2014 13:54
|
|
|
I don't think there really is a difference. At a basic level planning retirement comes down to wanting to live a certain lifestyle the cost of which is $X annually which means you need to have $Y in assets to support it. Being given a large sum of money will probably change your plans, or the amount you need to save to achieve them but I don't see a fundamental difference.
|
|
#
?
Jun 9, 2014 14:37
|
|
|
tentish klown posted:......For arguments sake, someone died and left you $2m - enough to buy a small real estate portfolio in NYC..... As someone who will never be in that situation, (boo), I would likely not take any action for quite some time, and try to follow this advice, albeit rather generic. - http://www.bogleheads.org/wiki/Managing_a_windfall
|
|
#
?
Jun 9, 2014 15:13
|
|
|
tentish klown posted:What would you guys do if you hypothetically didn't *need* to save for retirement - if your every basic need is covered. However, this isn't enough for real luxury. For arguments sake, someone died and left you $2m - enough to buy a small real estate portfolio in NYC. If you earned that much yourself then you probably have a high income (say, $200k), but if it's been handed to you then it's out of kilter with your income and changes the game slightly. The aims for saving for retirement are totally different in this situation as it's not about making sure you have enough to live after you lose your main income. Also, adding to your savings makes a larger dent in your quality of life and has a smaller % effect on your total net worth. 2M and I would retire instantly. I don't think I would quit working entirely but it would be part time and focused on things that mattered to me that I found interesting rather than things that mattered to Fortune 500 companies. I would almost definitely start my own business, but be careful not to risk my nest egg while doing so. That said, I already have finances mostly figured out and a path to retirement in ~12 years. If I did not have things as figured out, I'd set it aside in a fairly safe location (say.. 1/3 CDs, 1/3 Bonds, 1/3 Index funds) and let it sit while I figured things out over the next year or two. If I had kids, the opportunity to be a full time dad would be pretty hard to pass up as well :P Assuming you are in this situation, good luck! The windfall section of the boggleheads wiki someone already linked above is also a great resource.
|
|
#
?
Jun 9, 2014 17:18
|
|
|
tentish klown posted:What would you guys do if you hypothetically didn't *need* to save for retirement - if your every basic need is covered. However, this isn't enough for real luxury. For arguments sake, someone died and left you $2m - enough to buy a small real estate portfolio in NYC. If you earned that much yourself then you probably have a high income (say, $200k), but if it's been handed to you then it's out of kilter with your income and changes the game slightly. The aims for saving for retirement are totally different in this situation as it's not about making sure you have enough to live after you lose your main income. Also, adding to your savings makes a larger dent in your quality of life and has a smaller % effect on your total net worth. I too would "retire" if I had a 2M windfall. I wouldn't necessarily stop working, but I'd focus on working things I care about. Whether that means starting my own business (cheap to do in software/tech) or doing lower-paying/part time work for an organization I like. I mostly like what I do now, but I'm certainly trading a certain level of interest in the projects I work on for higher pay. 2M in the bank even conservatively invested would almost be more passive income than I make now working full time. Crazy to think about that. I wouldn't "need" to work another day in my life if managed effectively, but it's still pretty early in my life to just sit on the beach all day.
|
|
#
?
Jun 9, 2014 17:57
|
|
|
I probably wouldn't retire if I had 2 million, but I'd act the part of being FI. I'd probably become a freelance consultant and take two or three months off here or there as I pleased.
|
|
#
?
Jun 9, 2014 18:14
|
|
|
I'd throw it all into 1%-interest savings accounts and live off the 20k/year interest
|
|
#
?
Jun 9, 2014 18:37
|
|
|
EugeneJ posted:I'd throw it all into 1%-interest savings accounts and live off the 20k/year interest Wouldn't this be boring as gently caress? You would have so much free time and no money to do anything during that free time. We're probably going to have a similar situation somewhere down the line. It doesn't change anything for us for our current savings, but it will allow us to be more generous with our children's education (we can probably afford Harvard/Stanford without a scholarship/financial aid). But other than that?... we barely take it into account.
|
|
#
?
