Author Topic: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement  (Read 12607 times)

finitelement

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Nice to meet you all!  I have some questions regarding where I should allocate my retirement savings, and what kind of investments I should make given my current financial situation.
I'm 24 years old, single, and work at a company with a 401k match making about 59,000 salary.  They offer both Traditional and Roth 401k, which I will have some questions about.

Current income is 59,000 salary, and I get another 17,000 cash on the side.

Here is a breakdown of my current expenses-- $1,450/month mortgage (taxes + PMI), $450/month car payment (paying extra to pay off early, owe about 9k), ~600/month misc (cable, furnace loan, nat gas bill, electric).  I do NOT have any food bills. I know it is a lot of monthly expenses, I regret buying a new car and certainly have learned from the experience. 
I have about 8k saved in the bank, with no other credit card debt, besides the $170k home loan, car loan, and heating loan.
I know I should work on an Emergency fund as well.
I am trying to maximize my potential savings and put into my planned retirement.  The 600/month misc is kind of set in stone, if I lived by myself I could be savings on those expenses.  But as far as everything else, the only thing I can potentially do is sell off my car and get something much cheaper.

Since my company is offering the 401k, I want to try and fully maximize that.  They offer the traditional 401k and the roth 401k, with funds that are recommended by some financial company that is outsourced by us.  For example, each month they give conservative, moderate, and aggressive recommended funds.  Although I have only been putting money away (10%) of my paycheck (and 6% company match) only for a few months, I have been matching the aggressive portfolio.  For example, for Jan 2015, this financial service company recommended as an aggressive portfolio...
**deleted**

These all have fairly low ER ~1% ranging up to almost 2%.  There is also a target retirement fund that I could choose myself and just allocate 100% of it to the 2050 fund with a much less expense ratio..  I'm not sure what is best.

Given my current situation, what do you recommend for:
1.  Maxing out traditional or roth 401k? Both?
2.  Allocating that money in the recommended funds by this financial service company or put in into the set it and forget it target date fund?  I'm hoping to be able to retire as early as possible.
3.  If there is any left over money, put towards a separate roth IRA or traditional IRA?
4.  Should I have a solid emergency fund before putting money away into the 401k?
5.  Assuming the only expenses I can change is my car loan, would it be in my best interest to sell for something cheaper? KBB estimates my car at ~16k and I owe 9k on it.

Thanks so much for any input, and let me know if any other information would be useful! Again, nice to meet you all.  You all know more about my finances than anyone I know now!
« Last Edit: January 11, 2015, 06:50:52 PM by finitelement »

Philociraptor

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #1 on: January 08, 2015, 07:15:44 AM »
Given my current situation, what do you recommend for:
1.  Maxing out traditional or roth 401k? Both?
2.  Allocating that money in the recommended funds by this financial service company or put in into the set it and forget it target date fund?  I'm hoping to be able to retire as early as possible.
3.  If there is any left over money, put towards a separate roth IRA or traditional IRA?
4.  Should I have a solid emergency fund before putting money away into the 401k?
5.  Assuming the only expenses I can change is my car loan, would it be in my best interest to sell for something cheaper? KBB estimates my car at ~16k and I owe 9k on it.

Thanks so much for any input, and let me know if any other information would be useful! Again, nice to meet you all.  You all know more about my finances than anyone I know now!


1. You can do one or the other. Go with traditional if you plan on retiring early.
2. Holy crap no! 1% is high already! If you want help picking funds post ER's, but if the "recommended" funds are 1%+ and the Target Retirement is substantially lower go with that.
3. Again, traditional if your goal is to retire early.
4. Up to you. 3-6 months is pretty standard around here.
5. $7k equity = a decent used car if you want to do the trade in. It would help your cash flow and decrease time to FI, but it's a personal decision.

finitelement

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #2 on: January 08, 2015, 07:22:59 AM »
Thanks for the reply!
Expense ratios are generally pretty high around .7% a couple up to 1.2%

T.Rowe Price Retirement 2050 Fund= 0.76% (I thought it was lower), and I thought the other ER were higher than they actually are.
« Last Edit: January 11, 2015, 06:51:50 PM by finitelement »

FrugalSpendthrift

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #3 on: January 08, 2015, 07:35:49 AM »
If you choose the Vanguard Target 2050 in your IRA, the ER will be 0.18%

Philociraptor

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #4 on: January 08, 2015, 07:36:07 AM »
Thanks for the reply!
Expense ratios as follows---
American Century Income & Growth Fund= 0.68%
American Funds Smallcap World Fund= 0.77%
Delaware Healthcare Fund= 1.13%
Ivy Small Cap Value fund= 1.21%
Janus Triton= 0.76%

T.Rowe Price Retirement 2050 Fund= 0.76% (I thought it was lower), and I thought the other ER were higher than they actually are.

