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TIAA Portfolio Review & Traditional Question

Hi All:

I’ve been lurking for quite a bit on Morningstar but only just learnt about the TIAA forum. Hoping I can get some feedback on my thinking.

 

Basics

  • Single income family
  • Me (46), D (43) + 18 mth old +6 year old
  • Stayed a little longer in grad school so only started job (this one--first and only), about 15 years ago
  • Current Salary (Highest ever): $85,000
  • Plan to retire in about 16-20 years
  • Only debt is our home: Recent refinance 2.75% 15 year mortgage of $170,000. Home value=$235,000
  • Portfolio size: about $310,000 not including $75,000 in cds

A few years ago our university did something and we changed contracts (but stayed at TIAA)—I went from a target date fund to mostly what you see below. Portfolio is currently back to December 2019 level but I’m getting older and this recent dip made me realize that I need to do more than just check the balance at the start of each year.

 

CURRENT PORTFOLIO ALLOCATIONS

TIAA 403b (Current employer—combination of old and new contracts)

  • CREF Equity Index R2      61%       
  • CREF Stock R2                    12%
  • CREF Growth R2                1.3%     
  • TIAA Real Estate               9%         

Roth IRA (Vanguard)

  • VEXAX (Vanguard Extended Market Index Fund) 2.8%
  • AMZN 3.9%

Spousal IRA (Vanguard)

  • VTSAX (Vanguard Total Stock Market) 10%

CDs (not counted in portfolio total): $75,000 (1.7%-2.5%)

Contributions:

  • Pre-tax 403b 12% and employer matches 8%
  • Roth IRA/Spousal IRA: try to aim for max to spousal and then any leftover send to my Roth

Thanks so much for reading this far.

My questions:

  1. I just started using Cref Growth and have changed all future contributions to Cref Growth to build it up quickly. Does this seem reasonable?
  2. I now think that I should have some international after doing my investment plan. I know that Cref Stock holds international so should I exchange some Cref Equity for Cref Stock to up my international exposure? These are the other options for international:

Mstar 1.png

 

  1. Based on the recent threads in this forum, it appears that I should get out of TREA. I’m thinking of changing all TREA to traditional, and selling some other stuff (not sure what), to get to 20% in traditional. So I’d need to find about $60,000 from the existing funds to move. My plan offers the following flavors in the contract for the employer match:

MStar2.png

The plan offers the following flavors for the contract where I put in (supplemental):

MStar3.png

It doesn’t appear that either of these are good options since neither of them are the plans with 3% guarantee. Is it then better to just do bonds or Money market? 

 

Thanks so much for your time :).

-QNikki

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Re: TIAA Portfolio Review & Traditional Question

So, you have all equity portfolio except for some T-REA and a decent chunk in CDs [that you don't count in your portfolio. Why not?].

Feb 19 - Mar 23 gave you an idea of your portfolio volatility. Luckily, the portfolio may have recovered by now. So, it is good time to make adjustments. Some shift to fixed-income may be desirable and that may include Traditional [RC, RCP], core-plus bond funds [TIAA has too many] and short-term bond funds; funds mean VAs, mutual funds [OEFs], ETFs [in brokerage accounts].

CREF Stock is active, and has 70% benchmarked to R3000 and 30% to international. CREF Equity Index is 100% R3000. So, an obvious way to introduce international, and reduce overlapping R3000, is to shift a good chunk from CREF Equity Index to CREF Stock.

If you want to add separate international exposure, then consider T-C International Equity Index TRIEX or active AF EuroPacific REREX/RERFX/RERGX. But then you can prune some other stuff.

CREF Growth is benchmarked to R1000-growth, and LC-growth has been hot, so it is OK to build it up via payroll contributions. You can also shift some from CREF Equity Index [R3000] to CREF Growth for quicker buildup. Note that R1000-growth is a subset within R3000.

You seem to be familiar with recent discussions on T-REA. You may reduce it some if you think that T-REA will take a hit with some delay as property valuations are gradually updated.

Traditional RC and RCP are fine. RC has withdrawal limitation [via multiyear TPA] but RCP is flexible. Don't go by their min rates only. Through much of their history, RC rates were higher than those for RA, and RCP rates higher than those for SRA. Things became different recently because RA and SRA are now stuck at their min 3%. Note that RC and RCP are offered in TIAA's open-architecture plans and the plans can kick out RC and RCP if their rates become too low or noncompetitive [RA and SRA are offered in TIAA's closed-architecture plans].

