restarting at age 47

[Montecfo]

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

A lot of people trying to help you. I think you need the same things most folks need when saving for retirement:

Save more
Value engineer your lifestyle to spend less while.continuing to enjoy life.

Your strategy seems ok to me. Most folks here are indexers, but your strategy seems fine if it is not too unwieldy for you to manage.

You are more than 20 years from retirement. I would not worry too much about allocation to bonds at this point. I would certainly not go to 60/40. You need growth at this point from what I can tell.

It is great to have all your funds at one brokerage, but not essential. E-Trade regularly rates highly as does Fidelity. Vanguard is better if you prefer their funds, but their brokerage side is not as robust Kiplinger and Barron's annually rate the brokers and you can use those to dial in selections based on planned usage. Those reviews are free online.

But again, top priorities in my view are saving as much as possible and reducing expenses. When you can combine both of those it can move your planned retirement date a good bit.

Best of luck.

 

[jIMOh]

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)

190K total
78K in IRA split between a rollover IRA and a Roth which has some rollover money and some contributions
112k in combined 401k accounts I don't know if its important to distinguish the 401k I contribute to and the 401k the company contributes to?
I am vested in both.

My 401k is Roth and pre-tax money
the defined contribution 401k is pre-tax money

Salary is $115k

 

[jIMOh]

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.

There are months where technology lags, and I follow two guidelines

1) the sectors which make up S&P are held in portfolio
2) I try to overweight the sectors I think will move market (tech, healthcare, financials) when in doubt as to what to buy (because as you pointed out, some sectors are lowest performing for 6-12 months and after 1-3 purchases I have overweighted enough...

For example, for most of 2019 I was buying healthcare, and my only 2020 purchase was technology in April.

 

[WhenIsItTime]

There are months where technology lags, and I follow two guidelines



1) the sectors which make up S&P are held in portfolio

2) I try to overweight the sectors I think will move market (tech, healthcare, financials) when in doubt as to what to buy

On 2) I agree with you and do same.

 

[RunningBum]

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.

But what would that money have been taxed at had you not deferred the income?

Back to the OP. I realize that simplifying stocks does not produce more money, but I just glazed over when I saw the wall of ETF tickers and %s. It would be easier to read if you just said you gave a stock/bond mix in each acct type (tax deferred, Roth, and taxable). Especially since so many people quote your whole 1st post to give a short reply. There's just no need to confuse us with 401K and 401k-like accounts, just combine them with a single balance.

Are you including SS at all? Seems like you'll have a lot of years with high earnings, so your benefit should be good, even if SS gets cut, say, 25% across the board.

What are the prospects of advancing at your job and making more money? The trick there is to live the same way, and put that money toward debt reduction or retirement savings.

 

[copyright1997reloaded]

Starting salary: 115K
Step 1. Save 401k max ($19500/year from 47-49, $2600/year 50+ to 65)
@7% annual return this will give you around 900K plus the growth from your current investment.

115K-20K = 95K/year, which is still a nice salary for a single person. Depending on where you live you might be able to save even more.

If you do traditional 401K, 22% marginal on the 20K = 17,600 net cost (likely lower unless you live in an income-tax-free state). However, given where tax laws are today (and likely where they are going), i would opt for Roth if at all possible. (I am iin the 'unfortunate' position of having a large tax-deferred liability. In retrospect, I would have switched to Roth long ago).

Step 2: I noticed you stated you have 24% in company stock. Unless they are giving you options or a big discount on purchase, I would reduce your exposure there. Even if they are, over time you want your mega-corp related risk to be reduced (e.g. job, housing market (perhaps), company stock, ...).

 

[Hermit]

But what would that money have been taxed at had you not deferred the income?

The income about the same. The gains would have been quite different especially in Roth (I did not have a Roth option for a good part of that time.)

 

[birdie]

Tons of great advise here so +1 to all. Max out 401k each year. Free money is the best. Simplify your holdings! At 47 i like S P 500 mutual fund. A target retirement fund at 2050 would be suitable too. Please know youll have a few down years between now and 72, but thats no issue. Live modestly, bank the rest. Best formula for success is "do what most others wont do.....earn a buck, live on 70 cents" goog luck, keep us posted.

