PBS Frontline : The Retirement Gamble, sorta Must See (1 Viewer)

[Doctor Detroit]

People on the lake don't need to be on the lake because they live on the lake. My view is priceless, hopefully it's the last thing I ever see

Depends on why you live there and why you'd be on the lake. I'd imagine for older people being on the lake is more about relaxing than water sports, certainly easy to relax with a water view, more so than the work to get on a boat.Lots of people go "on the lake" in a boat and never get wet (other than what might be needed to put the boat in). Not enough of a difference between that and sitting on your back deck except you're not burning fuel and it's easier. But if you don't live on the lake you need to either get on a boat or find a public place.

Or you could just do what we've done and buy a lot of land with another great view like mountains.

My Link

Nice. I want to hear more about the house in Italy. Pics? Price? How the rental situation is going if you are doing that and how much, repair arrangements, etc. Really interested in this.

Maybe I'm watching too many house hunters international.

Talk to Chem X about this, he was actually on that show!!!!!!

My place has been with the family since the 70s, 3 apartments a quarter of a mile from the best beaches in Europe. I will own 2/3 of the property at some point, probably will sell and find a place in the city of Cattolica.

 

[Sand]

I fantasize about spending months at a beach location.. but part of me does wonder if it gets old... can you get burnt out on nothingness/beach living/lake life/boating in the same way you get burnt out with the daily grind?

I'm assuming you can. You ever notice how the people that live on the lake are never out on it? That's been my experience.

Yes, I definitely know people that live on the lake that are never on it.

People on the lake don't need to be on the lake because they live on the lake. My view is priceless, hopefully it's the last thing I ever see.

27, probably aim for retirement in early 60s. Hopefully I'll be financially "retirement ready" a few years prior to that to let me leave on my own terms.

Way too many variables to factor in for me though. Who knows what things will be like in 20 years?

27? Jesus, finally someone smart on this forum under 30.

I've been here since I was 13

I just knew there was something off about you...

 

[Judge Smails]

52 and targeting 60-62. Was hoping for big time cash out with options with last gig but that didn't pan out, so I'll be working for the man for awhile longer. I've always done enough of the key right things (saved early for 529's, maxed 401k's) to be OK but honestly I haven't been terrific with managing money. I'm getting real serious now, especially with the option dream gone.

I got a pretty decent size raise in base salary with my latest move and my goal now is to live off salary and bank almost every dime in commissions and bonuses. With the last one out of college in a little more than a year I should be able to do it. Question is what type of account to put that money in. My 401K is in a managed portfolio that's age weighted with moderate risk. I was thinking of just opening a Fidelity or Vanguard account and put all of the commissions/bonuses in an index fund or something. Thoughts?

 

[Binky The Doormat]

52 and targeting 52-60. Was hoping for big time cash out with options with last gig but that didn't pan out, so I'll be working for the man for awhile longer. I've always done enough of the key right things (saved early for 529's, maxed 401k's) to be OK but honestly I haven't been terrific with managing money. I'm getting real serious now, especially with the option dream gone.

I got a pretty decent size raise in base salary with my latest move and my goal now is to live off salary and bank almost every dime in commissions and bonuses. With the last one out of college in a little more than a year I should be able to do it. Question is what type of account to put that money in. My 401K is in a managed portfolio that's age weighted with moderate risk. I was thinking of just opening a Fidelity or Vanguard account and put all of the commissions/bonuses in an index fund or something. Thoughts?

Yep - Vanguard Lazy Man's Portfolio.

Always fun to invest in Berkshire Hathaway also.

 

[Sand]

52 and targeting 52-60. Was hoping for big time cash out with options with last gig but that didn't pan out, so I'll be working for the man for awhile longer. I've always done enough of the key right things (saved early for 529's, maxed 401k's) to be OK but honestly I haven't been terrific with managing money. I'm getting real serious now, especially with the option dream gone.

I got a pretty decent size raise in base salary with my latest move and my goal now is to live off salary and bank almost every dime in commissions and bonuses. With the last one out of college in a little more than a year I should be able to do it. Question is what type of account to put that money in. My 401K is in a managed portfolio that's age weighted with moderate risk. I was thinking of just opening a Fidelity or Vanguard account and put all of the commissions/bonuses in an index fund or something. Thoughts?

Yep - Vanguard Lazy Man's Portfolio.

Always fun to invest in Berkshire Hathaway also.

Pfft. Two funds?

I'll raise you and go for three funds. Or even four. (I like the ultimate buy and hold port.).

 

[netnalp]

In the book Flash Boys they recommend investing in index funds too. It's about high frequency traders. They are part of the reason why many financial advising companies fight legislation to require them to be fiduciaries. That book explains that often the advisor isn't aware that what he is offering isn't in the best interest of the client. They know their companies products well, and the company constantly reinforces the message that the products are good for clients, so the advisor buys in.

What it comes down to is the advisor blindly trusts that the company is doing the right thing. And the clients of without a fiduciary contract with an advisor are doing the same.

 

[BillyBarooo]

In the book Flash Boys they recommend investing in index funds too. It's about high frequency traders. They are part of the reason why many financial advising companies fight legislation to require them to be fiduciaries. That book explains that often the advisor isn't aware that what he is offering isn't in the best interest of the client. They know their companies products well, and the company constantly reinforces the message that the products are good for clients, so the advisor buys in.

What it comes down to is the advisor blindly trusts that the company is doing the right thing. And the clients of without a fiduciary contract with an advisor are doing the same.

any chance you could translate that for anyone who hasn't taken their series 7s, etc?

 

[Slapdash]

I've been here since I was 13

Member Since 14 Apr 2003

Bring your female friends over anytime.

Have you really though? You also seem older...

Yes, I posted on Old Yeller a little bit. And a lot of posts here under Desert Power before it got a timeout and I was too lazy to go back.

I just knew there was something off about you...

This probably doesn't even make the top ten.

 

[KCitons]

Do you count your emergency fund as part of your portfolio when you are reallocating?

 

[Slapdash]

Do you count your emergency fund as part of your portfolio when you are reallocating?