Also check what short-term bond funds are available in your plan; T-C's include TPSHX/TESHX, TSTPX/TISRX, TSDFX/TSDDX.

 

 

YBB
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Re: TIAA Portfolio Review & Traditional Question

@QNikki 

You look to be on track for a comfortable retirement, given your hefty contributions to your accounts. The main reason to stay with TIAA is the unique (because timeable) Real Estate Account, which can be used as a bond substitute. (You may have noticed the vigorous debate on Morningstar over the current desirability of bonds.) I have lots of cash parked in MM waiting for TREA to start going back up. (I’d guess that’s a year away.)

The Growth Account might be a big winner—or a big loser. I like the middle of the road Stock Account and the (somewhat more growthy) Global Equities Account, and prefer them to the Equity Index Account because of their international holdings (30% and 44%, respectively).

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Re: TIAA Portfolio Review & Traditional Question


@QNikki wrote:

It doesn’t appear that either of these are good options since neither of them are the plans with 3% guarantee. Is it then better to just do bonds or Money market? 

-QNikki


You asked plenty of good questions, so don't interpret my editing as suggesting otherwise. I'm focusing on your last question because it may indicate several important things:

  1. You may not understand the general investment characteristics of bond funds
  2. How good is your general understanding of investing? Be realistic when you answer!
  3. You don't have a desired risk profile or a target asset allocation. I understand that you are asking for help with this, but you can't rely on us to divine them. Even knowing your age and family situation, we can't predict whether you will sleep well and resist the desire to take unwise, precipitous action in the face of potential market turmoil.
  4. TIAA Traditional is a very complicate product, but it can have desirable characteristics for many investors. If you don't understand any given investment, you should not own it until you do understand it.

Have you looked at any of the asset allocation tools on TIAA, Fidelity, T. Rowe Price or other sites? I don't mean you should change investment companies, only that free tools can be helpful to non-customers. It would also be helpful to know what non-TIAA funds your employer may offer as choices.

Regarding TIAA Traditional, I suggest you start with these links:

https://www.bogleheads.org/forum/viewtopic.php?f=1&t=318503
https://www.bogleheads.org/forum/viewtopic.php?t=315414

Be sure to click on some of the links to additional documents in these messages. It takes a lot of reading to understand TIAA Traditional. You didn't tell us explicitly, but have you been able to learn if your "old" employer plan might allow you use "old" funds in the 3% version of TIAA Traditional? In any case, being unable to get a 3% guarantee does not mean you shouldn't consider TIAA Traditional, in a world where Vanguard Total Bond Fund is only paying 1.19%, and will drop in 6% in NAV if and when interest rates ever go up by 1%.

Because I personally (that adjective is important ... ) gave up on CREF Growth 30 years ago, I'm prejudiced. But I get the sense that you are relying on the name of a fund as sufficient information to select it. Names are not sufficiently informative to alone, select a fund. Similarly, I would imagine that you (at your current age) have no idea whether you will be seeking an annuity, or some other form of withdrawal, when you reach retirement age. I mention that because it isn't necessary to select particular TIAA-CREF brand investments with the assumption you will hold them into retirement. (TIAA Traditional is a potential exception to that rule, although it's less true with the liquid versions. That's because old money often earns a higher interest rate in TIAA Traditional. Did you know that?)

I don't think even you can be certain of the answers, but I wonder if you think you might have the same job when you retire? And what are the chances you will only have one child to put through college? Or will college be an insignificant expense if you remain in your current job, because of tuition benefits?

Tim

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Re: TIAA Portfolio Review & Traditional Question

Hi YBB:

Thanks so much for the feedback! I've pasted my responses in the text of the quotes


@yogibearbull wrote:

So, you have all equity portfolio except for some T-REA and a decent chunk in CDs [that you don't count in your portfolio. Why not?].

 

I've struggled with this but basically the reason for not counting the $75000 is because that's the figure my partner needs to feel "secure." So I keep it to the side as absolutely untouchable. I guess it's more mental than anything else.

 

Feb 19 - Mar 23 gave you an idea of your portfolio volatility. Luckily, the portfolio may have recovered by now. So, it is good time to make adjustments. Some shift to fixed-income may be desirable and that may include Traditional [RC, RCP], core-plus bond funds [TIAA has too many] and short-term bond funds; funds mean VAs, mutual funds [OEFs], ETFs [in brokerage accounts].

