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Teachers and Investors! What kind of Portfolio to compliment a Pension?
Old 03-25-2021, 05:12 PM   #1
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Teachers and Investors! What kind of Portfolio to compliment a Pension?

I am 49 and will retire in about 7-8 years and my Lifetime Pension will cover at least 90% of my expenses (live as an EXPAT). I do have an emergency fund and cash to cover a couple years too.

I'm just trying to figure out a good portfolio to compliment my Pension.

Are Bonds in my Portfolio necessary since I have a Pension?

I currently own Wellesley, Wellington and VTSAX in a tIRA.
50% is currently Wellesley, 25% Wellington and 25% VTSAX

I would like to grow my Portfolio as much as I can between now and Retirement maxing out a Roth IRA and Roth 403b with Vanguard.

I am thinking to go aggressive with
65% VTSAX or a Growth & Income?
20% VFWAX or VTIAX
5%- Real Estate Fund
10%- VBTLX OR should i drop the bond and add it to the equities?

And what to do with Wellesley and Wellington? Keep or sell part and purchase more Equities?

Thank you in advance!
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Old 03-25-2021, 06:24 PM   #2
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I would keep enough bonds to supply 3-5 years of your expected withdrawals (sounds like 10% of your expenses). That way you can leave the stocks alone if they take a dive. Otherwise, I like lots of stocks and your proposed portfolio looks good to me.

I wouldn't bother with a 5% allocation to RE with a portfolio that is otherwise very simple. Unless you really want it.
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Old 03-26-2021, 06:25 AM   #3
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Be wary of your 403b plan if you are a teacher, make sure you understand your plan totally.

My reason for alarm is that a lot of 403b plans are sponsored by the NEA. I'm not condemning the organization, but I have seen countless NEA 403b plans have a great underlying mutual fund (such as Wellesley} wrapped in an Annuity wrapper. DW, DD, and DSis, all were offered these plans when they began teaching, and I caught them before they got signed up, we had to go outside the box to find a"normal" 403b plan.

My neighbor was a teacher/administrator for over 40 years, but I didn't catch him or his widow in time. The widow lost her husband 2 years ago, and inadvertently re-upped when she inherited his 403b plans. She faces penalties if she tries to get out of the annuities, not to mention the high annual fees.
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Old 03-26-2021, 07:13 AM   #4
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I would keep enough bonds to supply 3-5 years of your expected withdrawals (sounds like 10% of your expenses). That way you can leave the stocks alone if they take a dive. Otherwise, I like lots of stocks and your proposed portfolio looks good to me.

I wouldn't bother with a 5% allocation to RE with a portfolio that is otherwise very simple. Unless you really want it.
Would 3-5 years of a Bond supply be considered short or intermediate?

VBTLX seems to be the big favorite in Vanguard, but only 50% of it is in 1-5yr Bonds and almost 30% in 6-10yr.

Should I pick Bond solely in the 3-5yr mold?

And with 7-10 yrs to go before retiring, is the main purpose getting bonds because of how risk adverse one is?

I don't know if I should start with a bond now to build it up over the next 7-10 years so it's sufficient enough to supplement me in retirement? Or just get bonds at the start of retirement?
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Old 03-26-2021, 09:09 AM   #5
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Originally Posted by Winemaker View Post
Be wary of your 403b plan if you are a teacher, make sure you understand your plan totally.

My reason for alarm is that a lot of 403b plans are sponsored by the NEA. I'm not condemning the organization, but I have seen countless NEA 403b plans have a great underlying mutual fund (such as Wellesley} wrapped in an Annuity wrapper.
+1

As a retired teacher I completely agree with Winemaker. I have never understood how my supposedly omnipotent teacher's union could allow this to continue. But, they do.

In my state we had the usual lousy, high fee annuities, and high fee mutual funds that under performed the indexes. A deferred compensation program was eventually offered to teachers and it used lower cost managed and index funds. But, for some reason, it was never promoted.
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Old 03-26-2021, 09:48 AM   #6
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I'll compliment it.."Hey, that's great".
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Old 03-26-2021, 10:26 AM   #7
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A good site to check out: 403bwise.org lots of good information espically about problems with 403bs. DW retired from teaching, she couldn't believe that the system would so rip off teachers or that these intelligent, educated teachers would not be aware of he problems with a lot of 403bs, When my nieces started teaching I sent them the book Teach And Retire Rich
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Old 03-26-2021, 11:59 AM   #8
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My 403b is with Vanguard. It allows me to choose a bunch of different mutual and index funds, many low cost ERs.
Lucky my District decided to give me that option.

I just need to figure out a proper Bond( what type of short/intermediate term) and the proper AA.
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Old 03-26-2021, 12:14 PM   #9
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Quote:
Originally Posted by Stillwater007 View Post
My 403b is with Vanguard. It allows me to choose a bunch of different mutual and index funds, many low cost ERs.
Lucky my District decided to give me that option.

I just need to figure out a proper Bond( what type of short/intermediate term) and the proper AA.
Vanguard Balanced Index Fund Admiral Shares (VBIAX) is a 60/40 balanced fund

Vanguard STAR Fund (VGSTX) is a 60/40 balanced fund of funds
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Old 04-15-2021, 12:17 PM   #10
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Dividend stocks to supplement my pension. But I still have 25% in bonds. Thats just a safety buffer during downturns. I rolled all my 457 and 401k into an Ira when I retired. Never had the option for a Roth when I worked, and I'm not putting it into a Roth now. Maybe when we move from California to Florida.
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Old 04-27-2021, 09:04 PM   #11
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I am a college faculty member retiring next year with a state pension. I also have a considerable amount in a TIAA 403b account which consists of 3 funds:
10% CREF R3 Growth fund (this account was inherited and I have limited investment options)
40% TIAA Traditional
50% TIAA-CREF SP500 index fund

So a 60/40 AA with about 95% of the above in tax-deferred and 5% in Roth
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Old 04-29-2021, 09:17 PM   #12
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Quote:
Originally Posted by Winemaker View Post
Be wary of your 403b plan if you are a teacher, make sure you understand your plan totally.

My reason for alarm is that a lot of 403b plans are sponsored by the NEA. I'm not condemning the organization, but I have seen countless NEA 403b plans have a great underlying mutual fund (such as Wellesley} wrapped in an Annuity wrapper. DW, DD, and DSis, all were offered these plans when they began teaching, and I caught them before they got signed up, we had to go outside the box to find a"normal" 403b plan.

My neighbor was a teacher/administrator for over 40 years, but I didn't catch him or his widow in time. The widow lost her husband 2 years ago, and inadvertently re-upped when she inherited his 403b plans. She faces penalties if she tries to get out of the annuities, not to mention the high annual fees.


A 403B never made sense to me as a educator pensioner. I retired with pension that was same tax bracket as my final working years. If I had pumped money in one through the years, I would have paid a higher tax amount on the money at withdrawal than the tax break received contributing to it. I did use 403b as a tax free vehicle to buy service years tax free so I could retire earlier though.
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