Seeking general advice about saving and investing

[Rihannon]

Thank you to anyone who has advice to offer. I am looking for advice from people experienced with saving, investing, and thinking about this kind of thing. United States here. I've looked into this a little but it's so complicated and maybe there are things I'm not thinking of.

 

I have a meeting with a financial adviser for my employer's retirement company, TIAA, in a few days.

 

My employer matches 403b contributions. If my contributions are 5% of my income, they'll match 10%. I've been contributing 10% lately but for years I wasn't saving nearly that much. Now I wonder if I should reduce my 403b contribution to 5% and instead contribute 5% toward a Roth IRA.

 

What do you think? Should I just keep putting everything into a diversified savings portfolio, increasing my contribution, (I also don't know how to invest. The TIAA company has tools to help me figure out what investment mix is aggressive and high risk vs. low risk, etc.) or spread some money around into other types of savings, like the Roth IRA?

 

The total balance in my active retirement portfolio is about 37K. I have an older retirement account, a state retirement account, from a previous job, it's not being contributed to anymore but still gaining interest each year and the balance last year when I checked was just over 33K. My husband and I have 24K in CDs and just over 86K in a savings account.

 

My husband is getting his PhD within the next year and there might be several months before he gets a job after that. We want to buy a house one day. We don't have any debt. He has a chronic illness. I am 38 years old. We probably won't have kids.

 

Should I open a health savings account? Don’t you have to use that money each year or risk being taxed on it?

 

Do you have any advice?

[arjumand]

Yes, go see a financial advisor -- they do this for a living, they are experts in the field and they can help you make intelligent investment decision. Don't ask a bunch of strangers on a board.

[Batya33]

Over 15 years ago I attended a silent auction and I bid on a consultation with a financial advisor (who came highly recommended by people I knew). Best decision I ever made was to go to him and sign up with him. He was my adviser for the next several years until he left the industry and he then sent me to his advisor. So I've had one for over 15 years. I would go to someone highly recommended and for me I prefer fee-based rather than commissions per trade. Others might differ. Certainly you might not want to interact beyond the consultation (i.e. take the advice then go to one of those self-service mutual fund companies, etc. ). I also like consumer advocate Clark Howard -check out his web site -he has a lot of resources available for what you're looking for (and his site is free, etc).

[melancholy123]

Please get advice from a certified financial planner not random people on a forum. I've not heard anyone here ever say they have major experience in a financial planning capacity.

 

I have a financial planner who has many degrees in the field, works for a major financial planning company and knows what she's doing. You will get the best advice from a qualified person. They are worth their weight in gold.

[DanZee]

For your 403b retirement fund you should contribute whatever gives you the highest match from your company. So if that's 5% gets you 10%, do that. What were they matching at the 10% level? Just 10%? TIAA has a mind boggling number of investment funds so it's difficult to give you any recommendations. I personally think the Lifecycle funds are too conservative. They were designed for advisors who don't know anything to sell. If you're young, you should stay away from real estate and bonds. Stocks usually average 10% gains over time, especially if you're not retiring any time soon.

 

TIAA takes large annual fees out of your retirement money, so you have the right idea about putting your other money into a Roth. A Roth IRA has a limit of $5500 yearly, so keep that in mind. Again, if you're not retiring for 20 years or more, invest in stocks.

 

You also have way too much money in cash. Unless you're buying a house this year, you should at least get the money into higher interest CDs or money market accounts with like Fidelity or Schwab. Ideally, half should be in ETFs that copies the S&P 500 or NASDAQ. That way, you can follow the market's ups and downs every day without having to go crazy looking things up online.

 

Of course, everyone has different opinions. You can look up Dave Ramsey's podcasts, YouTube videos or on a local radio station for some conservative ideas about investing. And do what seems right for you.

[lostandhurt]

Since you are getting a really good match on the 403b make sure you contribute at least the 5% they will match with 10% The 403b is taken pre-tax which is great and depending how it is dispersed later you can save some money long term. The problem is nobody knows what the tax rate will be when you retire and how many write offs you will have. Typically older people have less write offs since the kids are long gone and the house is paid for or close to being paid for.

 

This is where a Roth comes in. Since you pay the taxes upfront on a Roth most if not all withdrawals from it in retirement are tax free. This gives you flexibility later on depending on your situation.

 

Lets say you have a lot of medical bills and get to write them off that year and if you took disbursements from the 403b you can offset some of the taxes. But if you have no write offs and the tax rate that year for you will be projected to be high then you can take more money from the Roth.

 

The medical savings account is a good idea but you have to go into it with your eyes wide open.

 

Be sure to consider how all of this will affect any social security payments you will receive.

 

From what you have written you and your husband are way ahead of many people so good for you.

 

I agree talking to the financial counselor is a great idea but you need to go into that meeting with knowledge and good questions so make a list of things you want to cover and take it with you so you do not forget. You may want to send it to the counselor in advance so they can prepare and have some options for you. Just going in naïve is dangerous because not all counselors are created equal and many work on a commission. Be your own advocate and like Danzee mentioned watch out for the fees you are being charged. I am lucky that where I work we have so much invested I pay zero fees on everything but they can take a big bite out of your assets if you are not careful.

 

Lost