restarting at age 47

[jIMOh]

I am a long time poster, got divorced 2x and am rebuilding.

Trying to determine where I am, and where I can go.

Age 47
job at mega mega corp
401k is a 9% match (90% of first 5%, plus a 5% fixed contribution into a plan which is invested just like 401k).

I was maxing 401k out prior to second divorce.

401k balance (all accounts)
$112k
ytd contributions 18k (includes matching)
suggests my rate of return ytd is 22.38%

401k asset allocation is
81% stock
7% passive bond
7% real assets
3% stable value
2% in a lifecycle fund I cannot seem to sell to reallocate

specific fund breakdown
14% Vanguard US Large Cap fund (S&P 500 index)
16% Vanguard US Small/ Mid Cap Index fund (did not state index it is tracking)
14% State Street all cap equity index fund (MCSI Index)
4% Blackrock Bond Index fund (Bloomberg Barclays U.S. Aggregate Bond Index)
4% State Street Real Asset Index fund (custom index)
4% interest income fund
10% Neuberger Genesis fund
10% T Rowe International small cap equity fund
24% company stock

My goal is to be 80-20 and I know I need to get to 60-40 once balance is higher.


I have worked here 4 years, so all amounts reflect 4 years of savings. First 3 years I contributed to 100% Roth. I needed to reduce to 6% contribution and put money in pre-tax while I recovered from second divorce. Contributions are now 11% pre tax and 1% Roth for 2021 moving forward.

I cannot figure out a way for the GD 401k site to show me Roth balance vs pre-tax balance- the total is $112k and I think most of my contributions are Roth (with match being pre-tax).

E trade rollovers
Total all accounts $78k

Pre-tax rollover $48k
invested in
RSP $4700
USRT $3900
VTI $6900
VFMF $4200
VOO $5000
VT $4900
VIG $5100
VWO $4700
BND $4600
VMBS $4200

Roth Rollover and new contributions $29k This should be about 20% bonds and 80% equities (I considered real estate=bond)
USRT $2100
VAW $500
VCR $1300
VDC $2100
VDE $300
VFH $3600
VGT $3600
VHT $6700
VIS $1200
VOX $3400
VPU $400
VWOB $3800

when this account started, all sectors matched weight of sector in S&P 500, all new monies went to one of 3 lowest performing sectors at time of contribution. I have not contributed since April 14 2020.

I use this calculator to check my progress
https://www.flexibleretirementplanner.com/wp/planner-launch-page/

$190k total
150k tax deferred
40k tax free

This has me at a 3% starting withdraw rate at age 72 at $50k in todays dollars for annual spending (accurate) with 90% chance of success.

Please look at details and make any comments which could improve outcome
improve=retire earlier
improve=spend more
improve=take less risk to get similar outcome

 

[davebarnes]

In my opinion, you have way too many different holdings.
At your age I would do 100% zero-cost (or, very low cost) S&P 500 fund.
Don't overthink this. Just add as much money as you can into your retirement accounts.

 

[REWahoo]

Please look at details and make any comments which could improve outcome
improve=retire earlier
improve=spend more
improve=take less risk to get similar outcome

First thing that comes to mind is a fourth:
improve=stay single

 

[tulak]

Sorry to hear about your divorce.

I’d recommend on simplifying. If you’re going for total return, then stick with a few funds: total us, total intl, and something for fixed income.

For most of my portfolio, I simplified earlier this year and have no regrets.

 

[OldShooter]

Ack! Waaay too complicated. Just thinking about all the typing you did makes me tired.

On the equity side ditch everything and buy a low cost US total market fund, season to taste with a low cost international fund. VTSAX and VTIAX for example. Or if you're OK with owning all stocks worldwide on a cap weighted basis (we are) it's even easier: VT or VTWAX

See Vanguard "Global equity investing:The benefits of diversification and sizing your allocation" https://www.vanguard.com/pdf/ISGGEB.pdf

and Dr. Kenneth French: https://famafrench.dimensional.com/videos/home-bias.aspx

 

[Bamaman]

I agree with all. You may be a victim of informania--too much information thrown at you to be able to understand it all.

Have you considered researching Vanguard's offerings in about five different areas of investments. And choose their best five funds in different market segments.

