457 Plan for Parents

[tophdna]

My mother is retired from a state government job and she immediately went back to work for them. She is currently 55 years old.She is currently drawing her pension and also getting paid for the current work she is doing. She is interested in investing. After speaking with me I think she wants to invest in a traditional IRA (since she will make less money after "retiring", meaning she will stop working entirely).

We decided to go with the state 457 plan. She is relying on my help with choosing what to invest it in. From my very limited knowledge of reading on this forum and reading the J L Collins Stock series, I want her to invest in 50-60% into a stock index fund and the remaining in a bond (since she is near retirement age).

Here is a list of the options available: https://texasaver.gwrs.com/preLoginContentLink.do?accu=TexasWR&specificBundle=preLogin&contentUrl=preLogin.investments.coreFunds

I see some Vanguard funds in there that peaked interest. I currently invest in VTSAX. But i'm looking for a total stock market index fund or S&P fund. And then a bond fund.

My question to you guys is do you see anything that they offer that you think would be best for her situation? I'm willing to any criticism to anything I've already mentioned. On that list I was looking at these two, possibly:

Vanguard Institutional Index Fund, Institutional Plus Shares, or
Vanguard Growth Index Fund Institutional Shares

and then for the bond maybe:

BlackRock Bond Index Fund6

I'm looking to get her into 50-60 stocks, 50-40 bonds with the lowest fee's possible. Thoughts?

[maizefolk]

There are some contradictory things in your post.

VTSAX (/VTI) is a total stock market index fund.

IRAs and 457 plans are different and not mutually exclusive savings options.

That said VIIIX, which is listed at the linked page would be a perfectly suitable choice for a broad stock market index. I don't have much to do with bonds so cannot advise there, but I could suggest that since she has a government pension, you can think of that as representing a big part of her "safe" money, which would let her invest her 457 more heavily in stocks than would normally make sense for someone 55 years old hoping to retire at a conventional retirement age.

[tophdna]

Correct. I didn't mean to compare what I have. I was just saying it was my experience. I like Vanguard and prefer to stick with it. My apologies on that.

Thank you for your recommendation. And I didn't think of that. That is true her pension is the "safe" part. Thank you for your recommendation!

[Another Reader]

If she is retired and is working as a contract retiree, she may not be eligible for the 457 plan.  She should check with HR to verify her eligibility.  It certainly would be sensible to invest in an the IRA that best suits her current and future tax brackets.