Jun 9, 2014 19:03
|
|
|
tentish klown posted:What would you guys do if you hypothetically didn't *need* to save for retirement - if your every basic need is covered. However, this isn't enough for real luxury. For arguments sake, someone died and left you $2m - enough to buy a small real estate portfolio in NYC. If you earned that much yourself then you probably have a high income (say, $200k), but if it's been handed to you then it's out of kilter with your income and changes the game slightly. The aims for saving for retirement are totally different in this situation as it's not about making sure you have enough to live after you lose your main income. Also, adding to your savings makes a larger dent in your quality of life and has a smaller % effect on your total net worth. Two chicks at the same time.
|
|
#
?
Jun 10, 2014 13:08
|
|
|
401k question - If I have 3% of my salary withdrawn from my paycheck, and the company matches 3%, how is overtime/holiday pay handled? Like if my gross pay goes up in one pay period, I'm assuming my 401k contribution would go up to whatever 3% of that amount is. But would the employer match the higher amount? Or is the match capped at 3% of my base salary?
|
|
#
?
Jun 10, 2014 20:44
|
|
|
EugeneJ posted:401k question -
|
|
#
?
Jun 10, 2014 20:50
|
|
|
EugeneJ posted:401k question - This depends completely on your employer and 401k plan policies. To give you the flipside of 100 HOGS AGREE's situation, if you work as a civilian in the federal government, then I believe the TSP (government version of 401k) only contributes and matches from your base pay rate. Overtime, holiday pay, etc are not included in the percentage.
|
|
#
?
Jun 10, 2014 20:53
|
|
|
100 HOGS AGREE posted:Where I work it's just, I pay 4% of gross pay toward 401k, company matches it. Doesn't matter if it was regular pay, holiday pay, PTO, whatever. This is how mine works, too.
|
|
#
?
Jun 10, 2014 21:54
|
|
|
I'm 29, and I'm not planning to retire for ~35 years. I'm able to max my 401k and my Roth IRA every year. How is this for an aggressive stock-only portfolio (with Fidelity)? I'll obviously transfer more into bonds as I get older. 33% FXSIX 33% FSSVX 33% FSIVX
|
|
#
?
Jun 10, 2014 22:16
|
|
|
Bubbacub posted:I'm 29, and I'm not planning to retire for ~35 years. I'm able to max my 401k and my Roth IRA every year. How is this for an aggressive stock-only portfolio (with Fidelity)? I'll obviously transfer more into bonds as I get older. Adding 10-20% bond allocation to your portfolio will minimally reduce your overall returns while reducing your risk exposure significantly.
|
|
#
?
Jun 10, 2014 22:50
|
|
|
Bubbacub posted:I'm 29, and I'm not planning to retire for ~35 years. I'm able to max my 401k and my Roth IRA every year. How is this for an aggressive stock-only portfolio (with Fidelity)? I'll obviously transfer more into bonds as I get older. For real, add 10% bonds in there. If (when) stocks take a big dump, sell off all the bonds and buy more of those stocks you crave. Also, that's quite a tilt toward small cap. You really want to be 50/50 small cap/S&P 500? Small caps represent about 13% of the US stock market, so even going 75/25 would be a big tilt.
|
|
#
?
Jun 10, 2014 23:02
|
|
|
GoGoGadgetChris posted:For real, add 10% bonds in there. If (when) stocks take a big dump, sell off all the bonds and buy more of those stocks you crave. And in this way, adding 10% bonds may actually increase overall returns provided there is a big market crash or two(there will be).
|
|
#
?