CREF Stock is active, and has 70% benchmarked to R3000 and 30% to international. CREF Equity Index is 100% R3000. So, an obvious way to introduce international, and reduce overlapping R3000, is to shift a good chunk from CREF Equity Index to CREF Stock.

 

Okay good to know my thinking was on the right track with the Cref Stock! I'll work to do this.

If you want to add separate international exposure, then consider T-C International Equity Index TRIEX or active AF EuroPacific REREX/RERFX/RERGX. But then you can prune some other stuff.

It looks like the only one I have access to is TRIEX. I'll need to do some more research on international to figure out if it makes more sense to do this separately rather that just Cref Stock. I know that I need to keep more of an eye on things, but I'm still worried about getting in over my head in having to manage all of these categories given that I'm now starting to learn more about these specific funds.

CREF Growth is benchmarked to R1000-growth, and LC-growth has been hot, so it is OK to build it up via payroll contributions. You can also shift some from CREF Equity Index [R3000] to CREF Growth for quicker buildup. Note that R1000-growth is a subset within R3000.

Ok glad to see that Cref Growth may make sense although I didn't realize about the subsets. I suppose though that it's perhaps a small percentage, thus the difference in yield(?). Again I'm probably using incorrect terms here but I'm trying to learn. I'll do some more digging to figure this out. Sounds like moving some Equity to Stock and Growth make sense, and I'll keep moving with plowing into Growth for the next few months.

You seem to be familiar with recent discussions on T-REA. You may reduce it some if you think that T-REA will take a hit with some delay as property valuations are gradually updated.

I did read through all of the threads related to TREA here and on another board, but of course personal finance is so personal :) that I admit it got my head spinning. I was actually looking for info on Traditional and ran across the TREA threads--I hadn't planned to do anything with that category since it seemed like an attractive fund (different from other things). I'm still on the edge but am looking to guidance from others who clearly know more about it. Keeping some may be a good in-between as you suggest. Unfortunately I tend to think all or nothing which is clearly not the way to go for investing, so thanks for that reminder!

Traditional RC and RCP are fine. RC has withdrawal limitation [via multiyear TPA] but RCP is flexible. Don't go by their min rates only. Through much of their history, RC rates were higher than those for RA, and RCP rates higher than those for SRA. Things became different recently because RA and SRA are now stuck at their min 3%. Note that RC and RCP are offered in TIAA's open-architecture plans and the plans can kick out RC and RCP if their rates become too low or noncompetitive [RA and SRA are offered in TIAA's closed-architecture plans].

Again my ignorance here--I did read through the fund page (prospectus?) more in-depth and do see what you mentioned about the crediting rates being higher. I like the liquidity option very much (not sure why though since I don't intend to take out any money from my retirement accounts). I'm not sure what the open versus closed architecture plans means but will do some more digging. Regardless, it sounds like my thinking about traditional isn't too far off.

Also check what short-term bond funds are available in your plan; T-C's include TPSHX/TESHX, TSTPX/TISRX, TSDFX/TSDDX.

Before landing on Traditional, I had actually started with bonds. However, my own low understanding in this area has really stunted my research and the noise of what negative yield means had me running scared that I could lose significantly on bonds. It looks like the plan has TISRX but it says restricted ("The investment will not be available to receive new contributions (or transferred accumulations), but existing accumulations in the investment may remain invested in it.")

Only other funds available are: CREF Inflation-Linked Bond Account (R2) (QCILPX) , PIMCO Total Return Admin Class (PTRAX), and Templeton Global Bond Class A (TPINX) but none of the descriptions list these as short-term bonds. 

I guess nothing says that I cannot do some Traditional and some bonds. Will definitely looks into this more.

 


Thanks again so much for your insights--very helpful.

-QNikki

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Re: TIAA Portfolio Review & Traditional Question

Also look at 529 for kids. Your state 529 may have tax incentives.   https://529.morningstar.com/state-map.action

YBB
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Re: TIAA Portfolio Review & Traditional Question

Hi Tibbles:

Thanks for the feedback. Please see my comments in the quotes.


@Tibbles wrote:

@QNikki 

You look to be on track for a comfortable retirement, given your hefty contributions to your accounts. Here's hoping :)

The main reason to stay with TIAA is the unique (because timeable) Real Estate Account, which can be used as a bond substitute. (You may have noticed the vigorous debate on Morningstar over the current desirability of bonds.) I have lots of cash parked in MM waiting for TREA to start going back up. (I’d guess that’s a year away.)