I wouldn't, but I also just think emergency fund should be your whole cash allocation up to when you close in on retirement. I don't think it is a good idea to keep it invested, but opinions differ.

 

[cdubz]

In the book Flash Boys they recommend investing in index funds too. It's about high frequency traders. They are part of the reason why many financial advising companies fight legislation to require them to be fiduciaries. That book explains that often the advisor isn't aware that what he is offering isn't in the best interest of the client. They know their companies products well, and the company constantly reinforces the message that the products are good for clients, so the advisor buys in.

What it comes down to is the advisor blindly trusts that the company is doing the right thing. And the clients of without a fiduciary contract with an advisor are doing the same.

any chance you could translate that for anyone who hasn't taken their series 7s, etc?

If you are a fiduciary, you need to act in the best interest of your client at all times.

If you are not a fiduciary, then there is a suitability test. That you only have to make sure investments you put client into are suitable for them, even if there are theoretically better options available.

Why would someone invest a clients' money in a sub-optimal investment? Fees. The advisor often gets a cut for steering that money in the right direction.

Good overview: http://www.investopedia.com/articles/professionaleducation/11/suitability-fiduciary-standards.asp

Popular coverage of a relevant example of the nuances: http://fortune.com/2014/08/13/jp-morgan-chase-indianapolis-church-lawsuit/

ETA: 2nd link

 

[Binky The Doormat]

Do you count your emergency fund as part of your portfolio when you are reallocating?

No.

 

[netnalp]

In the book Flash Boys they recommend investing in index funds too. It's about high frequency traders. They are part of the reason why many financial advising companies fight legislation to require them to be fiduciaries. That book explains that often the advisor isn't aware that what he is offering isn't in the best interest of the client. They know their companies products well, and the company constantly reinforces the message that the products are good for clients, so the advisor buys in.

What it comes down to is the advisor blindly trusts that the company is doing the right thing. And the clients of without a fiduciary contract with an advisor are doing the same.

any chance you could translate that for anyone who hasn't taken their series 7s, etc?

If you are a fiduciary, you need to act in the best interest of your client at all times.

If you are not a fiduciary, then there is a suitability test. That you only have to make sure investments you put client into are suitable for them, even if there are theoretically better options available.

Why would someone invest a clients' money in a sub-optimal investment? Fees. The advisor often gets a cut for steering that money in the right direction.

Good overview: http://www.investopedia.com/articles/professionaleducation/11/suitability-fiduciary-standards.asp

Popular coverage of a relevant example of the nuances: http://fortune.com/2014/08/13/jp-morgan-chase-indianapolis-church-lawsuit/

ETA: 2nd link

It's a big problem when your financial advisor or their company is putting your money into the investments that give them the biggest kick-back rather than what benefits you most. Companies pay the advisor a bigger commission for the investments they want sold. It is not unusual for the advisors to have no clue if what their parent company is offer is what is best for you. They just know what the company tells them about the product and the company provides the software that indicates to the advisor what they should sell you.

The issue with High Frequency Traders (HFT) is they raise the cost of stocks to people buying them and lower what you can get for them when selling stocks. Their actions add no value to the market and they make billions doing it. The HFT, without gaining permission, insert themselves a middle man in stock buy/sell transactions.And it is legal for them to do so.

Basically what happens is say there is someone that wants to buy 1,000 shares of stock from someone selling that stock for example at $5.00 a share. The buyer, on their computer enters into the website they are using a request to buy 1,000 shares at $5.00 and hits the "send" button. The HFT have computers that are so fast that in the fraction of a second it takes for your buy command to reach the seller of the stock, they are alerted to your "buy" command. Once alerted the HFT is so fast their computers buy the stock from the seller before your signal gets there. That buy causes the value of the stock to raise and they sell you the stock at that higher price. So you end up buying 1,000 shares at $5.05 a share. All the HFT did was beat you too it and they made money from it.

But the problem is bigger than that. It is not just people logging onto a website and doing their own trading that are getting screwed. The brokers and financial institutions that are handling people's 401ks being beaten to stock transactions by HFTs. To avoid this the HFT companies will sell "protection" to banks willing to pay for it. Basically the HFT will agree not to do what they do to a chunk of the banks clients. In return the banks funnel all the rest of their clients money to the HFT. And as you probably have guessed the banks extend this "protection" to their most valued clients and everyone else gets ####ed.

Speed is the essential variable to the whole process. So much so that HFT paid hundreds of millions to have their computers put in the very same room as the computers that operate the stock exchange. And it all happens in about a millionth of a second. HFT are making billions for producing nothing and adding no value. They bully their way into other people's transactions and take a cut.

Where the actions of HFT connects to the Frontline piece is with the fees they talk about. Where 1/3 of the earnings produced by 401k's that have high fees. A part of those fees is either to offset losses to HFT or it is used to fund the payoff to HFT to leave their most prized clients alone. Unless you're in the top 1% we hear about that has most of the worlds $, you're not in the protected group. Banks knowingly charging the wealthy, middle class and poor to pay for special protection for the elite 1%.

A great deal of the past financial crisis is due to the dealings between banks and HFT. All that selling of bad debts and betting that their stocks would fail. It's all part of it.

 

[FUBAR]

How do you best play a loss in your Roth?

I bought a few different stocks over the past few years which have tanked. If these were in a different account I'd have sold them off and taken the loss and subsequent tax benefit. But in a Roth, what's the best thing to do? I'm somewhat inclined just to sell them off and put what's left in a better investment but is there a benefit I'm missing?

 

[Dentist]

How do you best play a loss in your Roth?

I bought a few different stocks over the past few years which have tanked. If these were in a different account I'd have sold them off and taken the loss and subsequent tax benefit. But in a Roth, what's the best thing to do? I'm somewhat inclined just to sell them off and put what's left in a better investment but is there a benefit I'm missing?

it's probably one of the most compelling reasons to put your bond or dividend generating safer stocks into the Roth.

When you combine the paltry maximum with the fact that you can't reload or double down and can't write off the losses, the account has severe real limitations.

