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20 hours ago, Link said:

Do you have a million dollars? If not, do you think you ever will? 

 

15 hours ago, phart010 said:

If you are the average working American and you don’t have at least a million by retirement age, you have not been doing it right and may not even be retiring comfortably 

😞 No I don't have that, nothing even near it.  I also am stuck with a wife who has been draining my inheritance to be for the last 5 years because of a partial disability.  Currently trying to find her some full time hopefully work from home work to remedy that.  The only savings I have is a 401k with my job, for years they matched at 6% and I kept it at 10% for awhile, last year it bumped up more so now it's 11% and it's valued currently between 150-200k and I've been there almost 15 years now.  The app for it says I have a 5.33% rate of return on the account.  The app has this projection thing on it assuming age 65 I guess for retirement.  Currently states by the time I retire my savings would provide 4.5k/mo but I'd need 5.6k/mo and I'd have saved 720k.  I guess figuring SS isn't going to collapse it would make up the rest?  So yeah, not a million. 😞

As I figure it call it dramatics, I don't care, I will never be able to retire, and that's depressing.  My only hope, with the way people around here drive in parking lots and slow streets, I get mowed down but not killed, if I hope to retire.  The thought crosses my mind enough when people often cut it close, I think it as a dare, I don't even bother getting out of the way.

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9 hours ago, Tanooki said:

 

The app for it says I have a 5.33% rate of return on the account. 

If you have been putting money in the account consistently, and it is investing automatically, you should really look at your allocation of funds if you're only ending up with a 5.33% rate of return.

That seems pretty low for any significant period of time in most of our adult working lives.

 

You should probably also take a hard look at what the fee structure is in your 401k, because fees on the account can present a significant drag to total return.  If you have "high" (i.e. 1% or higher) fees on the account, you should probably just invest to the match and then put the rest of what would have been contributions into a Roth IRA at a discount broker that you control.

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10 minutes ago, arch_8ngel said:

If you have been putting money in the account consistently, and it is investing automatically, you should really look at your allocation of funds if you're only ending up with a 5.33% rate of return.

That seems pretty low for any significant period of time in most of our adult working lives.

 

You should probably also take a hard look at what the fee structure is in your 401k, because fees on the account can present a significant drag to total return.  If you have "high" (i.e. 1% or higher) fees on the account, you should probably just invest to the match and then put the rest of what would have been contributions into a Roth IRA at a discount broker that you control.

x2

A lot of employer selected 401k custodians will charge high fees. They figure most people aren’t going to pay attention to what they’re charging and won’t work with a secondary broker.

When you get outside of the broker that your employer selected you’ll find there’s a lot more competitive brokers out there. 
 

Continue getting the maximum match from your employer as that’s free money, but put any excess cash into a secondary broker

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19 hours ago, phart010 said:

I wasn’t criticizing anyone who may be retirement age. Just pointing out to the younger generation, there’s a lot of learning resources and YouTube videos nowadays. Dave Ramsey is an example.

If someone has a modest annual income of $45k and they save 10% pretax monthly, that’s $750 a month or $375 biweekly. At 10% average annualized return (pretty easy to find with many mutual funds) that will get you $1M in 25 years (assuming no major collapse of the financial system as we know it😱)
 

Anyone who is 18 years old right now, follow this and retire at 43.  10% annual return on $1M is $100k spending money each year.

Shit happens though. A small anecdote for you.

My grandparents on my dad's side back in 1990 sold their house and rolled all their savings into good old fashion "safe" government bonds with intention of living off the interest during their retirement. That was all well and good until the bond market dried up a few years of later and they were forced to move into government subsidized housing.

Granted that would be the financial collapse you speak of. I learned from their lesson to not put my eggs in one basket.

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1 hour ago, arch_8ngel said:

If you have been putting money in the account consistently, and it is investing automatically, you should really look at your allocation of funds if you're only ending up with a 5.33% rate of return.

That seems pretty low for any significant period of time in most of our adult working lives.

 

You should probably also take a hard look at what the fee structure is in your 401k, because fees on the account can present a significant drag to total return.  If you have "high" (i.e. 1% or higher) fees on the account, you should probably just invest to the match and then put the rest of what would have been contributions into a Roth IRA at a discount broker that you control.

