I have been following the forum for a long time, and I have learned a lot from reading various posts. But this is my first post to check up on our portfolio and seek some input for some of my doubts.
Emergency funds: Three months of expenses
Debt: mortgage for primary home (interest rate 2.625%, 220K remaining).
Tax Filing Status: Married Filing Jointly
Tax Rate: 12% Federal, 4.4% State (a single-income family)
State of Residence: Colorado
Age: 40 (M), 40 (F), with two kids (11 and 7)
Desired Asset allocation: 60% total US stocks, 30% total international stocks, 10% bonds
Size of total portfolio: 1.04 M (not including~100k in 529 and the value of primary residency)
-------------------------
Current retirement assets:
His Tax-Deferred 457b at the Colorado Public Employee's Retirement Association (PERA)
220K, PERAdvantage 2050 Fund (expense ratio: 0.07%)
This is excluded from the total asset allocation. See the detailed explanation in Question 3 below.
The total for the following is ~784K
Her Taxable Account at Fidelity
4.2%, 33K, iShares Core S&P Total US Stock Market ETF (ITOT) (expense ratio: 0.03%)
Her Roth IRA at Fidelity
8.4%, 66K, Fidelity® ZERO Total Market Index Fund (FZROX) (expense ratio: 0)
Her Traditional IRA at Fidelity
0.6%, 5K, Fidelity® U.S. Bond Index Fund (FXNAX) (expense ratio: 0.025%)
His Roth IRA at Fidelity
7.9%, 62K, Fidelity® ZERO Total Market Index Fund (FZROX) (expense ratio: 0)
His Traditional IRA at Fidelity
3.6%, 28K, Fidelity® U.S. Bond Index Fund (FXNAX) (expense ratio: 0.025%)
His DCP at Fidelity (tax-deferred)
24.9%, 195K, Fidelity® Total International Index Fund (FTIHX) (expense ratio: 0.06%)
5.7%, 45K, Fidelity® U.S. Bond Index Fund (FXNAX) (expense ratio: 0.025%)
His Roth 403b at Fidelity
26.1%, 205K, Fidelity® 500 Index Fund (FXAIX) (expense ratio: 0.015%)
5.2%, 41K, Fidelity® Total International Index Fund (FTIHX) (expense ratio: 0.06%)
His HSA at Fidelity
11.5%, 90K, Fidelity® ZERO Large Cap Index Fund (FNILX) (expense ratio: 0)
His Roth 457b at the Colorado Public Employee's Retirement Association (PERA)
1.8%, 14K, PERAdvantage U.S. Large Cap Stock Fund (expense ratio: 0.05%)
-------------------------------------
New annual Contributions (~93k)
$~25k, his tax-deferred DCP (~10000 my contribution, ~150,00 match from employer)
$23k, his Roth 403(b)
$23k, his Roth 457(b)
$8.3k, his HSA
$7k, his traditional IRA
$7k, her traditional IRA
-----------------------------
Available funds
Funds available in his DCP
Various Vanguard Target Retirement Date funds from 2020 to 2070
e.g., Vanguard Target Retirement 2020 (VTWNX) 0.08%
Stock Investments
Dodge & Cox Stock Fund Class X (DOXGX) 0.46%
Fidelity® Blue Chip Growth K6 Fund (FBCGX) 0.46%
Vanguard FTSE Social Index Fund Institutional Shares (VFTNX) 0.12%
Fidelity® 500 Index Fund (FXAIX) 0.015%
Janus Henderson Enterprise Fund Class N (JDMNX) 0.66%
Victory Sycamore Established Value Fund Class R6 (VEVRX) 0.54%
Fidelity® Mid Cap Index Fund (FSMDX) 0.025%
DFA U.S. Small Cap Value Portfolio Institutional Class (DFSVX) 0.3%
Harbor Small Cap Growth Fund Retirement Class (HNSGX) 0.8%
Fidelity® Small Cap Index Fund (FSSNX) 0.025%
American Funds EuroPacific Growth Fund® Class R-6 (RERGX) 0.47%
Dodge & Cox International Stock Fund Class X (DOXFX) 0.57%
Fidelity® Total International Index Fund (FTIHX) 0.06%
Bond Investments
New York Life Guaranteed Interest Account 0.1%
Fidelity® Total Bond K6 Fund (FTKFX) 0.3%
Fidelity® U.S. Bond Index Fund (FXNAX) 0.025%
Funds available in his 403(b)
The same as those in the DCP
Funds available in his 457(b)
Various Target Date Retirement Funds 2025-2065: 0.07%
PERAdvantage Capital Preservation Fund: 0.21%
PERAdvantage Fixed Income Fund: 0.13%
PERAdvantage U.S. Large Cap Stock Fund: 0.05%
PERAdvantage U.S. SMID Cap Stock Fund: 0.15%
PERAdvantage International Stock Fund: 0.26%
PERAdvantage Real Return Fund: 0.17%
PERAdvantage SRI Fund: 0.19%
PERAdvantage Income Fund: 0.07%
----------------------
Questions:
Generally, I am pretty confident about my investment strategy, and I believe we are on track for a comfortable retirement. But I have the following questions that I do not have a clear answer yet. I would appreciate the board’s input on these questions. Thanks in advance!