 

[Random]

How do you best play a loss in your Roth?

I bought a few different stocks over the past few years which have tanked. If these were in a different account I'd have sold them off and taken the loss and subsequent tax benefit. But in a Roth, what's the best thing to do? I'm somewhat inclined just to sell them off and put what's left in a better investment but is there a benefit I'm missing?

it's probably one of the most compelling reasons to put your bond or dividend generating safer stocks into the Roth.

When you combine the paltry maximum with the fact that you can't reload or double down and can't write off the losses, the account has severe real limitations.

On the contrary, wouldn't you rather hit a homerun in your Roth?

 

[humpback]

How do you best play a loss in your Roth?

I bought a few different stocks over the past few years which have tanked. If these were in a different account I'd have sold them off and taken the loss and subsequent tax benefit. But in a Roth, what's the best thing to do? I'm somewhat inclined just to sell them off and put what's left in a better investment but is there a benefit I'm missing?

it's probably one of the most compelling reasons to put your bond or dividend generating safer stocks into the Roth.

When you combine the paltry maximum with the fact that you can't reload or double down and can't write off the losses, the account has severe real limitations.

On the contrary, wouldn't you rather hit a homerun in your Roth?

If you had a crystal ball, you would put your most appreciative and tax disadvantaged investments in your Roth. Since we don't, it's mostly a guess/personal preference.

What Dentist said makes sense for some- the interest and dividends are taxable when they are paid out, so the compounding of those in a retirement account adds up to quite a bit over time vs. in a taxable account. However, growth stocks will tend to outperform leaving you with a much larger gain over time, in which case the preferential tax treatment will also make a big difference. In cases where you have losses, obviously being in a taxable account is much preferred.

There really isn't a right or wrong answer without the benefit of hindsight. Long term, you should be better off with your "riskier" assets in the Roth, but it could also blow up in your face if you pick the wrong stocks.

To answer Fubar's question, no, there is nothing else you are missing with losses in your Roth, unless it was a Roth conversion.

 

[Dentist]

How do you best play a loss in your Roth?

I bought a few different stocks over the past few years which have tanked. If these were in a different account I'd have sold them off and taken the loss and subsequent tax benefit. But in a Roth, what's the best thing to do? I'm somewhat inclined just to sell them off and put what's left in a better investment but is there a benefit I'm missing?

it's probably one of the most compelling reasons to put your bond or dividend generating safer stocks into the Roth.

When you combine the paltry maximum with the fact that you can't reload or double down and can't write off the losses, the account has severe real limitations.

On the contrary, wouldn't you rather hit a homerun in your Roth?

true.. since you'd never have to pay taxes on it again, I suppose shooting the moon is a reasonable strategy as well.

Good point.

I guess the bottom line is that shooting the moon or playing it safe with tax disadvantaged interest bearing items are good choices... something in between is probably sub-optimal

 

[FUBAR]

How do you best play a loss in your Roth?

I bought a few different stocks over the past few years which have tanked. If these were in a different account I'd have sold them off and taken the loss and subsequent tax benefit. But in a Roth, what's the best thing to do? I'm somewhat inclined just to sell them off and put what's left in a better investment but is there a benefit I'm missing?

it's probably one of the most compelling reasons to put your bond or dividend generating safer stocks into the Roth.

When you combine the paltry maximum with the fact that you can't reload or double down and can't write off the losses, the account has severe real limitations.

On the contrary, wouldn't you rather hit a homerun in your Roth?

If you had a crystal ball, you would put your most appreciative and tax disadvantaged investments in your Roth. Since we don't, it's mostly a guess/personal preference.

What Dentist said makes sense for some- the interest and dividends are taxable when they are paid out, so the compounding of those in a retirement account adds up to quite a bit over time vs. in a taxable account. However, growth stocks will tend to outperform leaving you with a much larger gain over time, in which case the preferential tax treatment will also make a big difference. In cases where you have losses, obviously being in a taxable account is much preferred.

There really isn't a right or wrong answer without the benefit of hindsight. Long term, you should be better off with your "riskier" assets in the Roth, but it could also blow up in your face if you pick the wrong stocks.

To answer Fubar's question, no, there is nothing else you are missing with losses in your Roth, unless it was a Roth conversion.

Thanks guys.

I've stopped putting money in the Roth IRA anyway and have now put most of my retirement money into the Roth TSP. ($18k max)

But can't convert the Roth IRA into the Roth TSP. So my Roth IRA is stagnant. I'm inclined to sell off everything and put it all into a conservative ETF, probably a high interest bearing one. But haven't made that leap yet.

I might not put much into my wife's Roth IRA either, unless someone can explain why the Roth IRA would be better than the Roth TSP - which I doubt would be the case. I'm not a high roller like some of you, so we probably won't hit $18,000 each year.

 

[Sand]

How do you best play a loss in your Roth?

I bought a few different stocks over the past few years which have tanked. If these were in a different account I'd have sold them off and taken the loss and subsequent tax benefit. But in a Roth, what's the best thing to do? I'm somewhat inclined just to sell them off and put what's left in a better investment but is there a benefit I'm missing?

it's probably one of the most compelling reasons to put your bond or dividend generating safer stocks into the Roth.

When you combine the paltry maximum with the fact that you can't reload or double down and can't write off the losses, the account has severe real limitations.

On the contrary, wouldn't you rather hit a homerun in your Roth?

If you had a crystal ball, you would put your most appreciative and tax disadvantaged investments in your Roth. Since we don't, it's mostly a guess/personal preference.

What Dentist said makes sense for some- the interest and dividends are taxable when they are paid out, so the compounding of those in a retirement account adds up to quite a bit over time vs. in a taxable account. However, growth stocks will tend to outperform leaving you with a much larger gain over time, in which case the preferential tax treatment will also make a big difference. In cases where you have losses, obviously being in a taxable account is much preferred.

There really isn't a right or wrong answer without the benefit of hindsight. Long term, you should be better off with your "riskier" assets in the Roth, but it could also blow up in your face if you pick the wrong stocks.

