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34 y.o. - how am I doing so far with retirement plan?

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rebecca15
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34 y.o. - how am I doing so far with retirement plan?  Reply with quote  

Hi,
I am a little anxious about my retirement planning status as well as if i'm putting my money where I should. I am wondering if I am on track or if I should make any adjustments? Any advice would be greatly appreciated. My stats are as follows:

Salary $82,750 Age, 34, Single, No dependents, No car, Apt rent = $1000.00
Other expenses (phone, food, fun), etc = about $700 a month

$8,275 in Roth IRA, $7,500 of which is contributions. I started the Roth last year and plan to max the 5500 every year barring the unexpected.

I have $75,300 in a 403b account. I started maxing my contributions to this earlier this year. My employer puts in 6% of my salary. My take home pay after taxes, health insurance, and train commuter costs that come out pretax is $3,078 minus rent and the 700 misc expenses mentioned above leaves me with 1,378 left over every month. The 1,378 left over monthly is what i'm using to fund the Roth.

On average I try to keep about 3,000 combined in my regular checking/savings account every month. This is sort of my emergency fund, but I know I can also raid the Roth in an emergency....(yeah, this part isn't that great, I know.)

Whew! That's alot of numbers! What do you guys think? Also, I should note, I am doing this all on my own, I don't come from a wealthy family, no expected future inheritance, etc.
Thanks for your input!
Rebecca
Post Fri Jul 04, 2014 1:20 pm
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oldguy
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Doing great - maybe TOO great. Very Happy

Between the 403b max, the match, and the $5500 roth - you are investing $28k/yr. And you have about $83k of wealth.

If you use 11%/yr index funds for your investments, you will have about $4.8M at age 60. If you invest in lower return items at 8%/yr you'll have $2.8M at age 60.

Here's a site that you might use, you can try various 30-yr blocks over the past 150 yrs, usually it is about 11%/yr average. The most recent 30 yrs, ending in May, averaged 11.26%/yr.

http://politicalcalculations.blogspot.com/2006/12/sp-500-at-your-fingertips.html

That's what I used for my working years - since retirement I've transitioned from wealth-building to wealth-preservation, I'm about 50%/50% stock index/ bond index. But you can adjust your risk/return to whatever you like - ie, if you want more risk go toward 100%/0%, if you want less risk, less return, adjust toward 50/50, etc.

But remember - balance life-fun with wealth-building. You may not want to stay on the $4.8M trajectory - you may want to visit Australia, Austria, Alaska, Italy, etc - and settle for only $3M? Very Happy
Post Fri Jul 04, 2014 3:32 pm
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JonCartoon
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Re: 34 y.o. - how am I doing so far with retirement plan?  Reply with quote  

quote:
Originally posted by rebecca15
Hi,

Rebecca


I dont understand what is you question?
if you say how you can save your money, so thats nice.
Or if you ask what you else can do with your money, so I answer: investing them in some new business, or old but it be harder to make money.
If you interesting, I have some information for that.
Post Fri Jul 04, 2014 3:43 pm
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rebecca15
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great advice  Reply with quote  

Thank you Old Guy! Before I posted this question, I was looking through different threads on the forum, and I saw you had given advice on alot of questions, you seem very knowledgable so I really value your response.

More on my finances: It's good to hear i'm doing too well, if I'm being too extreme, i'd rather it be in that direction. I hear what your saying about saving some money for fun, I think because my family had alot of financial struggles when I was growing up, I tend to have hoarding tendencies with money. Shocked I know I need to loosen up a little. Smile

My 403b and Roth are with TIAA-CREF, and when you mentioned the 11% funds, I thought i'd log in to my account and look at what funds I was in. I'm invested 8.8% in real estate and 3.06 percent in a "guaranteed return" fund of 3.06%. I'm invested 88% in the below stocks...their 10 year averages are between 5 and 11.5% most of them around 7 or 8%. What are your thoughts on this? Thank you for the link to the online tool as well, it looks great!

