Hi all,
I read a ton of great stuff here, thanks in advance for advice on the following.
My sister is a Federal employee. She is 47, and hoping to ER at 62. I volunteered to look over her finances to help figure out if she is on track to do so, but sneakily am planning to outsource the job to this board. Then she will think she owes me a favor...
Current income: 178k increasing 1% annually
Side gig: 6-10k yearly but wants to quit that within 5 years.
TSP balance: 460k, allocated as follows:
3% I fund (Morgan Stanley Capital Int'l EAFE index )
6% L2050 fund (target date fund of all the tsp funds)
27% C fund (S & P 500 index)
30% F fund (Barclays US Aggregate Bond Index)
33% G fund (guaranteed principal gov't treasury)
She contributes 18k yearly to the tsp, and Uncle Sam adds 6800.
After tax brokerage: 119k currently, half in FFFEX 30 and half in FFFEX 40 (Fidelity target date funds). She intends to add 20k yearly to the after tax savings.
Cash savings: 30k
At age 65 she will be eligible for a 50k cola'd pension.
Her yearly expenses are 88k all in. Her mortgage balance is 177k, and she is in the middle of refinancing into a 15 year 2.875 loan. She seems to want to make extra principal payments of $1000 every month on the new loan (already included in the yearly expenses).
She is planning a large remodeling project and new car in the next few years, and anticipates needing 140k for those. She thinks her yearly expenses will remain the same after retirement, but she has an expensive hobby and I bet she would like more money, say 110K. Also, she doesn't have kids so spending it most of the way down probably works for her.
I don't know her financial risk tolerance, but she is not interested in learning much about asset allocation, just wants some common sense advice. I feel she would be comfortable with a 60/40 stocks/bonds allocation in the TSP and brokerage accounts. I realize she is way more conservative than that now, and wonder if she should dump the Fidelity funds, pay the cap gains tax on the approx 20k in gains and move on to a single Vanguard ETF. And adjust the TSP of course.
What would you tell your dear sister to do?
I read a ton of great stuff here, thanks in advance for advice on the following.
My sister is a Federal employee. She is 47, and hoping to ER at 62. I volunteered to look over her finances to help figure out if she is on track to do so, but sneakily am planning to outsource the job to this board. Then she will think she owes me a favor...
Current income: 178k increasing 1% annually
Side gig: 6-10k yearly but wants to quit that within 5 years.
TSP balance: 460k, allocated as follows:
3% I fund (Morgan Stanley Capital Int'l EAFE index )
6% L2050 fund (target date fund of all the tsp funds)
27% C fund (S & P 500 index)
30% F fund (Barclays US Aggregate Bond Index)
33% G fund (guaranteed principal gov't treasury)
She contributes 18k yearly to the tsp, and Uncle Sam adds 6800.
After tax brokerage: 119k currently, half in FFFEX 30 and half in FFFEX 40 (Fidelity target date funds). She intends to add 20k yearly to the after tax savings.
Cash savings: 30k
At age 65 she will be eligible for a 50k cola'd pension.
Her yearly expenses are 88k all in. Her mortgage balance is 177k, and she is in the middle of refinancing into a 15 year 2.875 loan. She seems to want to make extra principal payments of $1000 every month on the new loan (already included in the yearly expenses).
She is planning a large remodeling project and new car in the next few years, and anticipates needing 140k for those. She thinks her yearly expenses will remain the same after retirement, but she has an expensive hobby and I bet she would like more money, say 110K. Also, she doesn't have kids so spending it most of the way down probably works for her.
I don't know her financial risk tolerance, but she is not interested in learning much about asset allocation, just wants some common sense advice. I feel she would be comfortable with a 60/40 stocks/bonds allocation in the TSP and brokerage accounts. I realize she is way more conservative than that now, and wonder if she should dump the Fidelity funds, pay the cap gains tax on the approx 20k in gains and move on to a single Vanguard ETF. And adjust the TSP of course.
What would you tell your dear sister to do?