I'm probably reading it wrong, today that 5.33% return shows 5.6% I think it's looking at the stock market over X amount of time(year to date return).  Either way is there a name or sly wording that fee would be under but not called one?  Trying to use their app on my phone and not seeing it.  I see the random rare small extraction of like in the $5-10 range and few of them at all, so hopefully it doesn't amount to much.

Edited by Tanooki
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21 minutes ago, Kguillemette said:

Shit happens though. A small anecdote for you.

My grandparents on my dad's side back in 1990 sold their house and rolled all their savings into good old fashion "safe" government bonds with intention of living off the interest during their retirement. That was all well and good until the bond market dried up a few years of later and they were forced to move into government subsidized housing.

Granted that would be the financial collapse you speak of. I learned from their lesson to not put my eggs in one basket.

Whether "shit happens", or not, my point was that 10% is NOT a sustainable drawdown over any practical timeframe, as, at a BARE minimum, it completely ignores the need for inflation adjustment.  (i.e. you should always consider long-term horizons in "real" terms, rather than "nominal")

 

Anyone interested in this topic (which really, should be everyone 😉 ) should at least do a cursory search regarding the "Trinity Study" that originated the concept of a 4% safe withdrawal rate.  That's a starting point from which you can decide to make more aggressive assumptions (up to maybe 4.5%) or more conservative assumptions.

Edited by arch_8ngel
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3 minutes ago, Tanooki said:

I'm probably reading it wrong, today that 5.33% return shows 5.6% I think it's looking at the stock market over X amount of time.  Either way is there a name or sly wording that fee would be under but not called one?  Trying to use their app on my phone and not seeing it.  I see the random rare small extraction of like in the $5-10 range and few of them at all, so hopefully it doesn't amount to much.

They are legally obligated to send you a report at least once per year (possibly quarterly) that summarizes your total fees paid for administering the account.

If you have web access to your 401k, there should be disclosure documents that spell that out.

 

Aside from the "administration fees" on the account itself -- the other MAJOR source of fees is what funds and ETFs you have access to.  Those types of fees can range from 0.02% (somewhere like Vanguard) to multiple-% (something like American Funds, Merrill, or other expensive brokers and fund providers)

 

Who is the 401k custodian, if you don't mind me asking?  (and what types of funds are you invested in)

 

 

EDIT: and regarding the rate-of-return, it really sounds like you are either:

1) over-allocated into bonds (i.e. selected a "too conservative" portfolio for your time horizon)

2) over-allocated into cash (i.e. haven't been pro-actively getting your money invested)

3) otherwise somehow managed to completely miss the run-up in markets over the last couple of years

Edited by arch_8ngel
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Just now, arch_8ngel said:

They are legally obligated to send you a report at least once per year (possibly quarterly) that summarizes your total fees paid for administering the account.

If you have web access to your 401k, there should be disclosure documents that spell that out.

 

Aside from the "administration fees" on the account itself -- the other MAJOR source of fees is what funds and ETFs you have access to.  Those types of fees can range from 0.02% (somewhere like Vanguard) to multiple-% (something like American Funds, Merrill, or other expensive brokers and fund providers)

 

Who is the 401k custodian, if you don't mind me asking?  (and what types of funds are you invested in)

I don't mind, I'll see what I can do here.  It's a Schwab Retirement Plan. On the circle graph they have for ease of seeing things almost all of it is rolled into a Schwab  Index Ret Trust 2040 IV.  I'm not doing to math but like 1-2% is a mix of company stock fund and stable value account otherwise.

Looking at the spread on this PDF I see the 2040 lists things such as

BNY Mellon Large and Small Cap Stock Index Fund (around 48% of it are these two)
BNY Mellon Intl Stock Index Fund is another 21 1/2%

SSgA Emerging markets almost 5%
Blackrock Developed Real Estate another 4%

That's all the equity part, below there's Fixed Income rolled up about 20% and a 1 1/2% on cash equivalents with some state street govt short term investment fund.

 

Using the website I see contributions of 2464 and employee of 1680 (4144 total for year so far) with so far YTD of a 7.83% personal rate of return.

If this wording is fees 'annual fund operating expense' the ratio is 0.05% (50cents per 1K)

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4 minutes ago, Tanooki said:

I don't mind, I'll see what I can do here.  It's a Schwab Retirement Plan. On the circle graph they have for ease of seeing things almost all of it is rolled into a Schwab  Index Ret Trust 2040 IV.  I'm not doing to math but like 1-2% is a mix of company stock fund and stable value account otherwise.

