Would like help allocating into a 403bRoth and tIRA please

[Stillwater007]

I am doing a bit of a reset with my Investments and opening a new Retirement plan with Vanguard this week. I don't trust salesmen as I've has Insurance Salespeople trying to get me to invest for the last year, but I'm all ears to you guys, despite being total strangers!

I am 49, retiring when I am 56. Will be receiving a pension, no SS. Pension will cover 90% of my expenses. 100% if I get a little more Frugal.

I will be moving my tIRA all Stock MF from Edward Jones to Vanguard.It has about 35k and I haven't touched it in over 8 years, SADLY. It's been in all stocks.*It will be the first thing I withdraw from when I'm 59.5. I calculate that as a supplement to my Pension each month, after tax, that it will last me 7-10 years barring any surprises. I want to keep the tIRA*moderate, reducing my current risk and at the most so I want to make it more balanced.*

I will also open a new 403b Roth through my school district and it would supplement my pension when I'm closer to 70 so it would compound for 20 years. I'm hoping I don't even need to touch it and pass it on to my 2 kids.*

The following are my thoughts on where to allocate my investments...

tIRA- VBIAX ( Balanced Fund) it has only 0.7% and has performed well over the years. I believe it is passive. OR*Target Date Fund 2030, but fees are a little higher. I think it is active.

The 403b- This is where I'm a little unsure. Possibly a 2 or 3 fund Portfolio? Or is there a mutual fund that would be just as good? I am willing to be a little more riskier here since it will sit for 20 years, I hope.

While I am learning a lot about Investments, I am not assuredly confident that I can manage my own investments. That's kinda scary! I will admit I am naturally risk averse, but if something happens to an investment, I would leave it alone knowing that it will eventually go up.

I just want to be smart as I am getting close to retirement. I'm no longer in my 20's! Haha

Thank you in advance.

[Out-to-Lunch]

Congrats on getting out of EJ!

What are you planning to use to supplement your pension from 56 to 59.5?

If I am reading you correctly, you recognize that it was good (but perhaps lucky) to have been 100% in stocks for the past 8 years. And now, you are looking to take a bit less risk as you get closer to retirement. Did I get that correct?

The VBIAX fund is fine. It's ER is actually 0.07%, not 0.7%, so that is good. It's AA is 60/40. Does that meet your overall risk tolerance?

Personally, I don't think about having different risk characteristics in the different savings vehicles I have. Money is fungible, and what is in your portfolio is what is in your portfolio, no matter how you slice it. However, if it helps you to mentally divide it up, fine with me!

You indicated that you will now start contributing to a Roth savings vehicle. Have you made that decision by comparing what you think your future tax rates will be, compared to what they are now?

I think the next step is for you to share with us what funds are available in your 403(b).

You can do this! You need to learn some more things, I think, but you are on the right track.

[Stillwater007]

Quote:

Originally Posted by Out-to-Lunch Congrats on getting out of EJ! What are you planning to use to supplement your pension from 56 to 59.5? If I am reading you correctly, you recognize that it was good (but perhaps lucky) to have been 100% in stocks for the past 8 years. And now, you are looking to take a bit less risk as you get closer to retirement. Did I get that correct? The VBIAX fund is fine. It's ER is actually 0.07%, not 0.7%, so that is good. It's AA is 60/40. Does that meet your overall risk tolerance? Personally, I don't think about having different risk characteristics in the different savings vehicles I have. Money is fungible, and what is in your portfolio is what is in your portfolio, no matter how you slice it. However, if it helps you to mentally divide it up, fine with me! You indicated that you will now start contributing to a Roth savings vehicle. Have you made that decision by comparing what you think your future tax rates will be, compared to what they are now? I think the next step is for you to share with us what funds are available in your 403(b). You can do this! You need to learn some more things, I think, but you are on the right track.

Hello! Yes, I've done the math and the Roth is a tad better for me. I will keep the tIRA Traditional so I have a little flexibility.

Here's the list of options I have from Vanguard:
https://www.vanguard.com/pdf/403binvt.pdf

[SnowballCamper]

Quote:

Originally Posted by Stillwater007 While I am learning a lot about Investments, I am not assuredly confident that I can manage my own investments. That's kinda scary! I will admit I am naturally risk averse, but if something happens to an investment, I would leave it alone knowing that it will eventually go up.

I think a simple solution for you might be to just use target date funds. Since your withdrawal plan is based on the account type, just put each account all into the target date fund that aligns with your planned withdrawal timeline for that account. This would be consistent with your stated aptitude to leave it alone until it goes up. Good luck!

[Out-to-Lunch]

I think Snowball's suggestion is a fine one. I also think that your idea in the OP of a 2- or 3-fund portfolio is also a good choice. For my equity, I chose to go 70% US, 30% international. Then mix in bonds to your AA liking. So, if you wanted a 60/40 AA overall, you could use

40% Total Bond Market
42% Total Stock Market
18% Total International Stock Market
Then rebalance once a year or so.

I know you know this, but just spelling it out to give you some confirmation.