Yes the bonds posts have my head spinning! I saw other mention holding MM and waiting, but unfortunately I don't know enough to know when to buy. To show my ignorance, you mentioned waiting for TREA to go back up but in my mind I should buy when TREA goes down not back up. So I would be extremely bad a knowing when to get in and out :). So what I'm trying to do is be comfortable enough (if that make sense) so at the next downturn, I can do nothing (similar to what I did in March) but with less anxiety than I felt seeing the portfolio movement in March. Does that make sense?

The Growth Account might be a big winner—or a big loser. I like the middle of the road Stock Account and the (somewhat more growthy) Global Equities Account, and prefer them to the Equity Index Account because of their international holdings (30% and 44%, respectively).

I see the Global Equities in my list but unfortunately there's an alert that says "The investment will not be available to receive new contributions (or transferred accumulations), but existing accumulations in the investment may remain invested in it." That would have definitely been a good way to get a higher amount of international exposure versus Stock :(


I appreciate the extra set of eyes! Thank you!

-QNikki

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Re: TIAA Portfolio Review & Traditional Question

Hi Tim:

Great questions! Please see my comments in the quotes:


@crefwatch wrote:

@QNikki wrote:

It doesn’t appear that either of these are good options since neither of them are the plans with 3% guarantee. Is it then better to just do bonds or Money market? 

-QNikki


You asked plenty of good questions, so don't interpret my editing as suggesting otherwise. *No worries--I have a pretty thick skin and am all about learning. I appreciate all questions and comments.

I'm focusing on your last question because it may indicate several important things:

  1. You may not understand the general investment characteristics of bond funds You're absolutely right here and I mentioned this in a previous response to YBB. This is linked to your next question below.
  2. How good is your general understanding of investing? Be realistic when you answer! I have an extremely surface understanding gained only in the last few months. I've read the books on the bogleheads list and still feel like I'm way out of my depth :). 
  3. You don't have a desired risk profile or a target asset allocation. I understand that you are asking for help with this, but you can't rely on us to divine them. Even knowing your age and family situation, we can't predict whether you will sleep well and resist the desire to take unwise, precipitous action in the face of potential market turmoil.*Yes, I get what you're saying. I've done a lot of the allocation quizzes/surveys and did a "plan" as suggested on another board, but I'm still unclear. I've set the allocation to 80/20, but I believe that it will take a few more up and downs for me to really figure out what will make me less anxious. To be clear, I didn't lose sleep over the market drop but it did make my heart skip a beat long enough for me to feel uncomfortable (though I did nothing at the drop). I'm really just trying to get some baseline and see if my plan has any glaring errors.
  4. TIAA Traditional is a very complicate product, but it can have desirable characteristics for many investors. If you don't understand any given investment, you should not own it until you do understand it. Point taken :)

Have you looked at any of the asset allocation tools on TIAA, Fidelity, T. Rowe Price or other sites? I don't mean you should change investment companies, only that free tools can be helpful to non-customers. It would also be helpful to know what non-TIAA funds your employer may offer as choices. *Yes--I've used a number of the asset allocation tools. Unfortunately my employer doesn't offer much more than I've posted--they are heavy on the TIAA options.

Regarding TIAA Traditional, I suggest you start with these links:

https://www.bogleheads.org/forum/viewtopic.php?f=1&t=318503
https://www.bogleheads.org/forum/viewtopic.php?t=315414

Be sure to click on some of the links to additional documents in these messages. It takes a lot of reading to understand TIAA Traditional. You didn't tell us explicitly, but have you been able to learn if your "old" employer plan might allow you use "old" funds in the 3% version of TIAA Traditional? In any case, being unable to get a 3% guarantee does not mean you shouldn't consider TIAA Traditional, in a world where Vanguard Total Bond Fund is only paying 1.19%, and will drop in 6% in NAV if and when interest rates ever go up by 1%.

Thanks for the links--looks like I always reviewed those. And yes, my understanding of bonds and yield/rates in general is lacking. I'm working to understand this more.