Definitely stay away from anything over 1%. Keep in mind early retirement: are you going to retire in 2050? If not, maybe use a target retirement fund with a closer target date, it'll reduce your risk as you approach retirement.

finitelement

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #5 on: January 08, 2015, 07:42:55 AM »
If you choose the Vanguard Target 2050 in your IRA, the ER will be 0.18%

Should I put money into my 401k up to company match, then the rest into a traditional IRA with vanguard (better ER)?  What if I have left over savings?

FrugalSpendthrift

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #6 on: January 08, 2015, 08:04:37 AM »
If you choose the Vanguard Target 2050 in your IRA, the ER will be 0.18%

Should I put money into my 401k up to company match, then the rest into a traditional IRA with vanguard (better ER)?  What if I have left over savings?
Yes and Yes, as long as the traditional IRA is still deductible.  If it isn't deductible, then use a ROTH.  If you have left over savings, then increase your 401k contribution.  It may have shitty ER's, but it still offers a great tax benefit.  When you leave the company you can roll all of that into an IRA and lower the expense ratio.

finitelement

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #7 on: January 08, 2015, 08:16:01 AM »
If you choose the Vanguard Target 2050 in your IRA, the ER will be 0.18%

Should I put money into my 401k up to company match, then the rest into a traditional IRA with vanguard (better ER)?  What if I have left over savings?
Yes and Yes, as long as the traditional IRA is still deductible.  If it isn't deductible, then use a ROTH.  If you have left over savings, then increase your 401k contribution.  It may have shitty ER's, but it still offers a great tax benefit.  When you leave the company you can roll all of that into an IRA and lower the expense ratio.

How can I find out if the traditional IRA is still deductible?  Can anyone recommend where to go to open an IRA?
Thanks again

Philociraptor

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #8 on: January 08, 2015, 08:39:09 AM »
If you choose the Vanguard Target 2050 in your IRA, the ER will be 0.18%

Should I put money into my 401k up to company match, then the rest into a traditional IRA with vanguard (better ER)?  What if I have left over savings?
Yes and Yes, as long as the traditional IRA is still deductible.  If it isn't deductible, then use a ROTH.  If you have left over savings, then increase your 401k contribution.  It may have shitty ER's, but it still offers a great tax benefit.  When you leave the company you can roll all of that into an IRA and lower the expense ratio.

How can I find out if the traditional IRA is still deductible?  Can anyone recommend where to go to open an IRA?
Thanks again

2015 IRA Deduction Limits. Vanguard.

finitelement

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #9 on: January 08, 2015, 09:24:31 AM »
I will definitely qualify for the IRA deduction seeing as I make less than 61k.  And that is the MGI.  Does the amount going into my company 401k and the IRA get deducted from my income?

Philociraptor

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #10 on: January 08, 2015, 09:41:58 AM »
AGI deducts both traditional 401k contributions and traditional IRA contributions, MAGI adds IRA contributions back in but not 401k.

https://turbotax.intuit.com/tax-tools/tax-tips/IRS-Tax-Return/What-Is-the-Difference-Between-AGI-and-MAGI-on-Your-Taxes-/INF22699.html

FrugalSpendthrift

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #11 on: January 08, 2015, 10:05:16 AM »
I will definitely qualify for the IRA deduction seeing as I make less than 61k.  And that is the MGI.  Does the amount going into my company 401k and the IRA get deducted from my income?
You can probably get your taxable income down into the 15% bracket.
AGI - standard deduction - personal exemption = taxable income

I wonder if it would make sense to put enough into the deferred accounts to lower your tax bracket and then use a ROTH.

finitelement

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #12 on: January 08, 2015, 10:47:20 AM »
I will definitely qualify for the IRA deduction seeing as I make less than 61k.  And that is the MGI.  Does the amount going into my company 401k and the IRA get deducted from my income?
You can probably get your taxable income down into the 15% bracket.
AGI - standard deduction - personal exemption = taxable income

I wonder if it would make sense to put enough into the deferred accounts to lower your tax bracket and then use a ROTH.

Not sure if this is a stupid question, but how do I know for sure what tax bracket I'm in?  Is that done when I do my taxes?

FrugalSpendthrift

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #13 on: January 08, 2015, 11:00:04 AM »
Not sure if this is a stupid question, but how do I know for sure what tax bracket I'm in?  Is that done when I do my taxes?
When you fill out Form 1040, line 43 is your taxable income.  Just compare that to the tax brackets for that year.