 

[imnontrad]

I restarted at 50 and still retired early. I made saving for retirement my top priority and minimized housing/car expenses.
One thing I wish I had done is put more into Roth instead of pre-tax retirement accounts. Now, my income will most likely always be above 87K/year (I know, first world problem) and will incur higher Medicare premiums.

 

[Skitso999]

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.

I totally agree with this. I have three mutual funds. Two are Index funds, and one is a "Managed" fund. That means that someone is at the helm of it and trying to make sure he beats the index.

The returns from this have been amazing.

I retired at 55 with this philosophy.

 

[melijov]

I am sorry to hear about your second divorce. If I were you I would focus on two things only:
1. Very aggressive saving rate. I mean really aggressive at least 40% to 50% (my savings rate this year was 69%)
2. Very simple investment strategy. In my case for example I am 30% BND, 49% VTI and 21% VXUS.

 

[SpinDoctorTX]

+1
3rd time might not be the charm.

Speak for yourself, oh ye of little faith! I'm a 4th wife & DH is my #2. We are still very happy after 18 yrs.

 

[jIMOh]

Brief update, I figure out how to break down some of 401k balances

401k- my contributions
$93,000 (combo of Roth contributions, pre-tax contributions and pre-tax match)
now invested
30% S&P
25% small cap
25% global
10% bond
10% real asset

Defined contribution (pre-tax) balance is
$23,000
now invested
30% S&P
25% small cap
25% global
10% bond
10% real asset

93k+23k=$116k workplace retirement balance
current contributions are 12% pre tax and 1% Roth
I expect to increase this in June 2021 to about 20%, goal is to max out, then increase Roth as my budget allows.

Balance breakdown from another portion of website

$116k balance
pre-tax $20k
Roth 401k $53k
Match $25k
defined contribution $23k

Roth is 43% of balance
Roth has $39k of contributions and balance is $53k (after 3.5 years of participation).

It also showed an option to convert all balances to a Roth. Not ready to do this now, I would consider this in 2022 or 2023. Thoughts on this (has anyone seen a 401k transfer a pre-tax balance to a Roth balance)?

 

[FundManager81]

In case helpful -

In recent times, since rates went to 0% and 10-year yields fell below 1%, prevailing wisdom on wall street is that "60/40 is dead". The whole premise of 60/40 is that you get higher return per unit of risk, because bonds and stocks move in different directions during periods of stock market turbulence.
But, in a zero rate world, that has become (empirically) less true, if true at all.

If inflation rebounds even moderately next year, as the economy re-opens, bonds are going to be in for a tough period too. Try adjusting your 30-year treasury price for a 100bp parallel move in the curve. It's ugly.

So, the only bit of advice I have here - is don't worry about shifting from 80/20 to 60/40, per se. It's a rule that was a good one, but it has its roots in a different interest rate paradigm.

Right now, it's awfully hard to diversify away equity risk. If markets are really bad in 2021, it's probably because yields rise significantly. In which case, bonds will also be tough.

If yields back up (aka rise), then yes, the rule will be more meaningful again. But until that point, it's hard to improve your sharpe ratio with bonds. Sadly, cash may be a better diversifier for awhile (it dampens beta, and doesn't lose value in nominal terms... which may be better than bonds, which dampen beta less, and are more at risk of losing value in nominal terms).

Cash doesn't earn anything right now, but be reluctant to invest 40% of your assets in bonds just because of a rule of thumb that was predicated on a structurally different macro-economic backdrop.

Hopefully at some point before long, the 60/40 will be useful again. Until then, everyone and their grandmother is scratching their heads trying to figure out how to build "all weather portfolios". It's just hard with rates at 0%.

Good luck with everything -

FM

 

[UnrealizedPotential]

Two things stood out for me, way too many investments, as others have said, and your need to go at least 80 % in stocks, and maybe consider 90%, assuming you have 25 years for growth. Simplify things.

Save as much as you can every month and go for growth , because you will need it. There are not any guarantees, but by doing that, I feel you will give yourself the best chance to get to where you need to be later in life. Consider putting your stock portion in the SP500 index fund, but really , what will matter most is your savings rate. Invest until it hurts and keep doing it. Good luck!