Hi, I'm Karen...

[Sanbenito1]

And I'm new to the forum and I came upon this great site about a year ago. I retired 11 days ago after having a 'come to Jesus' lecture by friends and family, the result of which was that I gave only 2 weeks retirement notice to my (very difficult boss). Although I still feel a bit guilty about the 2-week notice, decided that my loyalty to the job (I was an Assistant Director) was not worth any more nightmares or health issues. In addition to my military pension, I have plenty of saving in IRAs, mutual funds as well as steady income from a small rental cottage at the back of my property. I have about half of my IRA money with my former employer in a Vanguard account and the other half in an account with USAA. the USAA account is actively managed at 6-tenths of a percent and is in a balanced (50-50) portfolio. The Vanguard account is not actively managed and is in a 80% stock-20% bond mix. I can easily live off my pension and rental income and either not touch, or only touch 1-2% of my Vanguard/USAA savings (I also have emergency funds in cash, I-bonds and CDs). Am I foolish to pay USAA 6-tenths% to manage half of my total mutual fund savings? I am not particularly interested in spending a lot of brain-power on investing and like not having to worry/monitor my account. My though is that with half of my savings in a balanced, managed account at USAA that I can afford to be more aggressive with the un-managed (except for an annual re-balancing by me) account at Vanguard. Appreciate your thoughts on the matter!

 

[racy]

Hi Karen,
Welcome! And stop feeling guilty over a 2-wk notice: that's standard protocol. As to your question, a 0.6% ER isn't much for half your portfolio. Assuming your Vanguard ERs are around 0.1%, your weighted average is 0.35%...that's not bad. So, I wouldn't call it foolish.

But I gotta say, since you're already planning to re-balance 50% of your portfolio, it wouldn't take any more 'brain-power' to do it all ... and save several thousand dollars a year.

 

[Sanbenito1]

Thanks Racy, good idea. The Vanguard money is in a 457-type account, which means I can access it now that I am retired (I am 55). The managed USAA money is in a regular IRA (and some is in a non-IRA mutual fund). If I convert the Vanguard money into a regular IRA I will lose my ability to spend it before age 59.5. So it may be best to wait until I am 59.5 when the withdrawal rules are all the same before I put it all in one place and managing it myself.

 

[pb4uski]

You might consider transitioning everything to Vanguard. You would probably pay lower fees and they would also do a financial plan for you at low or no cost and make investment recommendations to you.

I would keep the 457 account to preserve your ability to make penalty free withdrawals unless you are really sure you won't need to do any withdrawals from tax-deferred accounts for the next 4-5 years.

 

[Ready]

Welcome to the forum Karen. I'll defer to others on the advice, but just wanted to say congratulations on your retirement! I know what it's like to have a difficult boss, and I also know how pleasant it is to get rid of one!

Now go and enjoy your newfound freedom! And stop feeling guilty.

 

[Sanbenito1]

Thanks everyone! Off to enjoy my retirement now!