To answer Fubar's question, no, there is nothing else you are missing with losses in your Roth, unless it was a Roth conversion.

Thanks guys.

I've stopped putting money in the Roth IRA anyway and have now put most of my retirement money into the Roth TSP. ($18k max)

But can't convert the Roth IRA into the Roth TSP. So my Roth IRA is stagnant. I'm inclined to sell off everything and put it all into a conservative ETF, probably a high interest bearing one. But haven't made that leap yet.

I might not put much into my wife's Roth IRA either, unless someone can explain why the Roth IRA would be better than the Roth TSP - which I doubt would be the case. I'm not a high roller like some of you, so we probably won't hit $18,000 each year.

TSP is a better option for you. As far as what to do with those stocks the decision has no tax consequences - only thing to consider is if the stock will recover or continue to decline.

 

[Doctor Detroit]

How do you best play a loss in your Roth?

I bought a few different stocks over the past few years which have tanked. If these were in a different account I'd have sold them off and taken the loss and subsequent tax benefit. But in a Roth, what's the best thing to do? I'm somewhat inclined just to sell them off and put what's left in a better investment but is there a benefit I'm missing?

it's probably one of the most compelling reasons to put your bond or dividend generating safer stocks into the Roth.

When you combine the paltry maximum with the fact that you can't reload or double down and can't write off the losses, the account has severe real limitations.

On the contrary, wouldn't you rather hit a homerun in your Roth?

If you had a crystal ball, you would put your most appreciative and tax disadvantaged investments in your Roth. Since we don't, it's mostly a guess/personal preference.

What Dentist said makes sense for some- the interest and dividends are taxable when they are paid out, so the compounding of those in a retirement account adds up to quite a bit over time vs. in a taxable account. However, growth stocks will tend to outperform leaving you with a much larger gain over time, in which case the preferential tax treatment will also make a big difference. In cases where you have losses, obviously being in a taxable account is much preferred.

There really isn't a right or wrong answer without the benefit of hindsight. Long term, you should be better off with your "riskier" assets in the Roth, but it could also blow up in your face if you pick the wrong stocks.

To answer Fubar's question, no, there is nothing else you are missing with losses in your Roth, unless it was a Roth conversion.

Thanks guys.

I've stopped putting money in the Roth IRA anyway and have now put most of my retirement money into the Roth TSP. ($18k max)

But can't convert the Roth IRA into the Roth TSP. So my Roth IRA is stagnant. I'm inclined to sell off everything and put it all into a conservative ETF, probably a high interest bearing one. But haven't made that leap yet.

I might not put much into my wife's Roth IRA either, unless someone can explain why the Roth IRA would be better than the Roth TSP - which I doubt would be the case. I'm not a high roller like some of you, so we probably won't hit $18,000 each year.

TSP is a better option for you. As far as what to do with those stocks the decision has no tax consequences - only thing to consider is if the stock will recover or continue to decline.

The limit to five investment options is frustrating though. I spoke to someone last week who asked me about diversification, and they said they had their money spread across all 10 TSP funds (5 funds plus the five life cycle funds). Oof.

One thing to consider though is that FUBAR can roll his TSP money over into an IRA when he's done on active duty, and he also may see some big changes coming. TSP is doing research on opening an "investment window" to allow money to flow to outside selected mutual funds (based on low expense ratio and history among other things). That will certainly help the program overall.

 

[Sand]

How do you best play a loss in your Roth?

I bought a few different stocks over the past few years which have tanked. If these were in a different account I'd have sold them off and taken the loss and subsequent tax benefit. But in a Roth, what's the best thing to do? I'm somewhat inclined just to sell them off and put what's left in a better investment but is there a benefit I'm missing?

it's probably one of the most compelling reasons to put your bond or dividend generating safer stocks into the Roth.

When you combine the paltry maximum with the fact that you can't reload or double down and can't write off the losses, the account has severe real limitations.

On the contrary, wouldn't you rather hit a homerun in your Roth?

If you had a crystal ball, you would put your most appreciative and tax disadvantaged investments in your Roth. Since we don't, it's mostly a guess/personal preference.

What Dentist said makes sense for some- the interest and dividends are taxable when they are paid out, so the compounding of those in a retirement account adds up to quite a bit over time vs. in a taxable account. However, growth stocks will tend to outperform leaving you with a much larger gain over time, in which case the preferential tax treatment will also make a big difference. In cases where you have losses, obviously being in a taxable account is much preferred.

There really isn't a right or wrong answer without the benefit of hindsight. Long term, you should be better off with your "riskier" assets in the Roth, but it could also blow up in your face if you pick the wrong stocks.

To answer Fubar's question, no, there is nothing else you are missing with losses in your Roth, unless it was a Roth conversion.

Thanks guys.

I've stopped putting money in the Roth IRA anyway and have now put most of my retirement money into the Roth TSP. ($18k max)

But can't convert the Roth IRA into the Roth TSP. So my Roth IRA is stagnant. I'm inclined to sell off everything and put it all into a conservative ETF, probably a high interest bearing one. But haven't made that leap yet.

I might not put much into my wife's Roth IRA either, unless someone can explain why the Roth IRA would be better than the Roth TSP - which I doubt would be the case. I'm not a high roller like some of you, so we probably won't hit $18,000 each year.

TSP is a better option for you. As far as what to do with those stocks the decision has no tax consequences - only thing to consider is if the stock will recover or continue to decline.

The limit to five investment options is frustrating though. I spoke to someone last week who asked me about diversification, and they said they had their money spread across all 10 TSP funds (5 funds plus the five life cycle funds). Oof.

One thing to consider though is that FUBAR can roll his TSP money over into an IRA when he's done on active duty, and he also may see some big changes coming. TSP is doing research on opening an "investment window" to allow money to flow to outside selected mutual funds (based on low expense ratio and history among other things). That will certainly help the program overall.

The fees are incredibly low - this makes up for the choices. I'd put it all in an appropriate L fund and let it go.

 

[Doctor Detroit]

TSP is a better option for you. As far as what to do with those stocks the decision has no tax consequences - only thing to consider is if the stock will recover or continue to decline.