CREF Global Equities
TIAA-CREF Large-Cap Value Fund - Retirement Class
TIAA Real Estate
TIAA-CREF International Equity Fund - Retirement Class
CREF Stock
CREF Growth
Vanguard Mid Cap Index Institutional Share Class
Vanguard Value Index Fund Signal Class
TIAA-CREF Small-Cap Equity Fund - Retirement Class
TIAA-CREF Mid-Cap Value Fund - Retirement Class
Vanguard International Value Fund Investor Class
Vanguard Developed Markets Index Fund Admiral
Vanguard Capital Opportunity Fund Admiral
Vanguard Small Cap Value Index Fund Admiral Class
TIAA Traditional
Vanguard Emerging Markets Stock Index Institutional Class
TIAA-CREF International Equity Index Fund - Retirement Class
Vanguard Small Cap Index Institutional Share Class
Vanguard US Value Fund Investor
Vanguard REIT Index Fund Institutional Class
TIAA-CREF Growth & Income Fund - Retirement Class
TIAA-CREF Real Estate Securities Fund - Retirement Class

Oh and to JonCartoon, yeah, I'm here just looking for advice. I meet with a TIAA-Cref rep once a year, but that's just one person, and it's awkward talking about money with friends and family. I like hearing opinions from different people who aren't biased by knowing me personally.
Post Fri Jul 04, 2014 4:30 pm
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oldguy
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quote:
TIAA-CREF, and when you mentioned the 11% funds, I thought i'd log in to my account and look at what funds I was in. I'm invested 8.8% in real estate and 3.06 percent in a "guaranteed return" fund of 3.06%. I'm invested 88% in the below stocks...their 10 year averages are between 5 and 11.5% most of them around 7 or 8%. What are your thoughts on this?


Hi - I would probably sell the REIT, that is mostly an income class, not appreciation. And I would definitely get rid of the 'guaranteed 3%' fund - since inflation eats about 2% to 2.5%, you are 'guaranteed' to get almost zero increase in the purchasing power of your money. (Usually it a good idea to AVOID things that are 'guaranteed', whenever you pay someone to assume your risk, they get most of the return - as they should).

The law of investing - risk and return are directly proportional - always applies, if you want someone to take your risk, they also get your return.

As for the 88%, I'm not sure what you mean - did you scattergun the list - or did you pick one of two? They are mutual funds, each one is fully diversified across the US stock market. I would pick one (maybe TINRX or TIRTX?). I don't know what TIAA-CREF offers - but I would look for a fund that tracks the SP500.
In general, I like the broadest index, ie the generic market. If you narrow your scope - either to market sectors or even down to individual stocks you add the risk of that company/sector to the risk of the total market. And that is usually uncompensated risk.

I saw some Social Choice funds on the CREF site. Be careful of those - peoples' choices vary. Developers, gun makers, liquor, cigarettes, abortion drugs, GMO crops, caged chickens, organic foods, anti-monsanto crops, free-range eggs, etc. Historically, the Social companies are not good at business. Eg, developers may reduce a nice hay field to dirt and cover it with houses - but it is because the public is demanding newer & bigger houses. So the developer is successful - and vilified.
Post Fri Jul 04, 2014 5:58 pm
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JonCartoon
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Re: great advice  Reply with quote  

quote:
Originally posted by rebecca15


Oh and to JonCartoon, yeah, I'm here just looking for advice. I meet with a TIAA-Cref rep once a year, but that's just one person, and it's awkward talking about money with friends and family. I like hearing opinions from different people who aren't biased by knowing me personally.


looks like you find what you looking in this guy "oldguy".
And realy his give grate advace=)
gl
Post Fri Jul 04, 2014 6:28 pm
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rebecca15
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Oh, I don't think I explained the 88% thing well, I was referring to how my 403b is divided by what TIAA CREF calls asset classes. Mine looks like this:

Guaranteed 3%
Equities 88%
Real Estate 9%

The 88% percent above is made up of that list of funds. I copied and pasted the whole thing, so no scattergunning, that list is everything the 88% is made up of.

Thank you for the notes about the REIT and the "guaranteed fund". I will act on that. I feel like the 3% "guaranteed" being nearly eaten by inflation is something I should have realized myself since I know inflation stats. Embarassed This is why it's good to have someone else check your work, you never know when you could be missing something obvious.

