I've posted a couple questions related to helping my mom get a handle on her finances after my dad passed away in February. Dad handled all of the finances, so it's very overwhelming for Mom, thus why I am helping guide her. Initial months were focused on helping her take ownership of accounts in Dad's name and the other tasks associated with closing his affairs and getting everything situated in Mom's name.
We are now starting to look at her (his) portfolio and make a few immediate decisions. In addition to seeking Bogleheads advice, we also plan to meet with an advisor offered through her employer retirement plan as well as an advisor that is part of her self-directed taxable brokerage and IRAs inherited from my Dad's parents.
Her age: 61 turning 62 late this year
Debt: $172K @ 2.375% 15 yr fixed mortgage with 12 years remaining, $42.7K HELOC @ 2.74% that will be paid off from cash in August, $28K auto loan @ 1.99%
Tax Filing Status: Married Filing Jointly will be available for 2024 then will be single 2025 onward
Tax Rate: 12% Federal in 2024, then 22% in 2025 (although she will be on the edge income wise that she may be able to manage to 12% bracket), 3.15% State
Current investable assets:
Spousal Trad IRA (Merrill Edge) = 20%
Spousal 401(k) (Fidelity) = 21%
Spousal HSA (Fidelity) = 1%
Her Trad IRA (Vanguard) = 5%
Her 401(k) (Empower) = 8%
Inherited Taxable Brokerage (Regional Bank) = 25%
Inherited Trad IRA (Regional Bank) = 4% (currently taking RMDs)
Inherited Roth IRA (Regional Bank) = 1%
Cash Savings Account = 15%
Size of portfolio: $1.8MM
Current overall asset mix:
Bonds = 13% (but does not account for bond mix in the retirement target date funds below)
Large Blend = 22%
2025/2030 Target Retirement Fund = 16%
Large Growth = 12%
Large Value = 8%
Small/Mid Blend = 4%
Individual Stock = 5%
Cash/Money Market = 21% (earning minimum of 5%)
Spousal IRA @ Merrill - 20% of total portfolio
9% BlackRock High Yield Bond Portfolio Investor A Shares (BHYAX) (expense ratio=0.95%)
8% Nuveen High Yield Municipal Bd Fd Class A (NHMAX) (expense ratio=1.63%)
9% PGIM High Yield Fund Class A (PBHAX) (expense ratio=0.75%)
47% T. Rowe Price Blue Chip Growth Fund, Inc. (TRBCX) (expense ratio=0.71%)
13% T. Rowe Price Retirement 2025 Fund (TRRHX) (expense ratio=0.54%)
13% T. Rowe Price Value Fund, Inc. (TRVLX) (expense ratio=0.72%)
Spousal 401(k) @ Fidelity - 21% of total portfolio
34% Vanguard Institutional 500 Index Trust (expense ratio=0.03%)
34% Vanguard Institutional Total Stock Market Index Trust (expense ratio=0.03%)
33% State Street Target Retirement 2030 Fund (expense ratio=0.09%)
Spousal HSA @ Fidelity - 1% of total portfolio
100% FIDELITY GOVERNMENT CASH RESERVES (FDRXX) (expense ratio=0.38%)
Her Trad IRA @ Vanguard - 5% of total portfolio
40% VANGUARD DIVERSIFIED EQUITY INVESTOR CL (VDEQX) (expense ratio=0.35%)
36% VANGUARD STRATEGIC EQUITY INVESTOR CL (VSEQX) (expense ratio=0.17%)
24% VANGUARD TARGET RETIREMENT 2025 INVESTOR CL (VTTVX) (expense ratio=0.08%)
Her 401(k) @ Empower - 8% of total portfolio
64% T. Rowe Price Retirement 2025 I (expense ratio=0.38%)
13% Vanguard Institutional Index I (expense ratio=0.04%)
11% Vanguard Extended Market Index Instl (expense ratio=0.05%)
6% Hartford Total Return Bond R6 (expense ratio=0.32%)
6% Vanguard Total Bond Market Index I (expense ratio=0.04%)
Inherited Trad IRA - 4% of total portfolio (and taking RMDs)