The limit to five investment options is frustrating though. I spoke to someone last week who asked me about diversification, and they said they had their money spread across all 10 TSP funds (5 funds plus the five life cycle funds). Oof.

One thing to consider though is that FUBAR can roll his TSP money over into an IRA when he's done on active duty, and he also may see some big changes coming. TSP is doing research on opening an "investment window" to allow money to flow to outside selected mutual funds (based on low expense ratio and history among other things). That will certainly help the program overall.

The fees are incredibly low - this makes up for the choices. I'd put it all in an appropriate L fund and let it go.

Yes, it's a great deal and I have very few complaints. The L funds are overly conservative IMO, but I usually recommend to someone to chose the fund that is beyond their retirement date. Retiring in 2032? Go with the 2040 fund...and so on. The 2030 fund allocates 28 percent to treasuries right now, IMO that is too much (and the models dislike the Barclays Bond Index fund closer to retirement, which I don't quite understand). I also prefer periods of great small cap exposure, like the present for example so I do my own allocation and balancing.

Government employees are by and large conservative with money though I guess, so some of it makes sense. I think if you know just some about investing you just do it yourself. 100% in treasuries at any age is the wrong answer though, those people need to use the L funds.

 

[Judge Smails]

Embarrassed by my lack of knowledge on this stuff. I don't have any retirement vehicles except my 401K/IRA's. I max it out with the catch up provision. My wife doesn't work. I make FBG lite money (Little League version of Chet). Still working for the man but above all income thresholds. I expect to make less money in the future than I do now.

What other vehicles (Roth, etc) am I eligible for and therefor should open accounts immediately with monies I can put towards retirement? Thx

 

[Sand]

Embarrassed by my lack of knowledge on this stuff. I don't have any retirement vehicles except my 401K/IRA's. I max it out with the catch up provision. My wife doesn't work. I make FBG lite money (Little League version of Chet). Still working for the man but above all income thresholds. I expect to make less money in the future than I do now.

What other vehicles (Roth, etc) am I eligible for and therefor should open accounts immediately with monies I can put towards retirement? Thx

IMO it isn't a bad idea to have some money in each of the three pots - tax deferred (401k), tax free (roth), and taxable. Since no one has a clue what future tax rates will be this gives you the ability to hedge as best you can. With a high deferred balance if you retire early you have the opportunity to play tax games and move monies from the IRA to the Roth tax free, etc.

 

[FUBAR]

TSP is a better option for you. As far as what to do with those stocks the decision has no tax consequences - only thing to consider is if the stock will recover or continue to decline.

The limit to five investment options is frustrating though. I spoke to someone last week who asked me about diversification, and they said they had their money spread across all 10 TSP funds (5 funds plus the five life cycle funds). Oof.One thing to consider though is that FUBAR can roll his TSP money over into an IRA when he's done on active duty, and he also may see some big changes coming. TSP is doing research on opening an "investment window" to allow money to flow to outside selected mutual funds (based on low expense ratio and history among other things). That will certainly help the program overall.

The fees are incredibly low - this makes up for the choices. I'd put it all in an appropriate L fund and let it go.

Yes, it's a great deal and I have very few complaints. The L funds are overly conservative IMO, but I usually recommend to someone to chose the fund that is beyond their retirement date. Retiring in 2032? Go with the 2040 fund...and so on. The 2030 fund allocates 28 percent to treasuries right now, IMO that is too much (and the models dislike the Barclays Bond Index fund closer to retirement, which I don't quite understand). I also prefer periods of great small cap exposure, like the present for example so I do my own allocation and balancing. Government employees are by and large conservative with money though I guess, so some of it makes sense. I think if you know just some about investing you just do it yourself. 100% in treasuries at any age is the wrong answer though, those people need to use the L funds.

I prefer to set my own allocation for that reason. The more conservative allocation doesn't make sense to me especially with a pension.

Really don't know if I would roll the money over to an Ira as the fees would be higher. Plus there's a chance that I'll pursue a DA position.

 

[IC FBGCav]

http://finance.yahoo.com/news/5-secrets-to-a-happy-retirement-150212406.html

Retirement ought to be a happy time. You can set your own schedule, take long vacations, and start spending all the money you’ve been saving.


And for many retirees that holds true. According to the Gallup-Healthways Well-Being Index, people tend to start life happy, only to see their sense of well-being decline in adulthood. No surprise there: Working long hours, raising a family, and saving for the future are high-stress pursuits.

Once you reach age 65, though, happiness picks up again, not peaking until age 85. In a recent survey of MONEY readers, 48% retirees reported being happier in retirement than expected; only 7% were disappointed.

How can you make sure you follow this blissful pattern? Financial security helps. And good health is crucial: In a recent survey 81% of retirees cited it as the most important ingredient for a happy retirement. Some of the other triggers are less obvious. Here’s what you can do to make your retirement a happy one.

1. Create a predictable paycheck. No doubt about it: More money makes you happier. Once you amass a comfortable nest egg, though, the effect weakens, says financial planner Wes Moss. For his recent book, You Can Retire Sooner Than You Think: The 5 Money Secrets of the Happiest Retirees, Moss surveyed 1,400 retirees in 46 states. The happiest ones had the highest net worths, but Moss found that money’s power to boost your mood diminished after $550,000.

“Once you reach a certain level, more money doesn’t buy a lot more happiness,” says Moss. Similar research based on the University of Michigan Health and Retirement Study found a dropoff in happiness with extreme wealth; after you’ve amassed some $3.5 million in riches, more money doesn’t increase your happiness as much.

Where your income comes from is just as important as how much savings you have, says Moss. Retirees with a predictable income—a pension, say, or rental properties—get more enjoyment from spending those dollars than they do using money from a 401(k) or an IRA.

Similarly, a Towers Watson happiness survey found that retirees who rely mostly on investments had the highest financial anxiety. Almost a third of retirees who get less than 25% of their income from a pension or annuity were worried about their financial future; of those who receive 50% or more of their income from such a predictable source, just under a quarter expressed the same anxiety.