I've also made a note to look into TINRX or TIRTX, and looking for a fund that tracks the S&P. And wow about the social choice funds! Shocked I didn't really know the details about what those were. I will definitely ask my TIAA Cref guy more details about funds when I see him again. Thank you again, very much, for the great advice Very Happy
Post Sat Jul 05, 2014 12:17 pm
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oldguy
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quote:
that list is everything the 88% is made up of.


Ah, understood. Most (all?) of the funds on the list have redundancies - eg, there are several foreign funds, a few small-cap, a few total market (which include small cayp & mid cap). You might get better results by picking just one or two and putting your entire Equities allocation there. At your age you want wealth-building, ie the total-market index of major businesses, avoid 'value', 'income', etc.
Post Sat Jul 05, 2014 3:12 pm
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Publius
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I second oldguy's advice. The easiest way to make this change is probably to tell your TIAA rep exactly what you have said and read here. If you are really in each of those funds, it is more than I would want to keep track of. If you tell your representative that you want to be primarily in equities and you want to maximize GROWTH, (not income at this stage) and minimize the number of redundant funds, he/she should be able to point you to a few funds in the list that keep you well diversified.
Post Sat Jul 05, 2014 8:35 pm
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rebecca15
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Thanks again Old Guy and Publius too. I really appreciate the time you took for those thoughtful answers. I am going to copy this information and speak to my TiAA guy about it.
Post Mon Jul 07, 2014 12:50 am
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MrNewEngland
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I recently created a similar thread to this on this board. We are in very similar situations - I'm a couple years older than you and I am not putting that $27,965/year away but overall pretty similar.

After starting my thread I sold my motorcycle and when I called State Farm (my insurance provider) they asked me a question at the end that was out of left field: "would you like an appointment to help with financial/retirement planning?".

Now I knew it would be a sales pitch to sell me on life insurance (and maybe more) but I collected my statements and went down there for the free consultation. After answering some questions and giving her a statement she set up another appointment with me after the home office could analyze my portfolio.

When I went back I was thoroughly impressed with the package they had made up for me. They really didn't try to sell me on insurance that much either. If you have State Farm it might be worth your time to go and talk to them.
Post Tue Jul 08, 2014 1:27 pm
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oldguy
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quote:
When I went back I was thoroughly impressed with the package they had made up for me. They really didn't try to sell me on insurance that much either. If you have State Farm it might be worth your time to go and talk to them.


But don't overlook the reality of the marketplace - ie, insurance companies make their living by insuring things - your car, your life, your house. Annuities are a form of insurance (life) bundled to look like an investment. And any of the Whole Life, Universal Life, etc, products that combine insurance with investing are notoriously bad investments. As for financial products such as mutual funds, the partner with a brokerage and are a 3rd party - those funds will be Class A with 5% fees.
A better approach would be to go directly to a no-load fund company and buy mutual funds directly - ie, Fidelity, Vanguard, TRPrice.
Post Tue Jul 08, 2014 3:33 pm
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MrNewEngland
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quote:
Originally posted by oldguy
quote:
When I went back I was thoroughly impressed with the package they had made up for me. They really didn't try to sell me on insurance that much either. If you have State Farm it might be worth your time to go and talk to them.


But don't overlook the reality of the marketplace - ie, insurance companies make their living by insuring things - your car, your life, your house. Annuities are a form of insurance (life) bundled to look like an investment. And any of the Whole Life, Universal Life, etc, products that combine insurance with investing are notoriously bad investments. As for financial products such as mutual funds, the partner with a brokerage and are a 3rd party - those funds will be Class A with 5% fees.
A better approach would be to go directly to a no-load fund company and buy mutual funds directly - ie, Fidelity, Vanguard, TRPrice.


I agree whole heartedly. But in my case they really didn't try to sell me anything other than an umbrella policy (and that only after I buy a house and have a rental).

They didn't try to sell me life insurance, they didn't try to take over and manage my IRA, they didn't try to sell my their funds... they just had a three ringed binder with an analysis done on my holdings. They said that I was too heavily invested in international funds.

It really was a great organized look at everything I had combined into one book.
Post Tue Jul 08, 2014 3:51 pm
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