Because I personally (that adjective is important ... ) gave up on CREF Growth 30 years ago, I'm prejudiced. But I get the sense that you are relying on the name of a fund as sufficient information to select it. Names are not sufficiently informative to alone, select a fund. Similarly, I would imagine that you (at your current age) have no idea whether you will be seeking an annuity, or some other form of withdrawal, when you reach retirement age. I mention that because it isn't necessary to select particular TIAA-CREF brand investments with the assumption you will hold them into retirement. (TIAA Traditional is a potential exception to that rule, although it's less true with the liquid versions. That's because old money often earns a higher interest rate in TIAA Traditional. Did you know that?)

Yes I have been reading about the traditional and did see comments about how the different years work. But I'm not picking based on name alone--I have been going through the pages on TIAA, also on Market Watch and reading the prospectuses. Though again reading versus understanding are different things. I'm trying to make the best decisions based on my limited capacity to deeply understand an entire field that I'm not proficient in. And I'm a numbers person! I met with an adviser multiple times but was never comfortable with the products they were trying to push--more funds suggested (some 7-10!), higher ER and other things I perceived as drawbacks.

I don't think even you can be certain of the answers, but I wonder if you think you might have the same job when you retire? And what are the chances you will only have one child to put through college? Or will college be an insignificant expense if you remain in your current job, because of tuition benefits?

I do plan to have the same job but we are saving for the kids anyway because I'm not sure what tuition benefits will look like in 12 years. We have 529 plans with Utah for the kids--$18k+/- for the 6 year old and 2.5k+/- for the 18 month old. We aim for $3000 for each on their birthday. These are in age based funds that are mostly vanguard but their accounts still have not recovered to the December level (I put in an additional $3000 on my 6yr olds birthday which happened to be in February--that money is still "lost" at this point).

Tim


Thank for the very informative post Tim, and for the deep questions that challenged me to confront my own lack of understanding.

-QNikki

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Re: TIAA Portfolio Review & Traditional Question


@yogibearbull wrote:

Also look at 529 for kids. Your state 529 may have tax incentives.   https://529.morningstar.com/state-map.action


Hi YBB:

Yep--we're working on building those up too. We the Utah plan because that was the best when I investigated and our State doesn't offer any benefits for their plans. We have $18k+/- for the 6 year old and 2.5k+/- for the 18 month old and aim to contribute $3000 for each on their birthday. These are in age based funds that are mostly vanguard but their accounts still have not recovered to the December level (I put in an additional $3000 on my 6yr olds birthday which happened to be in February--that money is still "lost" at this point).

I'm tenured at the university and while we do have a tuition benefit now, we're planning in the event that it goes away, is reduced, or our children do something else (trade school etc). I'm also at a private university so the reciprocity agreements are with other privates which are very expensive for room/board etc.

Thank you!

-QNikki

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Re: TIAA Portfolio Review & Traditional Question

@QNikki , TIAA closed-architecture plans are where TIAA does everything and has some token non-TIAA offerings; these have Trdational RA/GRA and SRA/GSRA.

TIAA open-architechture plans are where TIAA is primarily record-keeper/administrator, has token TIAA offerings and many non-TIAA offerings; these have Traditional RC, RCP and/or TIAA Stable-Value fund [SV].

YBB
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Re: TIAA Portfolio Review & Traditional Question

@yogibearbull  Ok that is clearer now--thanks for looping back.

I appreciate it.

-QNikki

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Re: TIAA Portfolio Review & Traditional Question

@QNikki 

I've provided a link below to some TIAA-CREF publications I have collected over the years. Note that through the recent redesign of the TIAA website, some of these handouts are dated and/or no longer available.

https://www.dropbox.com/sh/y08d3qbmvisayex/AABHL2u3-zMN-_De9ICjQrZIa?dl=0

Hope this information is useful to you in learning more about TIAA Traditional.

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Re: TIAA Portfolio Review & Traditional Question

@oldzey This is great! Already clicked on a few and will work my way through these.

Thank you for sharing your resources!

-QNikki

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Re: TIAA Portfolio Review & Traditional Question

@QNikki : Some food for thought:

(1) Asset Allocation: With 16-20 years to retire (i.e., need of that money), 80%/20% is a bit high.  60% equity/40% fixed income may be typical of your time horizon and risk tolerance.

(2) 403b: My take (and only my take from experience) is only TIAA Traditional and TREA are reasonable to own; there are better options for other TIAA funds (such as CREF stock, CREF Social, and GREF growth).  Now my confidence with TREA is near-zero.  Maybe you do not have the Fido options I have, but still I personally would not opt for those funds.  My choice would be 47.2% CREF Equity Index (at least it is passively managed with low cost).  Put some money in Roth 403b if you have such an option (we do).