You can engineer a steady income by buying an immediate fixed annuity. According to ImmediateAnnuities.com, a 65-year-old man who puts $100,000 into an immediate annuity today would collect about $500 a month throughout retirement.

2. Stick with what you know. People who work past 65 are happier than their fully retired peers—with a big asterisk. If you have no choice but to work, the results are the opposite. On a scale of 1 to 10, seniors who voluntarily pick up part-time work rate their happiness a 6.5 on average; that drops to 4.4 for those who are forced to take a part-time job.

The benefit of working isn’t just financial. It’s also a boon to your health—a key driver of retirement happiness. The physical activity and social connections a job provides are a good antidote to an unhealthy sedentary and lonely lifestyle, says medical doctor turned financial planner (and Money.com contributor) Carolyn McClanahan .

A 2009 study published in the Journal of Occupational Health Psychology found that retirees with part-time or temporary jobs have fewer major diseases, including high blood pressure and heart disease, than those who stop working altogether, even after factoring in their pre-retirement health.

Switching careers in retirement, though, isn’t as beneficial. Retirees who take jobs in their field reported the best mental health, says lead researcher Yujie Zhan of Canada’s Laurier University, perhaps because adapting to a new work environment and duties is stressful.

3. Find four hobbies. Busy retirees tend to be happier. But just how active do you have to be? Moss has put a number on it. He found that the happiest retirees engage in three to four activities regularly; the least happy, only one or two. “The happy retiree group had extraordinarily busy schedules,” he says. “I call it hobbies on steroids.”

For the biggest boost to your happiness, pick a hobby that’s social. The top pursuits of the happiest retirees include volunteering, t ravel, and golf; for the unhappiest, they’re reading, hunting, fishing, and writing. “The happiest people don’t do things in isolation,” says Moss.

That’s no surprise when you consider that people 65 and older get far more enjoyment out of socializing than younger people do.

4. Rent late in life. In retirement, as in your working years, owning a home brings you more joy than renting does. But as time goes on, that changes. Michael Finke, a professor of retirement and personal financial planning at Texas Tech University, analyzed the satisfaction of homeowners vs. that of renters from age 20 to 90-plus and found a drop late in life, particularly after homeowners hit their eighties.

The hassles of homeownership build as you age, Finke notes, and a house can be isolating. Most people want to stay put in retirement. Yet, says Finke, “you need to plan for a transition to living in an environment with more social interaction and less home responsibility.”

5. Keep your kids at arm’s length. Once you suddenly have a lot more time on your hands, your closest relationships can have a big impact on your mood. According to an analysis by Finke and Texas Tech researcher Nhat Hoang Ho, married retirees, particularly those who retire around the same time, report higher satisfaction than nonmarrieds—but only if the couple get along well. A poor relationship more than erases the positive effects of being married.

Children don’t make much of a difference, with one twist. Living within 10 miles of their kids leaves retirees less happy. “People overestimate the amount of satisfaction they get from their kids,” says Finke. The reason is unclear—could being a too accessible babysitter be the problem?

 

[Balco]

My ideal retirement age is 48, with 50 being more realistic (I am 37).

My 457 just offered a Roth version, in addition to the pre tax. My question is, should I split up my contributions? And what should the percentage be? 50/50? When I leave my employment, I can immediately start withdrawing the money penalty free, which is pretty awesome. Because I would be leaving state service so early, my pension would be almost nothing (probably 250 a month when I am 55)

 

[Doctor Detroit]

Via Ric Edleman podcast:

According to a Columbia University research study, those people who check their 401k, 403b, IRA, etc balances most often, had the worst returns. Study found that those doing all the checking bought more when market was ascending, and selling more when the market was falling.

Interesting. Tried to find the report on the internet but no luck, so if you see it please post.

I look at my TSP(401k) maybe ten times a year, but half of those occurrences are in November/December as I study the year in returns and possible strategy going forward. Otherwise I check quarterly to re-balance.

My Roth IRA I look at quite often, but I mess around with that account more. Probably to my detriment as Columbia University so astutely points out.

 

[slackjawedyokel]

Posting so I can get a little star next to the topic.

 

[Grahamburn]

What are your expense ratios in your 401(k)? I think I'm getting crushed on fees..

 

[Dentist]

What are your expense ratios in your 401(k)? I think I'm getting crushed on fees..

i'm in a stupid variable annuity.

So i'm getting pwned for a 0.5% mortality and risk fee, and then a 0.37-0.8 ratio on my funds.

most of money money is in a S&P 500 index fund at 0.37... so my total is 0.87

My wife had a 403B where the fee was nearing 2%... we stopped contributing to that fast.... and now we have her in something hovering around 0.5-0.7%

You can never do as well as you can in a Roth IRA where I own Vanguard funds under 0.2% but I figure if you're under 1% you're probably doing ok.

 

[Grahamburn]

What are your expense ratios in your 401(k)? I think I'm getting crushed on fees..

i'm in a stupid variable annuity.

So i'm getting pwned for a 0.5% mortality and risk fee, and then a 0.37-0.8 ratio on my funds.

most of money money is in a S&P 500 index fund at 0.37... so my total is 0.87

My wife had a 403B where the fee was nearing 2%... we stopped contributing to that fast.... and now we have her in something hovering around 0.5-0.7%

You can never do as well as you can in a Roth IRA where I own Vanguard funds under 0.2% but I figure if you're under 1% you're probably doing ok.

My employer matches 10% of my contributions, so it's difficult to justify putting it into something else on my own outside of the plan, but the company managing the fund is blasting us for 1.6% of holdings.

After fees my gains this year were basically 7%...

 

[Gamma1210]

I think this has been answered somewhere but I couldn't find it. My wife has excellent insurance (teacher), and we won't move off of that. There is no way for us to open an HSA correct? It is required to have a high deductible plan to go with it? Thanks

 

[FUBAR]

What are your expense ratios in your 401(k)? I think I'm getting crushed on fees..

i'm in a stupid variable annuity.