 

[Golden sunsets]

I wouldn't be focusing on the nitty gritty at this point, way too many funds. Max out your contributions to pretax and build up after tax. Select a simple 3 fund portfolio and stash your cash.

You seem to be behind the 8 ball on total investments, given your age. Whether that is because of the 2 divorces or not you probably know the answer to. If you become involved again with an SO, choose wisely.

 

[OldShooter]

... Have you considered researching Vanguard's offerings in about five different areas of investments. And choose their best five funds in different market segments.

That sounds like sector picking. If that's what you mean, I would respectfully point out that it is a losing strategy. There is also an issue with "best." Past performance has been demonstrated over and over to not be predictive.

The classic quilt chart demonstrates the randomness of sector performance: https://www.callan.com/periodic-table/

Here is a good place to start: "The Bogleheads Guide to Investing" by Taylor Larimore et al https://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Larimore/dp/0470067365

 

[Dtail]

First thing that comes to mind is a fourth:
improve=stay single

+1
3rd time might not be the charm.

 

[jIMOh]

Ack! Waaay too complicated. Just thinking about all the typing you did makes me tired.

On the equity side ditch everything and buy a low cost US total market fund, season to taste with a low cost international fund. VTSAX and VTIAX for example. Or if you're OK with owning all stocks worldwide on a cap weighted basis (we are) it's even easier: VT or VTWAX

See Vanguard "Global equity investing:The benefits of diversification and sizing your allocation" https://www.vanguard.com/pdf/ISGGEB.pdf

and Dr. Kenneth French: https://famafrench.dimensional.com/videos/home-bias.aspx

Are the Vanguard funds NTF at Etrade? All tickers listed are Vanguard ETFs and are NTF at etrade.

That sounds like sector picking. If that's what you mean, I would respectfully point out that it is a losing strategy. There is also an issue with "best." Past performance has been demonstrated over and over to not be predictive.

The classic quilt chart demonstrates the randomness of sector performance: https://www.callan.com/periodic-table/

Here is a good place to start: "The Bogleheads Guide to Investing" by Taylor Larimore et al https://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Larimore/dp/0470067365

I buy the sector at the bottom each month, not the one at the top. (Buy=Low)

I wouldn't be focusing on the nitty gritty at this point, way too many funds. Max out your contributions to pretax and build up after tax. Select a simple 3 fund portfolio and stash your cash.

You seem to be behind the 8 ball on total investments, given your age. Whether that is because of the 2 divorces or not you probably know the answer to. If you become involved again with an SO, choose wisely.

Before my first divorce 8 years ago I had a portfolio slightly larger than where I am now. Either way, can't look back and ask what if, need tangible tasks to improve now and improve result later.

Simplifying portfolio does not prove (or disprove) how far behind I am.

 

[Mr. Tightwad]

First thing that comes to mind is a fourth:
improve=stay single

+ 1. This is the best advice to secure your financial future. I retired at 45 due to following it.

 

[OldShooter]

Are the Vanguard funds NTF at Etrade? All tickers listed are Vanguard ETFs and are NTF at etrade.

I dunno. But the point is not to say you have to be in VG. Any total us and total international funds with low expenses should do. Typically VG has been the low price leader but that market has been in turmoil for a couple of years so you have to check. Use the VG expenses as a benchmark and don't buy finds that cost very much more. If you're just differentiating between VG conventional funds and VG ETFs they are pretty much the same. Trading an ETF will cost you via the bid/ask spread going in and coming out. So ETFs aren't totally free.

Re transaction fees or bid/ask spreads, for a buy and hold investor IMO they are not worth worrying about. YMMV, but don't buy a higher expense fund just to dodge a small transaction fee.

I buy the sector at the bottom each month, not the one at the top. (Buy=Low)

If that worked the professionals would start doing it, which would result in its not working any more as they bid up the bottom sector and sold the top. This is true of any simple and many complex trading schemes. They don't work or, if they work, they don’t work for very long. There is a mountain of evidence. I can bury you in suggested reading if you like that sort of thing.

