Hi Lauren. What you need to do is open up an IRA. A 401(k) plan is sponsored by an employer and idividuals can't have them unless they are self employed. By all means do the IRA
Shirish, you have been doing your homework, what an excellent question. Bonds are tricky these days, but you still need them as sort of an anchor to your portfolio. We are using mostly short term bond funds for our bonds..Vanguard always have good bonds due to their low expense ratio. We are not recommending exchange traded or any unmanaged bond funds now, so choose a good manager and stay short in maturity.
Hi Jack. You cash your bonds in at your local bank.
@Donna (Part 1) Wow, that's a good question. I would hesitate because your "normal" retirement is potentially 20 years away, and a lot can happen in 20 years. So, you may not know now where you will want to live at retirement. If you continue to save cash, you leave your options completely open.
JJ: The mortgage terms seem competitive. If you have approx. $40,000 in non-retirement funds, how much of that is CASH for an emergency? If you don't keep a cash reserve, perhaps you should think about starting one.
Hello Paul, You are correct. That is a difficult question right now with interest rates so low. I would definitely try to wait until the interest rates rise and you will also get a bump from life expectancy too.
Jack. I'm not sure but I believe they will continue to pay beyond the maturity date. If there is an advisor on this board who knows more about these than me, maybe we can get them to give you a better answer.
Mike T, are you a widower? If not, your children will not receive social security. If you are, they should be receiving survivors benefits now. For further information try social security website, it is full of information.
JJ: In retirement all of your IRA / 401(k) funds will be subject to ordinary income taxes. If you could earmark some discretionary cash to a non-retirement account, a cash reserve, and a ROTH IRA, you would have a more tax efficient portfolio for distributions in retirement.
@Donna (part 2) You are doing the right thing. Maxing out on your 401k, while also contributing to a Roth. Its hard to say if you have saved enough because i am unfamiliar with your life style, but continuing to save as much as you can and keeping debt to a minimum goes a long way to a comfortable retirement.
Hi pres. You can contribute $23,000 to the 403(b). It makes sense to do what you suggest. You are getting some tax benefits and your strategy iis sound as long as you have the resources.
Hi Lee, I personally feel that bonds do not dampen growth but even out the stocks. I understand the lure off all stocks, but you have to be prudent and not greedy. Most of the portfolios I review there is little difference adding the 20% bonds, but the dips are not as harsh. Then as you get 5-7 years from retirement I would modify the allocation down to a min. of 60% stock unless you are not in need of these funds for your retirement.
Hi Dshel, lack of discipline is as you found out, the reason we fail to stay within a budget. Let me suggest that you may benefit from an online program or reading many of the best financial blogs (simply search online for what you're looking for) and one of the things that should sift through really clearly is that by articulating what you want (goals) when you want them (timeframe) and how much you're willing to spend on them (resources, income, savings, etc.) you are putting to paper a plan (however simple). There are few shortcuts other than inheritance, winning the lottery, etc. so face your goals, write them down, decide a timeline, and let everything else fall away. You cannot get goal 1 (whatever it is) if you are really funding shoes, eating out, whatever is distracting you from your stated goal. So you have to ask yourself, do I really want goal 1? Or do I just want shoes, eating out or whatever else I am actually funding vs. what I said I cared about funding. You can do this.
@jane If you are working you can contribute to a spousal IRA for your husband, which will be a start. You should also save as much as you can in your company's retirement plan to add to the family savings pot. Keep debt to a minimum and maintain a modest lifestyle. If you own your home, you may be able to use the equity built into your home to supplement retirement. There are various ways to do this.
JJ: I would not recommend taking money out of the market now for an accumulation goal that is 7 years away. If your monthly expenses are $2,300 and you have approx. $20,000 in CASH that is good. If you plan on staying in the home long term, is there a reason why you want to accelerate your mortgage payoff?
Dshel, trying to budget is like dieting, it is good to write everything you spend down. You will sometimes have to go into other "envelops" as unexpected expenses do come up. You must be realistic in setting up your budget. There are two categories to focus on: fixed expenses, those that you have to pay, and variable, those that can be tinkered with. Look at all of your variable expenses: food, gifts, clothing, travel, entertainment (yes cable) to see if you can shave those a bit.
Pres. Regarding your second question, i'm not sure that a tax rate should be the deciding factor. Can you use a deduction now? Then go with traditional contributions. Do you need some tax diversifcation? Use the Roth. At your age, it would be a good idea to have a proffesional look at your whole picture. Go to NAPFA.org to find someone to help you. A back door roth happens when somebody makes a nondeductible contribution to a traditional IRA and then immediately converts it to a Roth.
Hi King Garlic -- Unfortunately it's unable to be sorted in that way. But, we hope you'll still come back for a look!
Hello Ruth, What figures are you looking at now? There may be broker's fees and funds fees. Could you give me more details?