So i'm getting pwned for a 0.5% mortality and risk fee, and then a 0.37-0.8 ratio on my funds.

most of money money is in a S&P 500 index fund at 0.37... so my total is 0.87

My wife had a 403B where the fee was nearing 2%... we stopped contributing to that fast.... and now we have her in something hovering around 0.5-0.7%

You can never do as well as you can in a Roth IRA where I own Vanguard funds under 0.2% but I figure if you're under 1% you're probably doing ok.

I'll take my .029% https://www.tsp.gov/investmentfunds/fundsoverview/expenseRatio.shtml

 

[Steve Tasker]

General investment question, since this seems like the general investment thread.

I've been accumulating cash over the past few years. The majority of my "investable" dollars have gone into my 401(k) and Roth IRA. I've been holding cash in anticipation of an engagement ring ( ), wedding ( ), and a home. I do not own my home; we are renters.

At this point, we've established our wedding budget and expected downpayment for a (currently non-existent) house. Ring is long-since purchased and out of the equation. I have excess cash above what I "need" to cover these two budgets + an emergency fund, but I'm not sure I have enough to really dip my feet into non-tax-advantaged investment account. My options, as I see it, would be to either (1) up my 401(k) contributions to the max and use this excess cash to cover the "shortfall" of what I would be losing in my weekly take-home, or (2) start an investment account. I kinda like option 2 because it provides flexibility of being able to cash in the investment should I need more for a downpayment or unexpected expenses, though I suppose I do have that flexibility in the Roth as well.

The questions: am I crazy for doing this while I am not currently maxing my 401(k)? And #2, what would you say is the minimum you should have before starting an investment account? I'm certainly a long-term low-expense-ratio Bogleheads-type investor; this will not be an frequently actively traded account.

 

[FUBAR]

Steve, not sure if this answers your question but generally, Ramsey's 7 steps seem to work.

Baby Step 1

$1,000 to start an Emergency Fund

An emergency fund is for those unexpected events in life that you cant plan for: the loss of a job, an unexpected pregnancy, a faulty car transmission, and the list goes on and on. Its not a matter of if these events will happen; its simply a matter of when they will happen. Learn more

Baby Step 2

Baby Step 2

Pay off all debt using the Debt Snowball

List your debts, excluding the house, in order. The smallest balance should be your number one priority. Dont worry about interest rates unless two debts have similar payoffs. If thats the case, then list the higher interest rate debt first. Learn more

Baby Step 3

Baby Step 3

3 to 6 months of expenses in savings

Once you complete the first two baby steps, you will have built serious momentum. But dont start throwing all your extra money into investments quite yet. Its time to build your full emergency fund. Learn more

Baby Step 4

Baby Step 4

Invest 15% of household income into Roth IRAs and pre-tax retirement

When you reach this step, youll have no paymentsexcept the houseand a fully funded emergency fund. Now its time to get serious about building wealth. Learn more

Baby Step 5

Baby Step 5

College funding for children

By this point, you should have already started Baby Step 4investing 15% of your incomebefore saving for college. Whether you are saving for you or your child to go to college, you need to start now. Learn more

Baby Step 6

Baby Step 6

Pay off home early

Now its time to begin chunking all of your extra money toward the mortgage. You are getting closer to realizing the dream of a life with no house payments. Learn more

Baby Step 7

Baby Step 7

Build wealth and give!

Its time to build wealth and give like never before. Leave an inheritance for future generations, and bless others now with your excess. It's really the only way to live! Learn more

 

[Steve Tasker]

Steve, not sure if this answers your question but generally, Ramsey's 7 steps seem to work.

Baby Step 1

$1,000 to start an Emergency Fund

Baby Step 2

Pay off all debt using the Debt Snowball

Baby Step 3

3 to 6 months of expenses in savings

Baby Step 4

Invest 15% of household income into Roth IRAs and pre-tax retirement

Baby Step 5

College funding for children

Baby Step 6

Pay off home early

Baby Step 7

Build wealth and give!

Thanks. To comment on these.

#1-4 are covered. The "emergency fund" I referenced is about 12 months worth, I'm debt-free, and currently putting over 15% into 401(k)/Roth combined. Roth is maxed, 401(k) is not, but isn't far off. #5-6 are N/A, as I have no kids and don't own a home yet.

The question is do I increase my retirement investments or invest the cash in taxable accounts? I like the flexibility of being able to pull money without a problem should I have an unexpected renovation needed if I buy a house or something. Worst comes to worst and I can just cash the account and use it to pay down the mortgage if I want.

 

[Sand]

Steve, not sure if this answers your question but generally, Ramsey's 7 steps seem to work.

Baby Step 1

$1,000 to start an Emergency Fund

Baby Step 2

Pay off all debt using the Debt Snowball

Baby Step 3

3 to 6 months of expenses in savings

Baby Step 4

Invest 15% of household income into Roth IRAs and pre-tax retirement

Baby Step 5

College funding for children

Baby Step 6

Pay off home early

Baby Step 7

Build wealth and give!

Thanks. To comment on these.

#1-4 are covered. The "emergency fund" I referenced is about 12 months worth, I'm debt-free, and currently putting over 15% into 401(k)/Roth combined. Roth is maxed, 401(k) is not, but isn't far off. #5-6 are N/A, as I have no kids and don't own a home yet.

The question is do I increase my retirement investments or invest the cash in taxable accounts? I like the flexibility of being able to pull money without a problem should I have an unexpected renovation needed if I buy a house or something. Worst comes to worst and I can just cash the account and use it to pay down the mortgage if I want.

You're about out of tax free/deferred room anyway. IMO I'm a big believer in having a variety of tax types so that later on you can manipulate these accounts to (legally) cheat the tax man out of as much as possible. I'd vote for taxable accounts.

 

[Doctor Detroit]

General investment question, since this seems like the general investment thread.

I've been accumulating cash over the past few years. The majority of my "investable" dollars have gone into my 401(k) and Roth IRA. I've been holding cash in anticipation of an engagement ring ( ), wedding ( ), and a home. I do not own my home; we are renters.