1. Currently, I plan to contribute ~54K to Roth and ~39K to tax-deferred accounts annually. Given our low tax rate (12% Federal), should I contribute more to my Roth account? Currently, the total in the tax-deferred accounts is ~493K, while the total in the Roth accounts is ~ 478K. I understand this question is related to our expected tax rate in retirement. Since I like my job, I plan to work for at least 20 more years (my wife will not seek for employment). In this case, we may end up with a higher tax bracket in retirement. Note that we will not have social security after retirement since my employer does not participate in the Social Security program.
2. We have about ~100K in the state 529 accounts for my two kids. If we want to maximize contributions to our retirement account, we may not be able to contribute to the 529 account anymore. The general opinion is to prioritize retirement over 529. However, given my expected long-term work plan, we should have more than enough for our retirement (our annual expense is about 60-70K). In this case, should we NOT maximize retirement contributions but put some additional money into our kids’ 529 account?
3. Regarding his 457b account, it currently has about 220k (tax-deferred) in a target retirement fund, which is excluded from the calculation of ratios in the total portfolio since I feel like the other options are not good given the high expense ratios. I can put this 220K into the PERAdvantage U.S. Large Cap Stock Fund with a 0.05% expense ratio, but since this is a tax-deferred account, I would like to limit the growth. Is there a better option in dealing with this scenario?
Thanks for reading until the end. I appreciate any comments and suggestions!
Emergency funds: Three months of expenses
Debt: mortgage for primary home (interest rate 2.625%, 220K remaining).
Tax Filing Status: Married Filing Jointly
Tax Rate: 12% Federal, 4.4% State (a single-income family)
State of Residence: Colorado
Age: 40 (M), 40 (F), with two kids (11 and 7)
Desired Asset allocation: 60% total US stocks, 30% total international stocks, 10% bonds
Size of total portfolio: 1.04 M (not including~100k in 529 and the value of primary residency)
-------------------------
Current retirement assets:
His Tax-Deferred 457b at the Colorado Public Employee's Retirement Association (PERA)
220K, PERAdvantage 2050 Fund (expense ratio: 0.07%)
This is excluded from the total asset allocation. See the detailed explanation in Question 3 below.
The total for the following is ~784K
Her Taxable Account at Fidelity
4.2%, 33K, iShares Core S&P Total US Stock Market ETF (ITOT) (expense ratio: 0.03%)
Her Roth IRA at Fidelity
8.4%, 66K, Fidelity® ZERO Total Market Index Fund (FZROX) (expense ratio: 0)
Her Traditional IRA at Fidelity
0.6%, 5K, Fidelity® U.S. Bond Index Fund (FXNAX) (expense ratio: 0.025%)
His Roth IRA at Fidelity
7.9%, 62K, Fidelity® ZERO Total Market Index Fund (FZROX) (expense ratio: 0)
His Traditional IRA at Fidelity
3.6%, 28K, Fidelity® U.S. Bond Index Fund (FXNAX) (expense ratio: 0.025%)
His DCP at Fidelity (tax-deferred)
24.9%, 195K, Fidelity® Total International Index Fund (FTIHX) (expense ratio: 0.06%)
5.7%, 45K, Fidelity® U.S. Bond Index Fund (FXNAX) (expense ratio: 0.025%)
His Roth 403b at Fidelity
26.1%, 205K, Fidelity® 500 Index Fund (FXAIX) (expense ratio: 0.015%)
5.2%, 41K, Fidelity® Total International Index Fund (FTIHX) (expense ratio: 0.06%)
His HSA at Fidelity
11.5%, 90K, Fidelity® ZERO Large Cap Index Fund (FNILX) (expense ratio: 0)
His Roth 457b at the Colorado Public Employee's Retirement Association (PERA)
1.8%, 14K, PERAdvantage U.S. Large Cap Stock Fund (expense ratio: 0.05%)
-------------------------------------
New annual Contributions (~93k)
$~25k, his tax-deferred DCP (~10000 my contribution, ~150,00 match from employer)
