Hi, my husband’s finally going to be eligible for a 401k at his company and they sent over his investment choices which frankly look terrible, so I wanted to get advice from the smartest people I know to help me figure out what to do. Thanks in advance for any comments!
Here is some more information to help:
Emergency funds: 5 months in cash
Debt: we have a $320k mortgage, 2.875% interest rate, pay an extra $250/mo
- I lease a car, this is the best option for me. Husbands car is owned outright and we hope to last another five years. We are saving cash to replace.
Tax Filing Status: Married Filing Jointly
Tax Rate: 19.5% effective Federal (total tax/AGI) not including Medicare FICA etc 6.2% State
State of Residence: CT
Age: 40 & 43
Desired Asset allocation: 80% stocks / 20% bonds
Desired International allocation: 20% of stocks
Please provide an approximate size of your total portfolio: $1.3m
Current retirement assets
Taxable $47k
Mostly in FSKAX which is fidelity’s total index fund (0.01% ER)
His old 401k $325k
Super complex and no clear picture on ER
Company match? No
His Roth IRA at fidelity $72k
VTI (0.03% ER)
Her 401k at ML $765k
VIIX VANGUARD INST INDEX PLUS 55.46 % (0.04% ER)
VANGUARD TOTAL INTL CL INSTL 18.70 % (0.08% ER)
VBTIX VANGUARD TOTAL BOND MKT 16.03 % (0.04% ER)
VANGUARD EXTENDED MARKET INDEX 9.81 % (0.04% ER)
Company match? 200% of 5% (effectively 10%)
Her Roth IRA at fidelity $52k
VTI (0.03% ER)
Small position in COST - Costco for fun
Her HSA at ML -$25k
VTI (0.03% ER)
Her ibonds $15k
Her company stock - $35k
$15k guaranteed to vest (personal contributions)
$20k tied to continued employment 3 yr vesting cliff, granted each year (this is new)
Cash:$50k 4.25% interest
Contributions
Her 401k $66k/year including matching and MBD (approx 2/3 tax deferred and 1/3 post-tax)
His 401k - we plan to max starting in July when eligible $23k
His/her Roth IRA (backdoor): $7k each
Taxable $25k (no clear goal)
529: $10k (max CT tax benefit)
Cash savings $40k (future house Renos and car not retirement related)
No longer eligible to contribute to HSA
His 401k fund options
All American funds (er)
Europacific growth - 1.59%
Growth fund of America 1.42%
Various world funds 1.55-1.84%
Various growth and income 1.49%-2.05%
Income fund of America 1.36%
American balanced 1.39%
Bond funds range from 1.36-1.64%
Target date fund 2040 1.52%
Questions:
- does it make sense to even contribute to the 401k invest in these funds this 401k given the high ER? No company match but I think they do some profit sharing or something)
- Given his financial illiteracy (beyond being committed to saving!) and the relative ER does it make sense to just have him use the target date fund?
- Should we roll over old current 401k (he likes the investment guy there and has a variety of low cost index funds there)
- We don’t have any long term plans and won’t retire for 20 years. We have plenty of cash flow to cover anything we need right now, and are loosening the belt while still saving a considerable amount. Besides pumping into taxable are there any tax strategies to recommend? I got a $100k comp bump last year and nervous about taxes.
- I don’t have any financial goals besides college for kids and retirement. I cash flow everything else. I’m keeping my super low mortgage forever in a modest suburban home but fixing it up as we go. Should I be saving so much cash or should I put some of these renovation funds in my taxable, given they aren’t a “must” have and I don’t have a specific time horizon?) I already have $50k in cash so adding another $40k this year seems like too much)
- We have been paying $250 a month extra on our mortgage because we only put 10% down so we could do some renovations when we moved in. We’ve now paid down the extra 10% and removed PMI. I thought to just leave it since it’s not a lot extra and won’t substantially effect our cash flow, even thought it’s a low interest mortgage. Any thoughts? Dumb?