Jun 11, 2014 14:49
|
|
|
ETB posted:Adding 10-20% bond allocation to your portfolio will minimally reduce your overall returns while reducing your risk exposure significantly. Interesting. My JHP breakdown is: 6.11% - Vanguard Small Cap Grow Index (Aggressive Growth) 10.16% - Vanguard Small Cap Value Index (Growth) 24.03% - Vanguard Growth Index Fund (Growth) 23.03% - 500 Index Fund (Growth & Income) 14.92% - BlackRock Global Allocation (Growth & Income) 10.91% - Oppenheimer Intl Bond (Income) 10.84% - Vanguard Short-Term Federal (Income) 0% - Lifecycle 0% - Conservative Does that seem pretty balanced?
|
|
#
?
Jun 11, 2014 15:12
|
|
|
Red posted:Interesting. My JHP breakdown is: Dump the growth index and put it into the S&P 500 fund. Although Vanguard started including international bonds in their all-in-one funds, jury's still out on whether they're a meaningful addition to a portfolio or not. If you're following their strategy you shouldn't have more than ~2% in them right now anyways. Oppenheimer funds also can have really lovely fees depending on share class. Dump most or all of it and put it in the Global Allocation fund. Otherwise it looks reasonable given your fund choices.
|
|
#
?
Jun 11, 2014 15:27
|
|
|
Kilty Monroe posted:Dump the growth index and put it into the S&P 500 fund. So you're suggesting: 6.11% - Vanguard Small Cap Grow Index (Aggressive Growth) 10.16% - Vanguard Small Cap Value Index (Growth) 0% - Vanguard Growth Index Fund (Growth) 47.06% - 500 Index Fund (Growth & Income) 25.83% - BlackRock Global Allocation (Growth & Income) 0% - Oppenheimer Intl Bond (Income) 10.84% - Vanguard Short-Term Federal (Income) 0% - Lifecycle 0% - Conservative ? I'm not sure if you're referring to all of the Vanguards I have listed, or a particular one.
|
|
#
?
Jun 12, 2014 14:48
|
|
|
Do people put both their 401k and Roth in the same funds? My 401k and employer match goes in a Vanguard targeted retirement fund. Would I want to open a Roth IRA and put the money into that same fund, or something else?
|
|
#
?
Jun 12, 2014 15:27
|
|
|
So I'm 27, I did my taxes for the first time ever in april, don't really know what I'm doing wrt investing. I've been working at a startup company for about a year and we're getting money in now, so I'm getting a pretty significant raise in the form of a retirement plan thing. I could be wrong, but the way I understand it is that I'm now going to receive like 20k/year (25% of salary) into a vanguard SEP-IRA. What the heck do I do with this?
|
|
#
?
Jun 12, 2014 15:57
|
|
|
Omne posted:Do people put both their 401k and Roth in the same funds? My 401k and employer match goes in a Vanguard targeted retirement fund. Would I want to open a Roth IRA and put the money into that same fund, or something else?
|
|
#
?
Jun 12, 2014 16:45
|
|
|
After you decide what you want your asset allocation to be, for example(completely arbitrary numbers): 43% US large-cap 20% US small-cap 20% international 10% bonds 4% real estate 3% cash/money market You need to look at all your vehicles, including: 401k IRA taxable investments primary residence rental properties CDs emergency cash fund And treat the whole thing as a single portfolio. As mentioned above, at smaller balances, using target date funds may be the way to go in both 401k and IRA at first. Eventually you'll probably want to diversify based on the 401k choices given to you, and your other investment vehicles. For example if your target date fund has REITs but you already have 100k equity in your house, well, you might not need any additional exposure to real estate apart from your house. Additionally, if you have a net worth of 150k with $15,000 in emergency funds, you might not want money market exposure from target funds.
|
|
#
?
Jun 12, 2014 17:30
|
|
|
As an aside, it may help to do entire portions within the separate vehicles. By doing so, you may gain access to more "restricted" class shares, eg. Admiral shares in Vanguard as opposed to investor. This may decrease your fees substantially over time.
|
|
#
?