$23k, his Roth 403(b)
$23k, his Roth 457(b)
$8.3k, his HSA
$7k, his traditional IRA
$7k, her traditional IRA
-----------------------------
Available funds
Funds available in his DCP
Various Vanguard Target Retirement Date funds from 2020 to 2070
e.g., Vanguard Target Retirement 2020 (VTWNX) 0.08%
Stock Investments
Dodge & Cox Stock Fund Class X (DOXGX) 0.46%
Fidelity® Blue Chip Growth K6 Fund (FBCGX) 0.46%
Vanguard FTSE Social Index Fund Institutional Shares (VFTNX) 0.12%
Fidelity® 500 Index Fund (FXAIX) 0.015%
Janus Henderson Enterprise Fund Class N (JDMNX) 0.66%
Victory Sycamore Established Value Fund Class R6 (VEVRX) 0.54%
Fidelity® Mid Cap Index Fund (FSMDX) 0.025%
DFA U.S. Small Cap Value Portfolio Institutional Class (DFSVX) 0.3%
Harbor Small Cap Growth Fund Retirement Class (HNSGX) 0.8%
Fidelity® Small Cap Index Fund (FSSNX) 0.025%
American Funds EuroPacific Growth Fund® Class R-6 (RERGX) 0.47%
Dodge & Cox International Stock Fund Class X (DOXFX) 0.57%
Fidelity® Total International Index Fund (FTIHX) 0.06%
Bond Investments
New York Life Guaranteed Interest Account 0.1%
Fidelity® Total Bond K6 Fund (FTKFX) 0.3%
Fidelity® U.S. Bond Index Fund (FXNAX) 0.025%
Funds available in his 403(b)
The same as those in the DCP
Funds available in his 457(b)
Various Target Date Retirement Funds 2025-2065: 0.07%
PERAdvantage Capital Preservation Fund: 0.21%
PERAdvantage Fixed Income Fund: 0.13%
PERAdvantage U.S. Large Cap Stock Fund: 0.05%
PERAdvantage U.S. SMID Cap Stock Fund: 0.15%
PERAdvantage International Stock Fund: 0.26%
PERAdvantage Real Return Fund: 0.17%
PERAdvantage SRI Fund: 0.19%
PERAdvantage Income Fund: 0.07%
----------------------
Questions:
Generally, I am pretty confident about my investment strategy, and I believe we are on track for a comfortable retirement. But I have the following questions that I do not have a clear answer yet. I would appreciate the board’s input on these questions. Thanks in advance!
1. Currently, I plan to contribute ~54K to Roth and ~39K to tax-deferred accounts annually. Given our low tax rate (12% Federal), should I contribute more to my Roth account? Currently, the total in the tax-deferred accounts is ~493K, while the total in the Roth accounts is ~ 478K. I understand this question is related to our expected tax rate in retirement. Since I like my job, I plan to work for at least 20 more years (my wife will not seek for employment). In this case, we may end up with a higher tax bracket in retirement. Note that we will not have social security after retirement since my employer does not participate in the Social Security program.
2. We have about ~100K in the state 529 accounts for my two kids. If we want to maximize contributions to our retirement account, we may not be able to contribute to the 529 account anymore. The general opinion is to prioritize retirement over 529. However, given my expected long-term work plan, we should have more than enough for our retirement (our annual expense is about 60-70K). In this case, should we NOT maximize retirement contributions but put some additional money into our kids’ 529 account?
3. Regarding his 457b account, it currently has about 220k (tax-deferred) in a target retirement fund, which is excluded from the calculation of ratios in the total portfolio since I feel like the other options are not good given the high expense ratios. I can put this 220K into the PERAdvantage U.S. Large Cap Stock Fund with a 0.05% expense ratio, but since this is a tax-deferred account, I would like to limit the growth. Is there a better option in dealing with this scenario?
Thanks for reading until the end. I appreciate any comments and suggestions!
Statistics: Posted by fenghua9801 — Sat Jan 13, 2024 2:59 pm — Replies 1 — Views 213