Looking at the spread on this PDF I see the 2040 lists things such as

BNY Mellon Large and Small Cap Stock Index Fund (around 48% of it are these two)
BNY Mellon Intl Stock Index Fund is another 21 1/2%

SSgA Emerging markets almost 5%
Blackrock Developed Real Estate another 4%

That's all the equity part, below there's Fixed Income rolled up about 20% and a 1 1/2% on cash equivalents with some state street govt short term investment fund.

 

Using the website I see contributions of 2464 and employee of 1680 (4144 total for year so far) with so far YTD of a 7.83% personal rate of return.

If this wording is fees 'annual fund operating expense' the ratio is 0.05% (50cents per 1K)

Are they also the "401k Administrator"?  In the case of my company, we have an intermediate "Administrator" that has their own fee structure (where you can have minimum fees by self-managing, but pay up to 1% for them to fully manage your account).

 

In terms of the fund -- assuming you're talking about the ticker "SWERX" -- I would have thought they have a 0.64% "net expense ratio", which is pretty high, as things go, for a "target fund" when you compare against equivalent ETFs.

https://www.schwabassetmanagement.com/products/swerx

But it's entirely possible that as a function of your 401k you get "cheaper" access to that one (though I wouldn't expect it to be at 0.05% instead of 0.64% -- that would be a serious discount)

 

Are you in the "fund" or the "ETF"?

 

And 7.83% YTD isn't bad at all -- which certainly leaves me wondering how your overall returns are so relatively low, if your investments have been buying in consistently this whole time rather than sitting in cash or something.

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I don't follow all that, just looking at it now trying to figure it all out.  But, perhaps because for years I was underpaid and it was only corrected after the Obama administration was out.  In my area I started at 30k 15 years back, got the usual few % raise a year.  When that whole ACA crap was threatened raises got shrunk, then for 3 years raises and hiring externally was frozen.  It was only a year into Trump I got some back to back increases where I got like 15% of raises one year, another 10% (they called conveniently 'market corrections') stuff like that and in the last 3 they started doing this matching bonus bit that threw a few more K into my pocket around March.  Only with the bonus match yearly bump I creep into the low 60k/yr so that's why it's not higher.  I was matching the most I could, but matching not much in there, then getting screwed by bad politics for quite a few years threatening my workplace.

The only other thing I can come up with along with Schwab is Morningstar Investment Mgmt LLC which is listed as an independent investment advisor I guess they use for their plans, but it appears they self administer.

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28 minutes ago, Tanooki said:

I don't mind, I'll see what I can do here.  It's a Schwab Retirement Plan. On the circle graph they have for ease of seeing things almost all of it is rolled into a Schwab  Index Ret Trust 2040 IV.  I'm not doing to math but like 1-2% is a mix of company stock fund and stable value account otherwise.

Looking at the spread on this PDF I see the 2040 lists things such as

BNY Mellon Large and Small Cap Stock Index Fund (around 48% of it are these two)
BNY Mellon Intl Stock Index Fund is another 21 1/2%

SSgA Emerging markets almost 5%
Blackrock Developed Real Estate another 4%

That's all the equity part, below there's Fixed Income rolled up about 20% and a 1 1/2% on cash equivalents with some state street govt short term investment fund.

 

Using the website I see contributions of 2464 and employee of 1680 (4144 total for year so far) with so far YTD of a 7.83% personal rate of return.

If this wording is fees 'annual fund operating expense' the ratio is 0.05% (50cents per 1K)

It sounds like you are enrolled in a reasonable fund with a good distribution of your money. Target funds such as this are actively managed based on your projected year of retirement (in your case, you are targeting the year 2040, hence the name). When you are young and far from retirement, they allocate most of your money into aggressive growth. As time passes and you approach retirement, they transition to conservative, "safe" management of your funds. If your fee is 0.05%, that is excellent.

If you want to take on more risk in hopes of increasing growth, you can usually make changes in how your money is allocated by visiting the website of your retirement account. You could then move your money directly into growth funds. I wouldn't do this unless you fully understand the risks and plan on actively managing your money. You would need to manually change to more conservative investing as you approach retirement.

Rates of return are often given as "Previous 12 Months" or "Year to Date." Your rate of return of 7.8% for the year is quite good and indicates that most of your money is invested into growth right now.

My recommendation would be to max out your 401k before even thinking about your IRA because you're not going to get much lower fees than that, even in a passive fund like VTSAX (0.04%). At the very least, you should try to contribute enough to get the full employer match since that's "free" money.