But, check for yourself. Isolate some money, maybe $10K in a benchmark with reinvested interest and dividends. My personal benchmark started at 65 US and 35 International on Jan 1 2015. Track your benchmark's performance every quarter and compare the results to your trades using your sector scheme. Plot cumulative total returns for 2-5 years. Some quarters the scheme will be ahead, some you will be behind but the best long-term result you will probably see is the benchmark and the scheme will come out about equal. If you don't benchmark you are flailing in the dark and it's hazardous to your wealth.

Simplifying portfolio does not prove (or disprove) how far behind I am.

I'm not sure what you mean here. Behind relative to what? All there is for us is today and the future. We take what we have today and march off, trying to do the best we can as the future comes flying at us.

You probably need a goal, a target income from investments in retirement. Then you need a plan to get there, but it's all forward looking.

 

[jIMOh]

I'm not sure what you mean here. Behind relative to what? All there is for us is today and the future. We take what we have today and march off, trying to do the best we can as the future comes flying at us.

You probably need a goal, a target income from investments in retirement. Then you need a plan to get there, but it's all forward looking.

Goal- 50k in retirement income (this was stated in OP)
Goal- retire at or before age 72 (stated in OP)

 

[OldShooter]

Goal- 50k in retirement income (this was stated in OP)
Goal- retire at or before age 72 (stated in OP)

OK, so what's the savings rate needed to get there, assuming a conservative investment return?

 

[Exchme]

You are asking us to do a lot of guessing without numbers. If you retire at 72, you could probably take a 5% withdrawal rate and be relatively safe (not many years left at that point). So you need 20X your annual expenses saved by that time. If you get 4% real return each year on what you have, it will be worth 2.7x what it is today so will be a piece of the puzzle, but probably not a large piece. You have to get the rest from your future earnings, company contributions and compounding on them. You don't mention SS, but that will obviously be part of any planning you do.

 

[ILikeStarTrek]

I am a long time poster, got divorced 2x and am rebuilding.

Trying to determine where I am, and where I can go.

Age 47
job at mega mega corp
401k is a 9% match (90% of first 5%, plus a 5% fixed contribution into a plan which is invested just like 401k).

I was maxing 401k out prior to second divorce.

401k balance (all accounts)
$112k
ytd contributions 18k (includes matching)
suggests my rate of return ytd is 22.38%

<cut details of asset allocation>

I have worked here 4 years, so all amounts reflect 4 years of savings. First 3 years I contributed to 100% Roth. I needed to reduce to 6% contribution and put money in pre-tax while I recovered from second divorce. Contributions are now 11% pre tax and 1% Roth for 2021 moving forward.

I cannot figure out a way for the GD 401k site to show me Roth balance vs pre-tax balance- the total is $112k and I think most of my contributions are Roth (with match being pre-tax).

E trade rollovers
Total all accounts $78k

Pre-tax rollover $48k
<cut fund details>

Roth Rollover and new contributions $29k
<cut fund details>

when this account started, all sectors matched weight of sector in S&P 500, all new monies went to one of 3 lowest performing sectors at time of contribution. I have not contributed since April 14 2020.

I use this calculator to check my progress
https://www.flexibleretirementplanner.com/wp/planner-launch-page/

$190k total
150k tax deferred
40k tax free

This has me at a 3% starting withdraw rate at age 72 at $50k in todays dollars for annual spending (accurate) with 90% chance of success.

Please look at details and make any comments which could improve outcome
improve=retire earlier
improve=spend more
improve=take less risk to get similar outcome

I think I'm somewhat about to restate what OldShooter and Exchme have just said/asked in their last couple posts, but I'd like to be clearer about why there is confusion about some aspects of your post. Or even if this isn't exactly what they just asked, I'll freely say that I'm confused. I'm having trouble figuring out some basic things. I've quoted your post but snipped out some details to better see the forest rather than the trees.

What is your overall retirement account balance?

First you give "401k balance (all accounts) $112k"

Then you give some rollover amounts $78k + $48k + $29k
= $155k

Finally you give this figure "$190k total".

But if you had $112k in 401k and $155k as the sum of the three rollovers, that adds to $267k, not $190k. Please clarify.

How much are you contributing/saving each year?

