Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Roth Ira
Old 11-11-2007, 08:08 AM   #1
Thinks s/he gets paid by the post
martyb's Avatar
 
Join Date: Nov 2006
Location: Bossier City
Posts: 2,183
Roth Ira

I could use a little help & advice here. I'm a fed employee who will have a DBP starting in 5 yrs at age 55. I don't get any matching money, but I still max my TSP. Haven't always been allowed to do the max, but I am now & will till I retire. If I'm lucky, I'll only see about $250K in my TSP when I'm done. Maybe a similar amount in the wife's 401 by the time she retires...we got started late on these items. Where I need input is with regard to my desire to begin funding to the max a ROTH IRA for both myself & DW. She will keep working for at least 8 more yrs, so we can fund it for at least that long, even when I'm RE. I realize that since I'm only starting the ROTH at age 50, that it won't have time to really explode compounding-wise, but I think it should still make some pretty good money if we don't touch it till much later down the road. I've looked at the Vanguard and Fidelity sites, but would really like some input from folks who use either company, or somebody altogether different. Also, for a guy in my shoes, with a solid couple of pensions (reserves pension will kick in at 60) how do you think I should allocate the IRA $$?) Should I stick to a Lifecycle type deal, or what? I'm just looking to pad things financially however I can, and I figure it would be nice to have money in several pots to draw from when needed or desired. BTW, my Social Security will be negligible, probably no more than $3600 per year. I've got my 40 quarters, but I fall under the WEP for govt. employees and haven't contributed substantially to SS since 1981. At least that's what THEY say lol! Any thoughts are appreciated. Oh yeah, the DW will get SS when she's eligible, but that's 16 yrs down the road.
__________________
“Change is the law of life. And those who look only to the past or present are certain to miss the future.”
-John F. Kennedy

“Hard work never killed anybody, but why take a chance?” - Edgar Bergen
martyb is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 11-11-2007, 08:42 AM   #2
Moderator Emeritus
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 47,472
Quote:
Originally Posted by martyb View Post
I could use a little help & advice here. I'm a fed employee who will have a DBP starting in 5 yrs at age 55. I don't get any matching money, but I still max my TSP. Haven't always been allowed to do the max, but I am now & will till I retire. If I'm lucky, I'll only see about $250K in my TSP when I'm done. Maybe a similar amount in the wife's 401 by the time she retires...we got started late on these items. Where I need input is with regard to my desire to begin funding to the max a ROTH IRA for both myself & DW. She will keep working for at least 8 more yrs, so we can fund it for at least that long, even when I'm RE. I realize that since I'm only starting the ROTH at age 50, that it won't have time to really explode compounding-wise, but I think it should still make some pretty good money if we don't touch it till much later down the road. I've looked at the Vanguard and Fidelity sites, but would really like some input from folks who use either company, or somebody altogether different. Also, for a guy in my shoes, with a solid couple of pensions (reserves pension will kick in at 60) how do you think I should allocate the IRA $$?) Should I stick to a Lifecycle type deal, or what? I'm just looking to pad things financially however I can, and I figure it would be nice to have money in several pots to draw from when needed or desired. BTW, my Social Security will be negligible, probably no more than $3600 per year. I've got my 40 quarters, but I fall under the WEP for govt. employees and haven't contributed substantially to SS since 1981. At least that's what THEY say lol! Any thoughts are appreciated. Oh yeah, the DW will get SS when she's eligible, but that's 16 yrs down the road.
Wow! Lots of questions. I am also a federal employee, and didn't get my Roth IRA started until 2006. I plan to retire in 2009. Better late than never! I am going to leave my small Roth alone, with some moderately aggressive investments, and let it grow for a while after I retire.

I have my Roth IRA with Vanguard, and love it. I can do everything online. Because most Vanguard funds require $3000 minimum investment, and because Lifecycle funds don't appeal to me, what I have been doing is to buy a different fund with my Roth contribution each year with the goal of being reasonably diversified in a few years. In 2006, I bought Windsor (VWNDX), and in 2007 I bought European Index (VEURX). I haven't decided what to buy in 2008. I suppose that diversification of your overall allocation in all accounts matters most but to me, its simplest if I try to diversify both my TSP and my Roth.

With Vanguard, if you buy less than $10K of an index fund there is a $20 fee, I think. Be sure to check the "fees and minimums" section for any fund you are considering.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities. - - H. Melville, 1851.

