Company sponsored Vanguard 401(k) plan question... | TigerDroppings.com

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ColoradoAg03
Texas A&M Fan
Denver, CO
Member since Oct 2012
1839 posts
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Company sponsored Vanguard 401(k) plan question...


I'm 32 and I've been with this company for 5 years now. They use Vanguard for the sponsored 401(k) plans for employees. I knew nothing (and still don't really) about 401(k) other than to take full advantage of company match, which I have done since the beginning.

Since I first signed up, I've been on the Vanguard Target Rertirement 2045 Fund, which assumes retirement between 2043 and 2047, 62-66 yrs old.

I chose one of their target retirement plans because a couple of people here at the time told me it was the easiest and most hands-off way to do a 401(k). It has been hands-off for sure. All I have done is set the percent of pre-tax paycheck I want to contribute.

Am I doing it right? Have I picked a good plan? Or if I did something wrong what do i need to change? I feel like I read about people tweaking or customizing their 401(k), but I don't want to tinker with something I don't know anything about.

Here's a link to Vanguard's description of the type of 401(k) fund I have...

LINK








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MG
LSU Fan
New Orleans
Member since Dec 2007
268 posts

re: Company sponsored Vanguard 401(k) plan question...


If you have to ask.... You better keep it in that age based managed fund.





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jimbeam
USA Fan
University of LSU
Member since Oct 2011
29999 posts

re: Company sponsored Vanguard 401(k) plan question...


If you don't know how to run your retirement plan, or don't want to know, then yes, it is a good diversified plan, with a pretty low fee.





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ZereauxSum
LSU Fan
Lot 23E
Member since Nov 2008
8018 posts

re: Company sponsored Vanguard 401(k) plan question...


I think it's a good idea if you prefer to be hands off. My retirement is in T-Rowe Price's 2045 and 2040 funds.

Some folks here might argue that they don't do a good job adjusting your risk as you get closer to retirement, but I feel like I have plenty of time to educate myself so I can do the steering one day.






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Teddy Ruxpin
LSU Fan
New Orleans, LA
Member since Oct 2006
18122 posts
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re: Company sponsored Vanguard 401(k) plan question...


quote:

Some folks here might argue that they don't do a good job adjusting your risk as you get closer to retirement, but I feel like I have plenty of time to educate myself so I can do the steering one day.


Ya, if you don't like the stock/bond mix in say, your 2050 plan, you could always just move into the 2045 or 2040 plan which would be heavier in bonds than the 2050 plan. Just because you want to retire in 2050 doesn't mean you have to buy that one.

That's if you want to stay in one of these targeted retirement funds at all.






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jimbeam
USA Fan
University of LSU
Member since Oct 2011
29999 posts

re: Company sponsored Vanguard 401(k) plan question...


quote:

Ya, if you don't like the stock/bond mix in say, your 2050 plan, you could always just move into the 2045 or 2040 plan which would be heavier in bonds than the 2050 plan. Just because you want to retire in 2050 doesn't mean you have to buy that one.
exactly. if you're in the 2060 plan right now, just say, you could in 10 years just transfer it to the 2070 plan if you liked the future allocation better. or move it to 2050 whatever.






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CubsFanBudMan
Member since Jul 2008
537 posts

re: Company sponsored Vanguard 401(k) plan question...


The first thing to understand what the target retirement funds do. They create a portfolio based on average risk and target date. They start off with a high stock to bond ratio and as you get closer to the target date move the assets more towards bonds.

Next, you have to ask yourself is how much risk are you comfortable with. The target retirement funds are only good if your risk matches the fund manager's idea of average risk.

If you are comfortable with a higher risk than average, but want to stay hands off, you can go with a fund with a later target date, like 2055 or 2060. If you want less risk, then switch to 2030 or 2035.

I'm no financial adviser, but I wouldn't think it would take much time to have a more hands on approach to your 401k. I have my 401k in 5 funds. Two of them are target date fund that combine for 25% of my contributions, and the other 3 are non-target date funds that get 25% each. I look at them each quarter just to see how they are doing, then at the end of the year to make sure one of them just isn't tanking compared to the market. Some people may tweak the allocation every year, but anything more than that is just trying to time the market, which you can't rely on doing that.






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