At one point, you said "ytd contributions 18k". It would help more to know the total amount of your expected yearly contributions, not ytd. We are close to the end of the year, so the two numbers may not be that different, but as a general rule the yearly would be more helpful value to know going forward.

Then later you give "Roth Rollover and new contributions $29k". So, it's not clear how much of this is existing vs new (which I guess means ytd?). But even if you broke down the ytd here, again, yearly would be more helpful.

The bottom line is, whether it is 401k or tIRA or Roth IRA, you should give the amount of your total yearly contribution going forward.

Current total balance, yearly savings additions to account, and ROI will determine your total account balances at age 72. (Which will then determine how much is available for you to withdraw to meet your annual expense goal.)

And like Exchme, I am also wondering if you are considering SS.

 

[jIMOh]

I think I'm somewhat about to restate what OldShooter and Exchme have just said/asked in their last couple posts, but I'd like to be clearer about why there is confusion about some aspects of your post. Or even if this isn't exactly what they just asked, I'll freely say that I'm confused. I'm having trouble figuring out some basic things. I've quoted your post but snipped out some details to better see the forest rather than the trees.

What is your overall retirement account balance?

First you give "401k balance (all accounts) $112k"

Then you give some rollover amounts $78k + $48k + $29k
= $155k

Finally you give this figure "$190k total".

But if you had $112k in 401k and $155k as the sum of the three rollovers, that adds to $267k, not $190k. Please clarify.

How much are you contributing/saving each year?

At one point, you said "ytd contributions 18k". It would help more to know the total amount of your expected yearly contributions, not ytd. We are close to the end of the year, so the two numbers may not be that different, but as a general rule the yearly would be more helpful value to know going forward.

Then later you give "Roth Rollover and new contributions $29k". So, it's not clear how much of this is existing vs new (which I guess means ytd?). But even if you broke down the ytd here, again, yearly would be more helpful.

The bottom line is, whether it is 401k or tIRA or Roth IRA, you should give the amount of your total yearly contribution going forward.

Current total balance, yearly savings additions to account, and ROI will determine your total account balances at age 72. (Which will then determine how much is available for you to withdraw to meet your annual expense goal.)

And like Exchme, I am also wondering if you are considering SS.

There are two 401k accounts, one is a traditional 401k, one is a defined contribution plan (5% of pay fixed) and both get invested the same way. The defined contribution is always pre-tax, the 401k has a Roth, pre tax and post tax option.

$112k was account balance when I typed post.
There is another account(s) with etrade which are rollovers from former employers as well as a Roth I contribute to- 78k combined, with 29k being in Roth and 48k being in a pre-tax rollover.

SS not factored into retirement spending
There is also an HSA with about 15k in it, which is about 66% invested which I am not including at present time

 

[WhenIsItTime]

Goal- 50k in retirement income (this was stated in OP)

Goal- retire at or before age 72 (stated in OP)

Have you tried Firecalc? I input your $190k, a $25k annual contribution (my 401k guess based on what you provided) for 25 more years and retirement in 2045. With retirement spend of $50k in today’s dollars for 18 years (until you are 90), it shows a 100% success rate. That’s without SS.

Like others, I suggest you greatly reduce your investment portfolio. No reason to have that many funds that overlap. It’s like not seeing the forest because of the trees. Suggest more productive to think about current income, expenses, and savings rate aligned with your goal.

Also, not sure about buying low sectors as strategy. That is a strange take on buy low sell high. For example, that would like mean you are not buying technology sector that has carried S&P 500 for > 10 years. I’d be interested to see any evidence you have on that strategy having merit.

 

[cnocmmz]

I am a long time poster, got divorced 2x and am rebuilding.

Trying to determine where I am, and where I can go.

Age 47
job at mega mega corp
401k is a 9% match (90% of first 5%, plus a 5% fixed contribution into a plan which is invested just like 401k).

I was maxing 401k out prior to second divorce.