8% FEDERATED HERMES GOVT OBLIGATIONS IS (GOIXX) (expense ratio=0.20%)
22% VANGUARD SMALL-CAP INDEX FUND (VB) (expense ratio=0.05%)
22% VANGUARD DEVELOPED MARKETS INDEX FUND ETF (VEA) (expense ratio=0.06%)
24% VANGUARD INDEX FDS VANGUARD VALUE ETF (VTV) (expense ratio=0.04%)
25% VANGUARD INDEX FDS VANGUARD GROWTH ETF FORMERLY (VUG) (expense ratio=0.04%)
Inherited Roth IRA - 1% of total portfolio
3% FEDERATED HERMES GOVT OBLIGATIONS IS (GOIXX) (expense ratio=0.20%)
23% FIDELITY BALANCED (FBALX) (expense ratio=0.47%)
22% FIDELITY NEW MILLENNIUM (FMILX) (expense ratio=0.84%)
32% J P MORGAN EXCHANGE TRADED FD DIVERSFED RTRN (JPME) (expense ratio=0.24%)
20% VANGUARD STRATEGIC EQUITY INVESTOR (VSEQX) (expense ratio=0.17%)
Inherited Taxable Brokerage - 25% of total portfolio
20% FEDERATED HERMES GOVT OBLIGATIONS IS (GOIXX) (expense ratio=0.20%)
15% FEDERATED HERMES CAPTL INCOME CL F (CAPFX) (expense ratio=0.91%)
5% EATON VANCE TAX MNGD GROWTH 1.2 CL A (EXTGX) (expense ratio=0.89%)
14% FEDERATED HERMES CORP BOND FD CL F (ISHIX) (expense ratio=0.86%)
14% FEDERATED HERMES STRATEGIC INC CL F (STFSX) (expense ratio=0.96%)
15% FEDERATED HERMES STR VAL DIV CL A (SVAAX) (expense ratio=1.06%)
14% PROCTER AND GAMBLE CO COM (PG)
4% DUKE ENERGY CORP (DUK)
Questions:
1) Mom already has a distaste for Merrill based on how the transfer of the account into her name went, so she is interested in rolling over the Spousal IRA at Merrill into her Traditional IRA at Vanguard. This would mean her Traditional IRA would become 25% of the portfolio. A mix of VTI, VIG, and VTEB seems like a better allocation than the current allocations. Any thoughts on this approach as well as % mix? Other alternative recommendations?
2) The Spousal 401(k) at Fidelity looks pretty good based on the choices available. Initial thought is to stay the course here, although I'm not clear why Dad would have chosen both the Vanguard Institutional 500 Index Trust and Vanguard Institutional Total Stock Market Index Trust as both seem pretty similar. Other thoughts?
3) Similarly, Mom's 401(k) looks OK based on choices available. I'm thinking she should reallocate Hartford Total Return Bond R6 to the Vanguard Total Bond Market Index I to save on expense ratio, and another possibility is to allocate some of the 2025 target date fund into the Vanguard Institutional Index I. Thoughts?
4) For the HSA, we are not quite sure yet on Mom's retirement plans and healthcare options as she would like to retire next year at age 62.5 before she's eligible for Medicare. This is the reason this is allocated to FDRXX. With that said, it's tough not having her put it in FXAIX to continue to grow and fall back on her cash reserves to wait out a market downturn should one occur.
5) Inherited taxable brokerage - THIS IS THE TOUGH ONE. Not loving these funds and their expense ratios. I can't see why we wouldn't have this all go to Vanguard and be in a VTI, VIG, VTEB portfolio. She would have a $12.5K capital gains by closing her positions to transfer and reallocate.
6) Not as worried about the allocations in the Inherited Traditional IRA, although open to shifts in recommendations here especially to simplify. For the Inherited Roth IRA, would like to shift funds to lower expense ratio and likely mirror the outcome on where the Inherited Traditional IRA lands, unless there is a recommendation for a different strategy/allocation since the Inherited Trad IRA is taking RMDs.