(3) TIAA Traditional: Like you, I stay away from bonds or bond funds (from my experience), thus this is a good space to park your fixed income portion: 40%.

(4) IRA: 12.8%; Look at this along with your 403b as a single portfolio and use IRA to complement what you are short of for diversification.  For example, I would invest it in a good Vanguard mid/small cap fund, since you already have Vanguard IRA accounts.  I think international coverage is overlapping with domestic (U.S.) investment and usually does not perform as well. 

(5) CD: 2% (may belong to your fixed income portion; but if short-term, it is your emergency reserve, thus ir may be better not counting it as retirement portfolio.

You have a good deal on mortgage and excellent retirement benefits (12% with an 8% match). 

Keep up the good work!  My two-cents without retribution.:)

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Re: TIAA Portfolio Review & Traditional Question

My observations have nothing to do with asset allocation.

You are a 46 years old with two young children.

You are going to experience some profound changes in your professional and personal life. They will not all be pleasant. 

Protect your family with ample term life insurance for one thing, as well as health and disability insurance. 

Get a good accountant or read up on tax efficiency. 

With a young family, get an estate planning lawyer in your life.

Involve your wife in every financial decision.  The odds say she will outlive you.

Don't retire until age 70 unless good fortune provides you with unexpected returns.

Be a productive essential professional and a good provider. 

All the best.

Bob

 

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Re: TIAA Portfolio Review & Traditional Question

I agree with Bob's and Yogi's suggestions to think about your family economy and finances. I would add that you should plan on setting up savings/investment plans for your kids' future college costs. Ideally, when the kids reach college age you should be able to support them from those savings, not from your current income flow.

We didn't have 529 plans when our kids were growing up. The annual costs of attendance at the colleges my kids went to in the late 1990's--2002 have doubled since then.  See https://www.sec.gov/reportspubs/investor-publications/investorpubsintro529htm.html

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Re: TIAA Portfolio Review & Traditional Question


@51hh wrote:

@QNikki : Some food for thought:

(1) Asset Allocation: With 16-20 years to retire (i.e., need of that money), 80%/20% is a bit high.  60% equity/40% fixed income may be typical of your time horizon and risk tolerance.

(2) 403b: My take (and only my take from experience) is only TIAA Traditional and TREA are reasonable to own; there are better options for other TIAA funds (such as CREF stock, CREF Social, and GREF growth).  Now my confidence with TREA is near-zero.  Maybe you do not have the Fido options I have, but still I personally would not opt for those funds.  My choice would be 47.2% CREF Equity Index (at least it is passively managed with low cost).  Put some money in Roth 403b if you have such an option (we do).

(3) TIAA Traditional: Like you, I stay away from bonds or bond funds (from my experience), thus this is a good space to park your fixed income portion: 40%.

(4) IRA: 12.8%; Look at this along with your 403b as a single portfolio and use IRA to complement what you are short of for diversification.  For example, I would invest it in a good Vanguard mid/small cap fund, since you already have Vanguard IRA accounts.  I think international coverage is overlapping with domestic (U.S.) investment and usually does not perform as well. 

(5) CD: 2% (may belong to your fixed income portion; but if short-term, it is your emergency reserve, thus ir may be better not counting it as retirement portfolio.

You have a good deal on mortgage and excellent retirement benefits (12% with an 8% match). 

Keep up the good work!  My two-cents without retribution.:)


@51hh Appreciate the very helpful suggestions. I'm continuing to read and play around with calculators re: allocations and will review your other recommendations in detail.

Thanks for the kind words to keep up the good work--unfortunately (or perhaps fortunately) I stumbled across some boards with extremely high earners with 7 figure portfolios and was beginning to feel like I had sunk us.

Fortunately our expenses are low and we can (knock on wood) keep up our savings rate.

Thanks a lot :).

-QNikki

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Re: TIAA Portfolio Review & Traditional Question


@GLI2019 wrote:

My observations have nothing to do with asset allocation.

You are a 46 years old with two young children.

You are going to experience some profound changes in your professional and personal life. They will not all be pleasant. 

Protect your family with ample term life insurance for one thing, as well as health and disability insurance. 

Get a good accountant or read up on tax efficiency. 

With a young family, get an estate planning lawyer in your life.

Involve your wife in every financial decision.  The odds say she will outlive you.