401k balance (all accounts)
$112k
ytd contributions 18k (includes matching)
suggests my rate of return ytd is 22.38%

401k asset allocation is
81% stock
7% passive bond
7% real assets
3% stable value
2% in a lifecycle fund I cannot seem to sell to reallocate

specific fund breakdown
14% Vanguard US Large Cap fund (S&P 500 index)
16% Vanguard US Small/ Mid Cap Index fund (did not state index it is tracking)
14% State Street all cap equity index fund (MCSI Index)
4% Blackrock Bond Index fund (Bloomberg Barclays U.S. Aggregate Bond Index)
4% State Street Real Asset Index fund (custom index)
4% interest income fund
10% Neuberger Genesis fund
10% T Rowe International small cap equity fund
24% company stock

My goal is to be 80-20 and I know I need to get to 60-40 once balance is higher.


I have worked here 4 years, so all amounts reflect 4 years of savings. First 3 years I contributed to 100% Roth. I needed to reduce to 6% contribution and put money in pre-tax while I recovered from second divorce. Contributions are now 11% pre tax and 1% Roth for 2021 moving forward.

I cannot figure out a way for the GD 401k site to show me Roth balance vs pre-tax balance- the total is $112k and I think most of my contributions are Roth (with match being pre-tax).

E trade rollovers
Total all accounts $78k

Pre-tax rollover $48k
invested in
RSP $4700
USRT $3900
VTI $6900
VFMF $4200
VOO $5000
VT $4900
VIG $5100
VWO $4700
BND $4600
VMBS $4200

Roth Rollover and new contributions $29k This should be about 20% bonds and 80% equities (I considered real estate=bond)
USRT $2100
VAW $500
VCR $1300
VDC $2100
VDE $300
VFH $3600
VGT $3600
VHT $6700
VIS $1200
VOX $3400
VPU $400
VWOB $3800

when this account started, all sectors matched weight of sector in S&P 500, all new monies went to one of 3 lowest performing sectors at time of contribution. I have not contributed since April 14 2020.

I use this calculator to check my progress
https://www.flexibleretirementplanner.com/wp/planner-launch-page/

$190k total
150k tax deferred
40k tax free

This has me at a 3% starting withdraw rate at age 72 at $50k in todays dollars for annual spending (accurate) with 90% chance of success.

Please look at details and make any comments which could improve outcome
improve=retire earlier
improve=spend more
improve=take less risk to get similar outcome

KIS: Divorce is always hard. At your age, you will recover financially just fine, although may take until 55 or so. Your investment portfolio is way to complicated. Just keep maxing out your work 401k and it will come. If possible contribute to a Roth in whatever avenue available as well. You will be fine.
Stay single for a while-

 

[tulak]

Are your 401ks also at E-Trade?

Personally, I would also consolidate all my accounts at the same company: Fidelity and Vanguard being my top two choices. If your 401k is already at one of these, then I’d rollover IRA/Roth to them to have everything in one place. Then I’d pick same/similar funds to invest in across accounts. Of course, you can do this across different companies, but I prefer to keep it simple.

This reminds me of Oblivious Investor. I seem to remember that he invests in a single fund, Vanguard Lifestyle Growth (80/20), to keep it simple. It’s a fund of funds investing in total us, total intl, total bond. That approach is appealing, and one I considered, but decided not to for tax reasons (foreign tax credit and tax loss harvesting). I can’t find the link on his site, but I did find this one which describes 8 different portfolios, starting with a one fund portfolio going up to an eight fund portfolio. Any one of those would be a good choice: https://obliviousinvestor.com/8-sample-and-simple-portfolios/

It’s your money though. Invest as you please!

 

[ILikeStarTrek]

There are two 401k accounts, one is a traditional 401k, one is a defined contribution plan (5% of pay fixed) and both get invested the same way. The defined contribution is always pre-tax, the 401k has a Roth, pre tax and post tax option.

$112k was account balance when I typed post.
There is another account(s) with etrade which are rollovers from former employers as well as a Roth I contribute to- 78k combined, with 29k being in Roth and 48k being in a pre-tax rollover.

SS not factored into retirement spending
There is also an HSA with about 15k in it, which is about 66% invested which I am not including at present time

I don't see an answer to my questions so I'm going to try one more time asking.

In your reply to my questions, you said in one paragraph that there are 2 401k accounts, then in the next paragraph, "$112k was account balance when I typed post." It sounds like you are saying the 112k is the sum of both 401k accounts that were mentioned in the previous paragraph. If that is the case, what is the 190k?