Overall it seems like you're doing a pretty good job.

Edited by DoctorEncore
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I'm hoping it's that 0.05% but on the PDF, web site, app, I can't find anything else that straight up says FEE and a percentage.  I did see like taking a little over 11.50~ so far this year in fees on the total gain, which definitely is under, well under 1% so perhaps it is.

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36 minutes ago, arch_8ngel said:

Are they also the "401k Administrator"?  In the case of my company, we have an intermediate "Administrator" that has their own fee structure (where you can have minimum fees by self-managing, but pay up to 1% for them to fully manage your account).

 

In terms of the fund -- assuming you're talking about the ticker "SWERX" -- I would have thought they have a 0.64% "net expense ratio", which is pretty high, as things go, for a "target fund" when you compare against equivalent ETFs.

https://www.schwabassetmanagement.com/products/swerx

But it's entirely possible that as a function of your 401k you get "cheaper" access to that one (though I wouldn't expect it to be at 0.05% instead of 0.64% -- that would be a serious discount)

 

Are you in the "fund" or the "ETF"?

 

And 7.83% YTD isn't bad at all -- which certainly leaves me wondering how your overall returns are so relatively low, if your investments have been buying in consistently this whole time rather than sitting in cash or something.

I think he's invested in passive funds. I agree that they are charging a really low fee for active management of his target 401k, but I'd be surprised if they broke his fees out into great detail too.

UPDATE: I see DISSX at 0.5% and DIISX at 0.6%, so... IDK. Either way, you're doing better than most people, @Tanooki. Personally, I'd recommend sticking with the 401k so you don't have to worry about adding another retirement account. If you ever start maxing your 401k, a Roth IRA would be your next best bet. Also, some 401ks give a Roth option which I'd recommend so you don't have to worry about paying taxes later when you withdraw.

UPDATE 2: I pulled up the documentation for my 401k (Fee Disclosure Notice; should be on your website) and found a paragraph detailing the administrative expenses (0.15% for me). ADDITIONALLY, there is a listing further down that shows the expense ratio for each investment option. So you would need to add your admin fee (0.15% for me) + investment fee (i.e. Vanguard 2040 is 0.08% for me) to get your total fees. For me that would be 0.23%. Hope this helps.

Edited by DoctorEncore
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36 minutes ago, Tanooki said:

I don't follow all that, just looking at it now trying to figure it all out.  But, perhaps because for years I was underpaid and it was only corrected after the Obama administration was out.  In my area I started at 30k 15 years back, got the usual few % raise a year.  When that whole ACA crap was threatened raises got shrunk, then for 3 years raises and hiring externally was frozen.  It was only a year into Trump I got some back to back increases where I got like 15% of raises one year, another 10% (they called conveniently 'market corrections') stuff like that and in the last 3 they started doing this matching bonus bit that threw a few more K into my pocket around March.  Only with the bonus match yearly bump I creep into the low 60k/yr so that's why it's not higher.  I was matching the most I could, but matching not much in there, then getting screwed by bad politics for quite a few years threatening my workplace.

The only other thing I can come up with along with Schwab is Morningstar Investment Mgmt LLC which is listed as an independent investment advisor I guess they use for their plans, but it appears they self administer.

There are potentially two layers:

1) your 401k "administrator" -- this is who you (or your HR) talk to when you change your contributions or want to update your beneficiaries

2) your 401k "custodian" (I may not have the exact term here) -- this is where the investments actually exist.

 

In my case, our "Administrator" is "Wellington Financial" (they do all of the "plan management") and our "Custodian" is "Schwab" (this is where the actual brokerage transactions are reported and take place).

Sometimes it is all-in-one (in my wife's case -- with Vanguard).

Each layer has some fees that are in-play, depending on what services you're utilizing.

 

If you want to get a good picture of history on your account and learn more -- download AT LEAST your year-end statements as far back as you have access.

From there, you can either yourself, or with the help of a financial advisor, reconstruct your allocation, returns, and performance relative to the broad market.

I would be happy to walk you through some of that, just to help get you set up with a Google Sheet, or something for rough book-keeping.  You might feel a lot better about things once you see the year-of-year performance, and see a clear separation of your contributions from actual market gains.