At this point, we've established our wedding budget and expected downpayment for a (currently non-existent) house. Ring is long-since purchased and out of the equation. I have excess cash above what I "need" to cover these two budgets + an emergency fund, but I'm not sure I have enough to really dip my feet into non-tax-advantaged investment account. My options, as I see it, would be to either (1) up my 401(k) contributions to the max and use this excess cash to cover the "shortfall" of what I would be losing in my weekly take-home, or (2) start an investment account. I kinda like option 2 because it provides flexibility of being able to cash in the investment should I need more for a downpayment or unexpected expenses, though I suppose I do have that flexibility in the Roth as well.

The questions: am I crazy for doing this while I am not currently maxing my 401(k)? And #2, what would you say is the minimum you should have before starting an investment account? I'm certainly a long-term low-expense-ratio Bogleheads-type investor; this will not be an frequently actively traded account.

I would max the 401k and then consider real estate as an investment. Side investment accounts are fine and that's a possible path, but I'd stick to the retirement accounts and then real estate at your age. You're a bright guy and age is your friend, IMO if you have excess cash start looking at Real Estate either for your future, or as an investment.

 

[Random]

I'd say keep it in cash until you purchase the new house. Your wife will want to buy all kinds of new stuff, remodel (unless you are building), and you will need stuff you haven't thought of yet (mower, trimmer, tools, etc). Once you're comfortable with your house budget (utilities will likely be higher) then up the 401K.

 

[Buck Bradcanon]

Congrats Tasker on being in the position you are in. Maybe throw homeless GB Uni a little scrilla?

 

[NewlyRetired]

I'd say keep it in cash until you purchase the new house. Your wife will want to buy all kinds of new stuff, remodel (unless you are building), and you will need stuff you haven't thought of yet (mower, trimmer, tools, etc). Once you're comfortable with your house budget (utilities will likely be higher) then up the 401K.

This is good advice.

It has been a long time since I was a first time home owner but I still remember a period after we bought the house that I basically had to hand my wallet over to Home Depot once a week for a couple of months.

 

[Steve Tasker]

Congrats Tasker on being in the position you are in. Maybe throw homeless GB Uni a little scrilla?

If I'm gonna subsidize anyone's degenerate habits, they're gonna be my own....

 

[Steve Tasker]

Keeping it in cash probably does seem like a better idea in retrospect. Good call that there's a ton of #### you have to buy as a new homeowner. I just feel like a schmoe watching these accounts earn like 1% interest.

 

[eoMMan]

Keeping it in cash probably does seem like a better idea in retrospect. Good call that there's a ton of #### you have to buy as a new homeowner. I just feel like a schmoe watching these accounts earn like 1% interest.

If you are still a couple years from buying, I wouldn't knock you for throwing it at a diversified mix of dividend stocks/mutual funds.

 

[Tiger Fan]

I'd say keep it in cash until you purchase the new house. Your wife will want to buy all kinds of new stuff, remodel (unless you are building), and you will need stuff you haven't thought of yet (mower, trimmer, tools, etc). Once you're comfortable with your house budget (utilities will likely be higher) then up the 401K.

 

[Slapdash]

I'd say keep it in cash until you purchase the new house. Your wife will want to buy all kinds of new stuff, remodel (unless you are building), and you will need stuff you haven't thought of yet (mower, trimmer, tools, etc). Once you're comfortable with your house budget (utilities will likely be higher) then up the 401K.

This is good advice.

It has been a long time since I was a first time home owner but I still remember a period after we bought the house that I basically had to hand my wallet over to Home Depot once a week for a couple of months.

Or just not fix things for a few years. Still not sure when I'm going to do by needed improvements (windows, carpet, repainting, and soundproofing).

 

[RUSF18]

Keeping it in cash probably does seem like a better idea in retrospect. Good call that there's a ton of #### you have to buy as a new homeowner. I just feel like a schmoe watching these accounts earn like 1% interest.

If you are still a couple years from buying, I wouldn't knock you for throwing it at a diversified mix of dividend stocks/mutual funds.

I'm in a similar situation and also a couple years from buying (we can do it, just don't want to yet), and I've been struggling with the decision for about a year. Of course, I missed out on a lot of run up over that time. While I'm risky as possible with retirement accounts, I can't get myself to even take the safest non-CD method of investing our savings like you're suggesting for fear of a big drop. I thought about carving out the piece that is over and above what I think we would conservatively need for a down payment, but at that point, it's just reducing the potential return that you would get from a decent return on the bigger pot. So is it worth risking any portion of let's say $50K or so to try to squeeze out a few extra grand? I know the numbers tell me yes but there's still a mental/emotional component.

 

[Slapdash]

General investment question, since this seems like the general investment thread.

I've been accumulating cash over the past few years. The majority of my "investable" dollars have gone into my 401(k) and Roth IRA. I've been holding cash in anticipation of an engagement ring ( ), wedding ( ), and a home. I do not own my home; we are renters.

At this point, we've established our wedding budget and expected downpayment for a (currently non-existent) house. Ring is long-since purchased and out of the equation. I have excess cash above what I "need" to cover these two budgets + an emergency fund, but I'm not sure I have enough to really dip my feet into non-tax-advantaged investment account. My options, as I see it, would be to either (1) up my 401(k) contributions to the max and use this excess cash to cover the "shortfall" of what I would be losing in my weekly take-home, or (2) start an investment account. I kinda like option 2 because it provides flexibility of being able to cash in the investment should I need more for a downpayment or unexpected expenses, though I suppose I do have that flexibility in the Roth as well.

The questions: am I crazy for doing this while I am not currently maxing my 401(k)? And #2, what would you say is the minimum you should have before starting an investment account? I'm certainly a long-term low-expense-ratio Bogleheads-type investor; this will not be an frequently actively traded account.

I'd go ahead and max out the 401K here. Just my preference, but I am putting all my priority on maxing out Roth, HSA, and 401K for now. Can direct the marginal income increases into normal investment accounts as income grows. I like the mental aspect of keeping the paycheck as small as possible (and the lower taxes now).

I already have a house, but didn't put a big downpayment out there because of timing. Would suggest you have 10K to invest before starting a taxable account.