I wish you would give something very clear such as this:

112k - 1st 401k account
155k - sum of 3 rollovers
190k - 2nd 401k account
----------
467k total (?)
Or are some of these numbers included in the others - e.g. maybe the 190k includes the 112k? Whatever it is, please be clearer than you have been so far.

You also haven't answered the question about how much you are contributing each year. In your latest answer, you just said "5% of pay", while in the initial posts you said "401k is a 9% match (90% of first 5%, plus a 5% fixed contribution into a plan which is invested just like 401k)".

The problem is, I can't find anywhere that you actually gave the amount of your salary, so telling us that 5% or 9% of your salary is contributed is meaningless.

I wish you would just give clear figures like:
5000 (= 5% of current pay) - my 401k contribution
9000 (= 9% of current pay) - company match
-------
$14,000 total annual 401k contribution
(or whatever the real number is)

 

[Hermit]

I started seriously saving at 40 by maxing out what I contributed to 401k. At 63 I retired with enough to do that 50k/yr easily. That was 17 or 18% of my pay plus the corporate match. If you can put that much away each year you will likely be fine in your early 60s.



My biggest regret is that all my retirement money is in tax deferred accounts. Now that I am over 65 I have to pay an additional tax on my Medicare bennefits to withdraw any amount from retirement accounts. I will never be below 22% tax bracket and likely above with RMDs in a couple years. The moral of this story is to make sure your balance between Traditional, Roth, and taxable savings makes sense based on SS, pensions, and savings withdrawals even after you start Medicare.

 

[tulak]

My biggest regret is that all my retirement money is in tax deferred accounts. Now that I am over 65 I have to pay an additional tax on my Medicare bennefits to withdraw any amount from retirement accounts. I will never be below 22% tax bracket and likely above with RMDs in a couple years. The moral of this story is to make sure your balance between Traditional, Roth, and taxable savings makes sense based on SS, pensions, and savings withdrawals even after you start Medicare.

This is something I should look at more seriously. I'm still working and probably have too much in tax deferred accounts. My taxable savings are minimal compared to the overall portfolio. I have a good chunk in a Roth, but most of my assets are in tax deferred. I should probably put more in the Roth - I can do a mega backdoor Roth - and less in the tax deferred. The problem is that I would pay more taxes now. It could be that I'd be better off paying more taxes now, instead of later, but I've never tried to quantify which is a better option. I always figured once I stop working, I'd do a 72t for income and rollovers to get as much as possible out of the tax deferred accounts.

Thanks for mentioning this. This has inspired me to sit down and figure out my options, which is a good project over the holidays.

 

[WhenIsItTime]

I don't see an answer to my questions so I'm going to try one more time asking.

In your reply to my questions, you said in one paragraph that there are 2 401k accounts, then in the next paragraph, "$112k was account balance when I typed post." It sounds like you are saying the 112k is the sum of both 401k accounts that were mentioned in the previous paragraph. If that is the case, what is the 190k?

I wish you would give something very clear such as this:

112k - 1st 401k account
155k - sum of 3 rollovers
190k - 2nd 401k account
----------
467k total (?)
Or are some of these numbers included in the others - e.g. maybe the 190k includes the 112k? Whatever it is, please be clearer than you have been so far.

You also haven't answered the question about how much you are contributing each year. In your latest answer, you just said "5% of pay", while in the initial posts you said "401k is a 9% match (90% of first 5%, plus a 5% fixed contribution into a plan which is invested just like 401k)".

The problem is, I can't find anywhere that you actually gave the amount of your salary, so telling us that 5% or 9% of your salary is contributed is meaningless.

I wish you would just give clear figures like:
5000 (= 5% of current pay) - my 401k contribution
9000 (= 9% of current pay) - company match
-------
$14,000 total annual 401k contribution
(or whatever the real number is)

I read it as $112k 401k and $78k ETrade, totaling $190k. Annual contribution to 401k = or > $18k. Agree more info would help.

 

[YakGrl]

I think that in your situation you should also spend time working on ways to keep your expenses low while keeping your quality of life high. Also consider that working at the high income job as long as possible and then downshifting to an enjoyable low stress part time job. Spend some time considering what those options might be.