Happily retired since 2009, at age 61. Best years of my life by far!
W2R is offline   Reply With Quote
Old 11-11-2007, 09:29 AM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
travelover's Avatar
 
Join Date: Mar 2007
Posts: 14,328
I use both Fido and Vanguard and would recommend either, for low fees and good choices.

Asset allocation is a complex topic and has been covered here and on Bogleheads forum exhaustively. I'd start with the nice summary that Nords and Martha have compiled in the FAQ section.
travelover is offline   Reply With Quote
Old 11-11-2007, 09:50 AM   #4
Thinks s/he gets paid by the post
martyb's Avatar
 
Join Date: Nov 2006
Location: Bossier City
Posts: 2,183
Maybe my queston should have been: I am almost 50 yrs old. Since I will have two Defined Benefit Pensions (40K at age 55 & 18K at age 60) and plan to have roughly 500K total in mine & DW's 401k's, should I be more or less conservative in my allocations for a ROTH IRA I am about to open for myself/DW at ages 50/46? Should the DBP's mean I should be much more aggressive/risky? Also, what are the pros & cons between Vanguard & Fidelity? Sorry the original post was so rambling. Guess I'm gettin' old LOL!
__________________
“Change is the law of life. And those who look only to the past or present are certain to miss the future.”
-John F. Kennedy

“Hard work never killed anybody, but why take a chance?” - Edgar Bergen
martyb is offline   Reply With Quote
Old 11-11-2007, 10:22 AM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
travelover's Avatar
 
Join Date: Mar 2007
Posts: 14,328
I'm in a similar situation as my pension covers all my living expenses, though it is not COLAed. There seems to be two main views on this situation. One view is that since you have a pension, you can afford to be more aggressive. The second view is that since you have the pension, you can afford to take less risk. Another factor is whether you plan to leave an inheritance. So it gets back to the "what ever feels right to you and allows you to sleep at night" saw.

I think Vanguard's ERs are generally lower, though Fido has some very low ER Spartan index funds. Vanguard seems to have a wider range of index funds. Both good companies in my mind.
travelover is offline   Reply With Quote
Old 11-11-2007, 02:47 PM   #6
Thinks s/he gets paid by the post
 
Join Date: Oct 2007
Location: Willamette Valley, Oregon
Posts: 1,979
Quote:
Originally Posted by martyb View Post
Maybe my queston should have been: I am almost 50 yrs old. Since I will have two Defined Benefit Pensions (40K at age 55 & 18K at age 60) and plan to have roughly 500K total in mine & DW's 401k's, should I be more or less conservative in my allocations for a ROTH IRA I am about to open for myself/DW at ages 50/46? Should the DBP's mean I should be much more aggressive/risky? Also, what are the pros & cons between Vanguard & Fidelity? Sorry the original post was so rambling. Guess I'm gettin' old LOL!
So, will your two pensions (and eventually the little SS) cover your living expenses?

What is your/DW's risk tolerance profile?

How will your two pensions/SS keep up with inflation?

How are you assets in the 401ks/TSP allocated?

Think about these questions. If inflation offset is going to be a concern down the road, then you want to consider how your 401k/TSP in combination with the Roth IRAs will be able to provide inflation offset. You can then do asset allocation considering ALL your pots and income sources.

I have been a Vanguard customer for a couple of decades and am thoroughly satisfied. I also use TDAmeritrade and Charles Schwab and am also satisfied with them. Fidelity has a good reputationas does T. Rowe Price. I think you can't go wrong with any of them. Compare services/products/fees for the type of stuff tht interests you.

Good luck. I think your getting on the ball at ages 50/46 is going to leave you two sitting pretty!
__________________
Dreams Worth Dreaming are Dreams Worth Planning For. I Spent a Career Planning for Early Retirement.
RetireeRobert is offline   Reply With Quote
Reply

Tags
ira


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Roth 403(b), Roth IRA and 'earned income' ERD50 FIRE and Money 16 02-24-2008 07:00 PM
Can I contribute this much to my Roth ira and Roth 401k? summer2007 FIRE and Money 5 10-25-2007 03:54 PM
Can I max out my Roth IRA, Trad. IRA, and SIMPLE IRA? thefed FIRE and Money 9 09-24-2007 04:52 PM
Converting Traditional IRA to Roth IRA piranha Young Dreamers 4 04-14-2007 07:39 AM
?? for uber-savers, non-deductible IRA to Roth IRA in 2010 LOL! FIRE and Money 8 12-21-2006 12:25 AM

» Quick Links

 
All times are GMT -6. The time now is 07:59 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.