Jun 12, 2014 20:20
|
|
|
I didn't realize that Brightscope had a free database of public information about every 401k plan: http://www.brightscope.com/ It's cool that I can see how many of my co-workers are invested in what funds. 90% of them are lazy and just chose the 3 default John Hancock portfolios.
|
|
#
?
Jun 12, 2014 21:25
|
|
|
manic mike posted:This is a list of approved vendors for her district. AXA is the company that contacted her. I'm a teacher. We have ING, Lincoln, and Valic. I chose Valic, they were the only company with access to Fidelity index funds. You're wife may be in a similar situation, and the District most certainly will have more info on their website.
|
|
#
?
Jun 12, 2014 21:44
|
|
|
Red posted:So you're suggesting: Yes, that looks reasonable. I was referring to Vanguard's Target Retirement all-in-one funds, which are themselves made up of their own index funds and are sometimes used as a model to follow.
|
|
#
?
Jun 12, 2014 21:47
|
|
|
Hi guys, I'm trying to take actual responsibility for my finances and whip everything into shape, and I could use a little guidance about how to actually do that. Specifically, while we're not able to hit anywhere close to 75% savings rate at this time, my girlfriend and I (she's completely on board) want to do a Mr. Money Mustache and maximize our savings with the goal of retiring by around 40. We're pretty serious about this and have already had the big discussions. My situation doesn't entirely match the quick FAQ in the OP and I'm really not sure how to maximize our returns/advantages/tax savings/etc. I work for a university that puts 5% of my yearly base wages (no OT) into a 403b. This isn't a matching bonus, this is regardless of whether I do anything at all. We are allowed to contribute on top of this 5% to the tune of $17,500 per year. Unfortunately, the only options I have are to either cap out my contribution, or select a hard dollar amount to contribute per pay period. I am hourly, and my weekly income fluctuates, so this makes it incredibly hard to save a specific %. Right now, I'm adding what was 5% of my 2013 W2 income as a way to forecast, but I can't say whether I'll make more or less this year yet. All of the money is invested in a Vanguard Target Retirement 2050 Fund with 90% stocks and 10% bonds. However, I don't want to retire in 2050, more like 2030-35. Should I not be putting a dime into the 403b, and instead letting them dump 5% and instead maxing out an IRA (Roth I assume, or backdoor a traditional into a Roth?)? Since it's not matching funds it doesn't really line up with the Matching->IRA->401k ladder. Second, my girlfriend's retirement. She works at a public library and her retirement plan is MA state retirement, which from what I can tell sort of sucks, and I'm having trouble figuring out what exactly it is. They withhold 9% of her paycheck automatically (based on her salary/age) and it is managed by the Retirement Board for the city she works in. All she gets is a single piece of paper showing her balance and interest earned (???). They also will not let her draw from it until she's worked there either 20 years... which we do not plan on doing, but she could possibly work part time to pad that if necessary. I've hit the MA state calculator and if she contributes 9-10% of her income for 20 years it shows she will draw $375 a month which loving blows. Is this even worth it? Should she stop putting income into this because it seems useless for those who don't want to work until they're 70? I'm happy to give any info I can if you need more hard figures, but I'm really not sure how to proceed to meet our goals 
xie fucked around with this message at 14:12 on Jun 13, 2014 |
|
#
?
Jun 13, 2014 14:03
|
|
|
I can't really say about your girlfriend's situation, but on this:xie posted:
The advice in the OP still applies, just replacing 401(k) with 403(b) (and/or potentially 457(b) if you have access to one) OP posted:1) Contribute to 401(k) up to employer match 1) In your case, your employer matches 0%, so 0% for this step 2) Do this first 3) Once you have maxed out the Roth, then consider adding to your employer's 403 offering. The only reason I'd consider prioritizing the 403 over your Roth is if your employer offers significantly better fund choices/expenses. If you choose Vanguard for your Roth, this is unlikely (although possible). I'd also add in that especially if early retirement is something you are looking at, if you have an HSA eligible insurance plan you should consider maxing that out as well. Chances are you will be needing to pay out of pocket for health insurance/procedures and not having to pay any tax on those expenses is better than paying tax early (Roth) or at distribution (traditional)  Personally, I prioritize my HSA maxing between steps 2 and 3.
|
|
#
?
