Hello Bogleheads! Long time reader and first-time poster here. Thank you to everyone in this amazing community for helping to educate me! I am very grateful for the incredible wealth of knowledge that all of you so generously share on this forum. My wife and I are both teachers and I have had the good fortune of being able to teach a personal finance class to Middle School students for the past 13 years, in addition to my core job of teaching US History. Know that the time and efforts you put into helping others on this forum have a “ripple effect” that is larger than you know! Thank you.
Thank you in advance for taking a look at our current financial picture. I appreciate it.
Emergency funds: None dedicated
Debt: None (We own our home valued at $720,000 – not included in assets)
Tax Filing Status: Married Filing Jointly
Tax Rate: 22% Federal, 4.75% State
State of Residence: Maryland
Age: Him 50, Her 47
Gross Salary: Him $88,000, Her $103,000
Desired Asset allocation: 80% stocks / 20% bonds
Desired International allocation: 20% of stocks
Please provide an approximate size of your total portfolio: 2,109,431
Taxable Brokerage Account
3.5% Vanguard Federal Money Market Fund (VMFXX) (.11) $74,692
2.5% Vanguard 500 Index Admiral (VFIAX) (.04) $54,019
8.2% Vanguard Total Stock Market Index Admiral (VTSAX) (.04) $173,658
Current retirement assets
His 403B
10.7% CREF Core Bond R2 (QCBMPX) (.315) $226,545
25.4% CREF Equity Index R2 (QCEQPX) (.25) $536,725
Her 403B
7.5% CREF Core Bond R2 (QCBMPX) (.315) $158,082
17.8% CREF Equity Index R2 (QCEQPX) (.25) $374,526
His Roth IRA
16.1% Vanguard Total International (VXUS) (.08) $339,008
Her Roth IRA
8.2% Vanguard Russell 1000 (VONE) (.08) $172,176
His 529 Plans – Maryland College Investment Plan
$79,139 for High School Junior
$73,741 for High School Freshman
Her 529 Plans – Maryland College Investment Plan
$33,005 for High School Junior
$33,006 for High School Freshman
_______________________________________________________________
New annual Contributions
$30,500 his 403b plus $3,872 employer contribution
$23,000 her 403b plus $5,147 employer contribution
$8,000 his Roth IRA
$7,000 her Roth IRA
$10,000 to 529 Plans to get maximum state tax break
Available funds in 403B are not good. We have selected the lowest cost offerings for stock and bond index fund. 403B is at TIAA-CREF, Roth IRAs are at Merrill (helps with Bank of America Rewards), and Taxable Brokerage is at Vanguard.
Questions:
1.Paying for College: I know I have too much cash in VMFXX but this is earmarked for a new car purchase in 2025/2026, basement renovation in 2025/2026, and remainder will be used for college costs. We are hoping to pay the full amount for college for both of our children and there are also Grandparent 529s (approximately $30,000 for each of our two kids). My question is, is there an order to deplete/withdrawal accounts, knowing that I will need to supplement costs with cash flow, that makes the most sense? I know that I will cash flow $4,000 each year, per kid, to make sure to maximize the AOTC, but beyond that, is there any strategy for the order to use the accounts? Should I continue to put $10,000 into the 529s each year or should I divert that money to retirement (putting it in taxable brokerage and/or HSA if we go with the HDHP – see question below)?
2.Asset Allocation: My wife and I have no pensions and plan to delay social security (using opensocialsecurity to maximize). We are hoping to be able to retire in 5-7 years when we have full clarity on college costs. We are planning on a 40 year retirement/drawdown and will use a VPW strategy. We hope to generate $94,000 per year (in real dollars - 2024) after taxes in retirement, but have the ability to spend significantly less and could live comfortably on less than $60,000. My plan is to “glide” from our current 80/20 to 70/30 by age 55 (him) by changing the allocation of new money more heavily into bonds in our 403b’s. Does this seem like a sensible approach for our situation?
3.Health Insurance from “early” retirement to Medicare: We will purchase health insurance through the ACA during the time between retirement and age 65. I am interested in positioning our money (taxable, roth, tax-deferred) so that we qualify for maximum subsidies and can potentially take advantage of roth conversions. My thought is that increasing the balance in our taxable account will be helpful, but not at the expense of not maxing 403b and Roth contributions. When my wife turns 50, that will mean another $8,500 in contributions as well. I would welcome any thoughts and suggestions on how to adjust contributions/saving today to help us most efficiently bridge the time from early retirement to Medicare.
4.Traditional or Roth 403b: We now have a Roth 403b option from our employer. Should I consider this? What about putting part of our contribution in the Roth option?
5.High Deductible Health Plan: We now have a HDHP option through our employer. I am contemplating using this instead of the current HMO Family Plan that we are in. I could pay for all health care costs out of pocket and contribute the max to the HSA and invest it in 100% stocks for the long haul. How do I best calculate if this switch makes sense for our family?