Don't retire until age 70 unless good fortune provides you with unexpected returns.

Be a productive essential professional and a good provider. 

All the best.

Bob

 


@GLI2019 

Bob:

Thanks for the feedback. As a tenured professor I do strive to do my best, and have worked to also provide for my family so I hope good health and luck will continue to shine on us so I can keep on keeping on :).

We're set on term life insurance but thanks for thinking of this. We got $1million for me and $350,000 for my wife a few months after the 6 year old was born--we pay $90.04 combined for both policies each month (this is NOT through my employer). While we don't have the highest level of the health insurance plan offered, we do have a midrange plan and the max OOP for family is $7500 which we can swing easily. We also have great dental and the university provides free vision; disability insurance is split with university (my share is only like $8). We also set up our Wills & Trusts and all of that other stuff shortly after the 6 year old was born. I did loop back to the lawyer after the 18 month old was born to check to make sure that what we have covered her as well (and it did). He also gave us all of the wording etc to change over the beneficiaries on all accounts to the trust and we did that a few years back. Interestingly we had both a Coverdell and a 529 for the 6 year old when we first started out, and it was the lawyer who suggested that we drop the Coverdell and just move everything to the 529 (which we did).

I had never thought of an accountant--I admit to using the bogleheads wiki extensively as my guide to research a lot of things and used their efficient placement of funds and such to guide me heavily. I'll definitely do some research on the benefits of an accountant. I guess I always figured that our pot of money wasn't large enough and our situation wasn't complex enough to warrant an accountant. I'm also rethinking having an actual wealth adviser (versus the free TIAA adviser) to help with some of the types of niggles I have around all of these choices (for funds, allocations etc).

Luckily my wife loves spreadsheets/calculators so she is always open to looking over things with me and we came up with the investment plan together, and she's been reading this thread and helping me with notes :). She also knows where everything is and has passwords. We both realize that at our ages we cannot be in set-it-and-forget-it land anymore so thanks for that reminder as well.

I love my job and would love to teach as long as I can. But the reality is that my dad died at 61 and my mom had the first of 3 strokes at 40, so I want to make sure that I don't HAVE to work until 70. You know what I mean? But again, I love teaching and will do so as long as it still brings me joy. 

Thanks for the great food for thought :).

-QNikki

 

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Re: TIAA Portfolio Review & Traditional Question


@Juris2 wrote:

I agree with Bob's and Yogi's suggestions to think about your family economy and finances. I would add that you should plan on setting up savings/investment plans for your kids' future college costs. Ideally, when the kids reach college age you should be able to support them from those savings, not from your current income flow.

We didn't have 529 plans when our kids were growing up. The annual costs of attendance at the colleges my kids went to in the late 1990's--2002 have doubled since then.  See https://www.sec.gov/reportspubs/investor-publications/investorpubsintro529htm.html


Thanks for the feedback @Juris2. We have two 529s set up through the Utah plan and aim to contribute $3000 on each birthday--current values around 18k and 2.5k. You're so right about the cost of college--it is insane and I work for a small private college myself :(.

It's actually in my Outlook planner as a reminder on my birthday in 4 years when I turn 50 to start investigating LTC insurance because this is the part that I'm most concerned about. To some we may live a simple life but we don't want for anything and don't strive to be rich (otherwise my wife would be out working--she has a BS and M.S. in Industrial Engineering, and I would be at a research I university chasing grants). I do want to be a good steward of what we do have however. We're both good at learning so will continue to make investing knowledge a priority :).

The plan is to continue to keep our expenses low so we can hopefully fund a comfortable retirement and perhaps have a little something left for our kids (something neither of our parents can afford to do). We're keenly aware that as older parents we'll be heading into retirement just as costs will be ramping up for the kids--not something we thought about or planned; we were just so ecstatic to have them.

So not to get too down, but we're planning to keep on keeping on and all of the responses to this post have been extremely extremely helpful to us, so thanks to you for your insights.

-QNikki

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Re: TIAA Portfolio Review & Traditional Question

Hi QN,

Since your wife has a BS and M.S. in Industrial Engineering she can easily do consulting most likely online to supplement your income. This will keep her active in her field in case your health declines (family history) and may give her some break from the usual daily household chores. As an Electrical Engineer myself I found it refreshing to do consulting in the Engineer field while teaching Computer Science. She can also substitute teach in the local school system like my wife did when our children got older.

Just a thought!

S

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