7) Curious to overall feedback on the portfolio and anything that may be glaring beyond what I have called out above (or even within what I have called out given she is in a different life stage than me, of course).
We are now starting to look at her (his) portfolio and make a few immediate decisions. In addition to seeking Bogleheads advice, we also plan to meet with an advisor offered through her employer retirement plan as well as an advisor that is part of her self-directed taxable brokerage and IRAs inherited from my Dad's parents.
Her age: 61 turning 62 late this year
Debt: $172K @ 2.375% 15 yr fixed mortgage with 12 years remaining, $42.7K HELOC @ 2.74% that will be paid off from cash in August, $28K auto loan @ 1.99%
Tax Filing Status: Married Filing Jointly will be available for 2024 then will be single 2025 onward
Tax Rate: 12% Federal in 2024, then 22% in 2025 (although she will be on the edge income wise that she may be able to manage to 12% bracket), 3.15% State
Current investable assets:
Spousal Trad IRA (Merrill Edge) = 20%
Spousal 401(k) (Fidelity) = 21%
Spousal HSA (Fidelity) = 1%
Her Trad IRA (Vanguard) = 5%
Her 401(k) (Empower) = 8%
Inherited Taxable Brokerage (Regional Bank) = 25%
Inherited Trad IRA (Regional Bank) = 4% (currently taking RMDs)
Inherited Roth IRA (Regional Bank) = 1%
Cash Savings Account = 15%
Size of portfolio: $1.8MM
Current overall asset mix:
Bonds = 13% (but does not account for bond mix in the retirement target date funds below)
Large Blend = 22%
2025/2030 Target Retirement Fund = 16%
Large Growth = 12%
Large Value = 8%
Small/Mid Blend = 4%
Individual Stock = 5%
Cash/Money Market = 21% (earning minimum of 5%)
Spousal IRA @ Merrill - 20% of total portfolio
9% BlackRock High Yield Bond Portfolio Investor A Shares (BHYAX) (expense ratio=0.95%)
8% Nuveen High Yield Municipal Bd Fd Class A (NHMAX) (expense ratio=1.63%)
9% PGIM High Yield Fund Class A (PBHAX) (expense ratio=0.75%)
47% T. Rowe Price Blue Chip Growth Fund, Inc. (TRBCX) (expense ratio=0.71%)
13% T. Rowe Price Retirement 2025 Fund (TRRHX) (expense ratio=0.54%)
13% T. Rowe Price Value Fund, Inc. (TRVLX) (expense ratio=0.72%)
Spousal 401(k) @ Fidelity - 21% of total portfolio
34% Vanguard Institutional 500 Index Trust (expense ratio=0.03%)
34% Vanguard Institutional Total Stock Market Index Trust (expense ratio=0.03%)
33% State Street Target Retirement 2030 Fund (expense ratio=0.09%)
Spousal HSA @ Fidelity - 1% of total portfolio
100% FIDELITY GOVERNMENT CASH RESERVES (FDRXX) (expense ratio=0.38%)
Her Trad IRA @ Vanguard - 5% of total portfolio
40% VANGUARD DIVERSIFIED EQUITY INVESTOR CL (VDEQX) (expense ratio=0.35%)
36% VANGUARD STRATEGIC EQUITY INVESTOR CL (VSEQX) (expense ratio=0.17%)
24% VANGUARD TARGET RETIREMENT 2025 INVESTOR CL (VTTVX) (expense ratio=0.08%)
Her 401(k) @ Empower - 8% of total portfolio
64% T. Rowe Price Retirement 2025 I (expense ratio=0.38%)
13% Vanguard Institutional Index I (expense ratio=0.04%)
11% Vanguard Extended Market Index Instl (expense ratio=0.05%)
6% Hartford Total Return Bond R6 (expense ratio=0.32%)
6% Vanguard Total Bond Market Index I (expense ratio=0.04%)
Inherited Trad IRA - 4% of total portfolio (and taking RMDs)
8% FEDERATED HERMES GOVT OBLIGATIONS IS (GOIXX) (expense ratio=0.20%)
22% VANGUARD SMALL-CAP INDEX FUND (VB) (expense ratio=0.05%)
22% VANGUARD DEVELOPED MARKETS INDEX FUND ETF (VEA) (expense ratio=0.06%)
24% VANGUARD INDEX FDS VANGUARD VALUE ETF (VTV) (expense ratio=0.04%)