6.Tax Loss Harvesting: I am using VFIAX and VTSAX as TLH partners in our taxable brokerage. Does this make sense (avoiding wash sales, etc) when looking at the other funds that we own?
Thank you in advance for taking a look at our current financial picture. I appreciate it.
Emergency funds: None dedicated
Debt: None (We own our home valued at $720,000 – not included in assets)
Tax Filing Status: Married Filing Jointly
Tax Rate: 22% Federal, 4.75% State
State of Residence: Maryland
Age: Him 50, Her 47
Gross Salary: Him $88,000, Her $103,000
Desired Asset allocation: 80% stocks / 20% bonds
Desired International allocation: 20% of stocks
Please provide an approximate size of your total portfolio: 2,109,431
Taxable Brokerage Account
3.5% Vanguard Federal Money Market Fund (VMFXX) (.11) $74,692
2.5% Vanguard 500 Index Admiral (VFIAX) (.04) $54,019
8.2% Vanguard Total Stock Market Index Admiral (VTSAX) (.04) $173,658
Current retirement assets
His 403B
10.7% CREF Core Bond R2 (QCBMPX) (.315) $226,545
25.4% CREF Equity Index R2 (QCEQPX) (.25) $536,725
Her 403B
7.5% CREF Core Bond R2 (QCBMPX) (.315) $158,082
17.8% CREF Equity Index R2 (QCEQPX) (.25) $374,526
His Roth IRA
16.1% Vanguard Total International (VXUS) (.08) $339,008
Her Roth IRA
8.2% Vanguard Russell 1000 (VONE) (.08) $172,176
His 529 Plans – Maryland College Investment Plan
$79,139 for High School Junior
$73,741 for High School Freshman
Her 529 Plans – Maryland College Investment Plan
$33,005 for High School Junior
$33,006 for High School Freshman
_______________________________________________________________
New annual Contributions
$30,500 his 403b plus $3,872 employer contribution
$23,000 her 403b plus $5,147 employer contribution
$8,000 his Roth IRA
$7,000 her Roth IRA
$10,000 to 529 Plans to get maximum state tax break
Available funds in 403B are not good. We have selected the lowest cost offerings for stock and bond index fund. 403B is at TIAA-CREF, Roth IRAs are at Merrill (helps with Bank of America Rewards), and Taxable Brokerage is at Vanguard.
Questions:
1.Paying for College: I know I have too much cash in VMFXX but this is earmarked for a new car purchase in 2025/2026, basement renovation in 2025/2026, and remainder will be used for college costs. We are hoping to pay the full amount for college for both of our children and there are also Grandparent 529s (approximately $30,000 for each of our two kids). My question is, is there an order to deplete/withdrawal accounts, knowing that I will need to supplement costs with cash flow, that makes the most sense? I know that I will cash flow $4,000 each year, per kid, to make sure to maximize the AOTC, but beyond that, is there any strategy for the order to use the accounts? Should I continue to put $10,000 into the 529s each year or should I divert that money to retirement (putting it in taxable brokerage and/or HSA if we go with the HDHP – see question below)?
2.Asset Allocation: My wife and I have no pensions and plan to delay social security (using opensocialsecurity to maximize). We are hoping to be able to retire in 5-7 years when we have full clarity on college costs. We are planning on a 40 year retirement/drawdown and will use a VPW strategy. We hope to generate $94,000 per year (in real dollars - 2024) after taxes in retirement, but have the ability to spend significantly less and could live comfortably on less than $60,000. My plan is to “glide” from our current 80/20 to 70/30 by age 55 (him) by changing the allocation of new money more heavily into bonds in our 403b’s. Does this seem like a sensible approach for our situation?
3.Health Insurance from “early” retirement to Medicare: We will purchase health insurance through the ACA during the time between retirement and age 65. I am interested in positioning our money (taxable, roth, tax-deferred) so that we qualify for maximum subsidies and can potentially take advantage of roth conversions. My thought is that increasing the balance in our taxable account will be helpful, but not at the expense of not maxing 403b and Roth contributions. When my wife turns 50, that will mean another $8,500 in contributions as well. I would welcome any thoughts and suggestions on how to adjust contributions/saving today to help us most efficiently bridge the time from early retirement to Medicare.
4.Traditional or Roth 403b: We now have a Roth 403b option from our employer. Should I consider this? What about putting part of our contribution in the Roth option?
5.High Deductible Health Plan: We now have a HDHP option through our employer. I am contemplating using this instead of the current HMO Family Plan that we are in. I could pay for all health care costs out of pocket and contribute the max to the HSA and invest it in 100% stocks for the long haul. How do I best calculate if this switch makes sense for our family?
6.Tax Loss Harvesting: I am using VFIAX and VTSAX as TLH partners in our taxable brokerage. Does this make sense (avoiding wash sales, etc) when looking at the other funds that we own?
Statistics: Posted by goodtimes4005 — Sat Oct 05, 2024 4:29 pm — Replies 0 — Views 183