Here is some more information to help:
Emergency funds: 5 months in cash
Debt: we have a $320k mortgage, 2.875% interest rate, pay an extra $250/mo
- I lease a car, this is the best option for me. Husbands car is owned outright and we hope to last another five years. We are saving cash to replace.
Tax Filing Status: Married Filing Jointly
Tax Rate: 19.5% effective Federal (total tax/AGI) not including Medicare FICA etc 6.2% State
State of Residence: CT
Age: 40 & 43
Desired Asset allocation: 80% stocks / 20% bonds
Desired International allocation: 20% of stocks
Please provide an approximate size of your total portfolio: $1.3m
Current retirement assets
Taxable $47k
Mostly in FSKAX which is fidelity’s total index fund (0.01% ER)
His old 401k $325k
Super complex and no clear picture on ER
Company match? No
His Roth IRA at fidelity $72k
VTI (0.03% ER)
Her 401k at ML $765k
VIIX VANGUARD INST INDEX PLUS 55.46 % (0.04% ER)
VANGUARD TOTAL INTL CL INSTL 18.70 % (0.08% ER)
VBTIX VANGUARD TOTAL BOND MKT 16.03 % (0.04% ER)
VANGUARD EXTENDED MARKET INDEX 9.81 % (0.04% ER)
Company match? 200% of 5% (effectively 10%)
Her Roth IRA at fidelity $52k
VTI (0.03% ER)
Small position in COST - Costco for fun
Her HSA at ML -$25k
VTI (0.03% ER)
Her ibonds $15k
Her company stock - $35k
$15k guaranteed to vest (personal contributions)
$20k tied to continued employment 3 yr vesting cliff, granted each year (this is new)
Cash:$50k 4.25% interest
Contributions
Her 401k $66k/year including matching and MBD (approx 2/3 tax deferred and 1/3 post-tax)
His 401k - we plan to max starting in July when eligible $23k
His/her Roth IRA (backdoor): $7k each
Taxable $25k (no clear goal)
529: $10k (max CT tax benefit)
Cash savings $40k (future house Renos and car not retirement related)
No longer eligible to contribute to HSA
His 401k fund options
All American funds (er)
Europacific growth - 1.59%
Growth fund of America 1.42%
Various world funds 1.55-1.84%
Various growth and income 1.49%-2.05%
Income fund of America 1.36%
American balanced 1.39%
Bond funds range from 1.36-1.64%
Target date fund 2040 1.52%
Questions:
- does it make sense to even contribute to the 401k invest in these funds this 401k given the high ER? No company match but I think they do some profit sharing or something)
- Given his financial illiteracy (beyond being committed to saving!) and the relative ER does it make sense to just have him use the target date fund?
- Should we roll over old current 401k (he likes the investment guy there and has a variety of low cost index funds there)
- We don’t have any long term plans and won’t retire for 20 years. We have plenty of cash flow to cover anything we need right now, and are loosening the belt while still saving a considerable amount. Besides pumping into taxable are there any tax strategies to recommend? I got a $100k comp bump last year and nervous about taxes.
- I don’t have any financial goals besides college for kids and retirement. I cash flow everything else. I’m keeping my super low mortgage forever in a modest suburban home but fixing it up as we go. Should I be saving so much cash or should I put some of these renovation funds in my taxable, given they aren’t a “must” have and I don’t have a specific time horizon?) I already have $50k in cash so adding another $40k this year seems like too much)
- We have been paying $250 a month extra on our mortgage because we only put 10% down so we could do some renovations when we moved in. We’ve now paid down the extra 10% and removed PMI. I thought to just leave it since it’s not a lot extra and won’t substantially effect our cash flow, even thought it’s a low interest mortgage. Any thoughts? Dumb?
Statistics: Posted by SanAntionetta — Thu Mar 07, 2024 1:40 am — Replies 1 — Views 212