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28 minutes ago, DoctorEncore said:

 

UPDATE: I see DISSX at 0.5% and DIISX at 0.6%, so... IDK. Either way, you're doing better than most people, @Tanooki. Personally, I'd recommend sticking with the 401k so you don't have to worry about adding another retirement account. If you ever start maxing your 401k, a Roth IRA would be your next best bet. Also, some 401ks give a Roth option which I'd recommend so you don't have to worry about paying taxes later when you withdraw.

 

I think that almost anyone that isn't in a high enough tax bracket to imply income that easily maxes out 401k contributions is better off ONLY contributing "up to the match", and then maxing out a Roth IRA as the next major priority.

There is IMMENSE flexibility that comes from that approach -- and if your tax bracket is relatively low (in his case married, with low or no income on his wife's end, basically getting MFJ treatment for his individual income) -- then paying the taxes NOW on Roth contributions for tax free withdrawals later is too good to ignore.

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12 minutes ago, arch_8ngel said:

I think that almost anyone that isn't in a high enough tax bracket to imply income that easily maxes out 401k contributions is better off ONLY contributing "up to the match", and then maxing out a Roth IRA as the next major priority.

There is IMMENSE flexibility that comes from that approach -- and if your tax bracket is relatively low (in his case married, with low or no income on his wife's end, basically getting MFJ treatment for his individual income) -- then paying the taxes NOW on Roth contributions for tax free withdrawals later is too good to ignore.

I guess it's the age old debate of simplicity vs maximum benefit. I lean towards simplicity when making recommendations to people who don't have a lot of comfort with managing their retirement funding, but from a purely financial standpoint, you make a very valid point. And I completely agree that almost everyone should be choosing the Roth option; it is a Godsend for retirement investing. I even recommend Roth for high earners with poor financial literacy since it is the route of least resistance once they start withdrawing money.

One of the coolest things about being in the Army was maxing out my non-Roth TSP (basically military 401k) while deployed. Since I was in a combat zone, I had no tax burden (untaxed deposits AND withdrawals will not be taxed in retirement), so I was essentially able to convert my regular TSP to a "Roth" and contribute beyond the normal yearly Roth limits. Badass. 😎

9 minutes ago, LeatherRebel5150 said:

Im reading alot of this stuff and much is going over my head. You guys have any place to really read up or videos to learn about this stuff more?

I learned all I know about money by spending a ton of time reading a ton of different websites (even the IRS website!). I don't have any specific recommendations where to go, although I've found Investopedia to be a pretty good resource. If you have some more specific questions, I'd be happy to answer them to the best of my ability or at least try to point you in the right direction.

Edited by DoctorEncore
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1 hour ago, LeatherRebel5150 said:

Im reading alot of this stuff and much is going over my head. You guys have any place to really read up or videos to learn about this stuff more?

Which stuff?

For solid discussion about "safe withdrawal rates" go look at r/FinancialIndependence as a really good consolidation of information regarding the Trinity Study that I mentioned.

If you want some really advanced reading, there are a few blogs that link from that subreddit that get into dozens of case studies of deep financial planning and prediction.

Edited by arch_8ngel
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1 hour ago, DoctorEncore said:

I guess it's the age old debate of simplicity vs maximum benefit. I lean towards simplicity when making recommendations to people who don't have a lot of comfort with managing their retirement funding, but from a purely financial standpoint, you make a very valid point. And I completely agree that almost everyone should be choosing the Roth option; it is a Godsend for retirement investing. I even recommend Roth for high earners with poor financial literacy since it is the route of least resistance once they start withdrawing money.

 

I don't personally view it as that much more complicated to have a Roth account in addition to your 401k.

The trade-off is really favorable, IMO, to make it worth the marginal effort.

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9 hours ago, arch_8ngel said:

Whether "shit happens", or not, my point was that 10% is NOT a sustainable drawdown over any practical timeframe, as, at a BARE minimum, it completely ignores the need for inflation adjustment.  (i.e. you should always consider long-term horizons in "real" terms, rather than "nominal")

Just to add to this, AT&T had a dividend that's like 7%. If you're looking at getting a yield between 5 and 10% just look for staple stocks w high dividends and diversify that way. 

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8 hours ago, OptOut said:

I love how the DOGE thread has turned into a wealth of genuinely useful and informative financial advice! 😂

If only the DOGE faithful had stepped in here before wading into that mess, a lot of people could have avoided getting financially rekt! 🐕

One Dollar Doge GIF

This explains why Dogecoin is up 20% since yesterday!

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