re: Anyone that would help me with my finances? Update (4/7/23) - Page 1

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Are you going to have a mortgage in retirement? Do you and your wife have expensive hobbies and/or plan to travel significantly in retirement? Are there pensions/passive income streams other than social security in the future?

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Nothing outrageous as far as travel or hobbies. No pensions.


Honestly I really haven't thought alot about my retirement goals for myself, cause I just haven't felt they are attainable. I would love my wife to be able to retire by 65 or so. Just trying to save as much as we can while still going one reasonable vacations once a year or so for our sanity, lol. We almost never eat out, I do all home repairs thst I possibly can, etc.

My wife understands the situation. We met later in life and she was in about the same financial situation as me. Worse actually.

I see lots of good advice so far, so in addition to that here is another key element of your plan. Have an investment strategy within your 401k and IRA’s, and even in your savings account. Diversity is key and I don’t mean ESG;(. At your age you can afford to be slightly aggressive, maybe 70/30 or even 80/20 stock equities to bonds/fixed income. Diversify your stock investments; buy in various sectors, many small positions are less risky than a few large positions.

Corporate bond yields with a decent rating (A’s) are around 6% which is higher than in years. I like buying individual bonds, not bond funds because when you buy a bond you will get 100% of your principle back if you hold the bond to maturity.

Start an after tax investment account; Fidelity is my favorite. Start off as a self directed account and put any extra cash, or a small auto deduct from your paychecks. Regardless of how small the incremental investments are, they will add up. But only invest here when you have maxed out IRA and the 401k matched amount. You can actually use this as your savings account as well. Fidelity has a money market account paying 4.2% interest, so your 20k in savings is making you $70/month.

Back on type of investments in your various buckets. Avoid the sexy high risk stocks. Look for those that have a solid history of growth and pay a decent dividend. Also be aware of economic conditions like our current/pending recession. I am totally out of the market (I’m retired, but would be mostly out even if I wasn’t). I believe that we will see market dips of 20-25%. SP maybe to 3000-3200.

People say you can’t time the market and that’s partially true, but you can invest optimally when the market is relatively deflated. And with your tax deferred accounts, you can buy and sell without any current capital gains concerns. So for example right now, you may want to sell some of your solid performers that may not have a great outlook (tech). Wait for the pending dip and buy back in small increments along the dip curve. You never know the absolute bottom but you will know when there’s blood in the streets and a decent buying opportunity.

I know many 401ks have limited investment choices, but look at the contents of all of their mutual funds….btw I hate the 2035 funds, 2040 funds or wtf they are.

In summary, what you invest in within your buckets is as important, or could be more important, as how much you put in. God bless and keep plugging. Y’all will be fine.

Both of you need to be maxing out your 401k. I needed to know your account balance to project. Your date fund will shift investments to a more conservative blend as you approach the date. The 500k index is a mix of the top 500 companies and is basically VOO.

My HYSA is 3.75. That's where we have our emergency funds.

From what I gather, my best move over the year (this is assuming the ibond rate drops like I expect) is to try to get the 65k in ibonds moved to a IRA and or 401k.

I'm just not sure how to go about it. The IRA is simple (just start it and put 6000 in), but the 401k I can't just add to it since it has to come out of our checks.

So I guess the best way to do that would be to raise our 401k contributions and then use the money that we take out of ibonds to cover expenses???

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Is your job rock solid stable for you to work until you don't want to? Are they going to try to force you out in some sort of "youth movement" in 10 to 15 years?

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Lol, yes it's stable. One of the best/worst qualities about it is they don't boot anybody, lol.

You said you don't think $40k per year is doable. Is $30k doable?

Thanks

My wife's 401k is more limited than mine on what she can invest in. But there is a c975 fidelity 500 index fund as an option.

Hers was in a ret fund like mine, but her company just switch her 401k to voya. It's now in DFA global Allocation 25/75 portfolio.

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To reduce your taxed income from 2022.

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Pretty solid reason lol