Alack and alas, the time has come for us to broach the subject of retirement accounts–an important topic, cause it’s gonna let me re-visit Machu Picchu as a wizened old bird with my kids and grandkids and let you do, well, whatever you want. I’m starting to move beyond my level of personal comfort and experience here, but I think it’s still important to start thinking and talking about this issue, and hopefully we can muddle through together to some greater group clarity. I especially want to bring this up since it’s open enrollment for many people, and this is when people tend to make changes to their benefits (though at my company, and maybe elsewhere (?), you can change your retirement account contribution at any time throughout the year).
The main point I think I want to drive home here, one I wish I had been better about, is that once you have started working full-time, whether you’re self-employed or in a traditionally employed position, you need to start contributing a retirement account. (Full-time students should focus on keeping educational debt low and credit card debt zero, and revisit this topic once they’re in the work force). I was blissfully unaware of how much I should be saving, so when I started out working I just made the minimum contribution to get my employee match, which was 3% (6% with employee match) of my salary. You should at a bare minimimum be saving 10% to 15% of your income for retirement from the day you start making money. But obviously, the more you save, the sooner you are financially independent and able to quit work and live off the interest of your nest egg. And there is an immediate advantage to saving for retirement now, as well, in that it lowers your tax burden for the year. In the beginning I struggled to know whether to start putting money in my retirement account or aggressively paying down debt, and discussed this with a financial advisor who recommended I do both bit by bit, but recommended that I do not delay saving for retirement.
So here’s my challenge for those of you that have retirement accounts–do you know what your asset allocation is? What percentage of your money is in stocks versus bonds versus a multi-asset allocation (whatever that is)? What specific bonds and stocks is your account money invested in? I have two retirement accounts from previous jobs, as well as a Roth IRA I opened up independently with Fidelity, and my current 403(b) is through Transamerica. Check out the deets below:
My current 403(b):
- 95% in stocks
- 5% in bonds
- 0% in Multi-Asset (Other)
More specifically, here’s the breakdown:
- Short Bonds:Vanguard Federal Money Market Inv
- Interm/Long Term Bonds: Baird Aggregate Bond Instl
- Aggressive Bonds: Transamerica Partners Instl Hi Yld Bd
- Large Cap Stocks: Dodge & Cox, Steward Lrge Cap Enhanced, Vanguard Institutional Index, Principal LargeCap Growth
- Small/Mid-Cap Stocks: Transamerica Partners Instl Mid value, Harbor Mid Cap Growth Instl, DFA US Targeted Value I, Vanguard Small Cap Index Instl Plus, Hartford SmallCap Growth HLS IA
- International Stocks: American Funds Europacfici, DFA International Small Company I
Now my challenge is to start talking to others and asking around to figure out if these particular investments are right for me and my money. Never fear, guys, I’ll keep you updated.
P.S. Here ya go.