Jun 13, 2014 15:23
|
|
|
The HSA thing would have been true over the past 2 years. Unfortunately I was a doofus and paid thousands out of pocket for dental work. I was planning on using an Health FSA (this is what I'm offered- is this the same as an HSA?) and doing much of the work in 2014, but it got infected and I had to do it last year. My current yearly medical expenditures are about $100 in co-pays, so I don't think there's a savings there for me. I'm a healthy young male with no medical needs. I had an ambulance ride last year and a hospital visit and it cost me under $150 out of pocket. edit: Unless you're talking about something else that's more long term? I'm not very familiar with HSA stuff. My employer provides lifetime medical if you retire after 55 (you're so limited in the USA if you want to retire early!). I believe the funds in my health FSA must be used that year I've done some more research on my girlfriend's plan, and the amount she draws is a % of her average compensation when she retires. I was using $45,000 (she's a librarian, while in 15 years I hope she's making more it's not a job you do for the money), and if she retires at age 45 she'll actually draw 0.5% of that average compensation. If she retires at 41 she only draws 0.1%. So we need to sit down and discuss how willing we are to work until 45 instead of 41. If we are serious about retiring in our 30s/early 40s then I think she should focus elsewhere. The contribution on her end is actually automatic, I don't believe she can opt-out. No employer matching, which is a shame, as she'd be better served by a Roth I think for ER. edit: I do have access to a 457b but make nowhere near $200k. xie fucked around with this message at 15:37 on Jun 13, 2014 |
|
#
?
Jun 13, 2014 15:27
|
|
|
Does she get full health benefits post-retirement by being in the state system? If you retire early and her health benefits cover both of you, that would be a lot of money saved as opposed to having to buy your own plans on the exchange.
|
|
#
?
Jun 13, 2014 15:37
|
|
|
EugeneJ posted:Does she get full health benefits post-retirement by being in the state system? I don't think so. It's vague on the MA site, and her local Retirement Board does not have a website, so she'd need to call, but it doesn't sound like it? "A provision is made in the retirement law for the withholding of monthly premiums for your continued coverage in a group health and life insurance program sponsored by the governmental unit by which you are employed at the time of retirement." I don't know if this is all automatic, and if her city has opted in it's just something that happens? edit: Wait a tick - aren't I locking my funds up in a Roth IRA until we're almost 60? Where should I be putting this money so that we can actually stop working in our 40s? xie fucked around with this message at 15:53 on Jun 13, 2014 |
|
#
?
Jun 13, 2014 15:46
|
|
|
xie posted:edit: Wait a tick - aren't I locking my funds up in a Roth IRA until we're almost 60? Where should I be putting this money so that we can actually stop working in our 40s? This comes up literally every 2-3 pages. Is there any way something about SEPP could be added to the OP? I realize it might be considered "financial independence" or whatever but I still think it's relevant. http://www.investopedia.com/terms/s/sepp.asp http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-Substantially-Equal-Periodic-Payments
|
|
#
?
Jun 13, 2014 16:07
|
|
|
|
| # ? May 26, 2024 22:04 |
|
|
Nail Rat posted:This comes up literally every 2-3 pages. Is there any way something about SEPP could be added to the OP? I realize it might be considered "financial independence" or whatever but I still think it's relevant. I appreciate the link, thanks. Sorry for another stupid question, but I don't need to do anything now to be eligible for this, right? Just do all of the right stuff in 15 years?
|
|
#
?
Jun 13, 2014 16:11
|
|