25% VANGUARD INDEX FDS VANGUARD GROWTH ETF FORMERLY (VUG) (expense ratio=0.04%)
Inherited Roth IRA - 1% of total portfolio
3% FEDERATED HERMES GOVT OBLIGATIONS IS (GOIXX) (expense ratio=0.20%)
23% FIDELITY BALANCED (FBALX) (expense ratio=0.47%)
22% FIDELITY NEW MILLENNIUM (FMILX) (expense ratio=0.84%)
32% J P MORGAN EXCHANGE TRADED FD DIVERSFED RTRN (JPME) (expense ratio=0.24%)
20% VANGUARD STRATEGIC EQUITY INVESTOR (VSEQX) (expense ratio=0.17%)
Inherited Taxable Brokerage - 25% of total portfolio
20% FEDERATED HERMES GOVT OBLIGATIONS IS (GOIXX) (expense ratio=0.20%)
15% FEDERATED HERMES CAPTL INCOME CL F (CAPFX) (expense ratio=0.91%)
5% EATON VANCE TAX MNGD GROWTH 1.2 CL A (EXTGX) (expense ratio=0.89%)
14% FEDERATED HERMES CORP BOND FD CL F (ISHIX) (expense ratio=0.86%)
14% FEDERATED HERMES STRATEGIC INC CL F (STFSX) (expense ratio=0.96%)
15% FEDERATED HERMES STR VAL DIV CL A (SVAAX) (expense ratio=1.06%)
14% PROCTER AND GAMBLE CO COM (PG)
4% DUKE ENERGY CORP (DUK)
Questions:
1) Mom already has a distaste for Merrill based on how the transfer of the account into her name went, so she is interested in rolling over the Spousal IRA at Merrill into her Traditional IRA at Vanguard. This would mean her Traditional IRA would become 25% of the portfolio. A mix of VTI, VIG, and VTEB seems like a better allocation than the current allocations. Any thoughts on this approach as well as % mix? Other alternative recommendations?
2) The Spousal 401(k) at Fidelity looks pretty good based on the choices available. Initial thought is to stay the course here, although I'm not clear why Dad would have chosen both the Vanguard Institutional 500 Index Trust and Vanguard Institutional Total Stock Market Index Trust as both seem pretty similar. Other thoughts?
3) Similarly, Mom's 401(k) looks OK based on choices available. I'm thinking she should reallocate Hartford Total Return Bond R6 to the Vanguard Total Bond Market Index I to save on expense ratio, and another possibility is to allocate some of the 2025 target date fund into the Vanguard Institutional Index I. Thoughts?
4) For the HSA, we are not quite sure yet on Mom's retirement plans and healthcare options as she would like to retire next year at age 62.5 before she's eligible for Medicare. This is the reason this is allocated to FDRXX. With that said, it's tough not having her put it in FXAIX to continue to grow and fall back on her cash reserves to wait out a market downturn should one occur.
5) Inherited taxable brokerage - THIS IS THE TOUGH ONE. Not loving these funds and their expense ratios. I can't see why we wouldn't have this all go to Vanguard and be in a VTI, VIG, VTEB portfolio. She would have a $12.5K capital gains by closing her positions to transfer and reallocate.
6) Not as worried about the allocations in the Inherited Traditional IRA, although open to shifts in recommendations here especially to simplify. For the Inherited Roth IRA, would like to shift funds to lower expense ratio and likely mirror the outcome on where the Inherited Traditional IRA lands, unless there is a recommendation for a different strategy/allocation since the Inherited Trad IRA is taking RMDs.
7) Curious to overall feedback on the portfolio and anything that may be glaring beyond what I have called out above (or even within what I have called out given she is in a different life stage than me, of course).
Statistics: Posted by rhatfiel — Thu May 16, 2024 11:42 am — Replies 6 — Views 431