ShoulderThingThatGoesUp

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #14 on: January 08, 2015, 11:07:38 AM »
Not sure if this is a stupid question, but how do I know for sure what tax bracket I'm in?  Is that done when I do my taxes?
When you fill out Form 1040, line 43 is your taxable income.  Just compare that to the tax brackets for that year.

Or look at the total income minus pre-tax deductions lines from your last paystub of 2014.

FrugalSpendthrift

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #15 on: January 08, 2015, 11:18:47 AM »
Not sure if this is a stupid question, but how do I know for sure what tax bracket I'm in?  Is that done when I do my taxes?
When you fill out Form 1040, line 43 is your taxable income.  Just compare that to the tax brackets for that year.

Or look at the total income minus pre-tax deductions lines from your last paystub of 2014.
Then subtract standard or itemized deduction and exemptions to get taxable income.

ShoulderThingThatGoesUp

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #16 on: January 08, 2015, 11:20:01 AM »
Not sure if this is a stupid question, but how do I know for sure what tax bracket I'm in?  Is that done when I do my taxes?
When you fill out Form 1040, line 43 is your taxable income.  Just compare that to the tax brackets for that year.

Or look at the total income minus pre-tax deductions lines from your last paystub of 2014.
Then subtract standard or itemized deduction and exemptions to get taxable income.

Right, that.

finitelement

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #17 on: January 08, 2015, 11:32:07 AM »
Ok, now for a traditional IRA and my current plan, should I be reinvesting the dividends and capital gains or transfer to market settlement fund? This is an option when setting up a vanguard traditional IRA, not sure what to do!

curler

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #18 on: January 08, 2015, 11:48:07 AM »
Reinvest.  That's what allows the "magic" of compound interest to do its thing.

finitelement

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #19 on: January 08, 2015, 12:34:02 PM »
So, $5,500 traditional IRA into vanguards target retirement 2050.  All else into my companies 401k traditional.  Should i be slowly increasing my Roth 401k contributions year after year?  It seems like I have a good grasp on what I need to do now, but what about as years go on as my salary increases and I get closer to FI

Bbqmustache

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #20 on: January 09, 2015, 04:44:12 AM »
I know you are posting about your long term retirement savings, but take care to review your home budget as well.
You are throwing extra money at the car loan.  You also have a furnace loan.  Should you be throwing extra at it first to kill that debt?

In the same category where you mention the furnace loan, you say $600 pays for the items in that arena, but those costs are set in stone.  Not if you kill the furnace loan.

Plan on needing a food budget at some time in the future.  Not sure what your situation is, but I am sure that it will change.

Examine all your outflows, and free up money to accomplish your longer term goals.  Dumping money into your 401K and IRA won't hurt as much when you become more mustachian in your outflows.

ysette9

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #21 on: January 09, 2015, 10:52:34 AM »
Don't lose track of your current finances in your quest to do the right thing for the future. Others have posted about getting rid of your current debt. I would make saving up an emergency fund a priority right now. You can stop paying extra on the car, sell the car and get something cheaper, divert some of your retirement savings into a savings account, or some other scheme. You really don't want to jeapordize your long-term success by not having a cash cushion if your car breaks, you get sick, or anything like that.

Otherwise you are really starting out well. Keep focused!

zolotiyeruki

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #22 on: January 09, 2015, 11:16:32 AM »
Here's what I'd suggest, in order:
0) contribute to the 401(k) to maximize the match.
1) sell the car, get something cheaper. Ditch the car loan.
2) pay off the furnace loan ASAP.
3) max out traditional IRA ($5500/year)

--this much will knock your AGI down from $59k to around $47,500. A $6,200 standard deduction plus $3950 in personal exemptions gets you just about to the 15% bracket, and FICA taxes will definitely put you under.

Now what?  Well, it probably depends on your state income taxes.  If you're in a state with high income taxes (CA, NY, IL, and the like), I'd recommend increasing your 401(k) contributions to reduce your tax burden.  If you're in a state with low or no income taxes, I'd actually recommend contributing to traditional investments for the next few years until you feel that you have enough to cover the first 5 years of early retirement while you build your Roth Ladder (you *do* know what that is, right?).

There are lots of other variables to consider--future events that could change your financial situation:
1) marriage - raises the thresholds for income tax brackets, more room for IRA contributions, more deductions/exemptions
2) kids - higher expenses, but much lower taxes
3) salary changes.  If you think your salary is going to increase a lot, you may want to contribute now to a Roth and later to a traditional IRA

finitelement

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #23 on: January 09, 2015, 01:33:08 PM »
Here's what I'd suggest, in order:
0) contribute to the 401(k) to maximize the match.
1) sell the car, get something cheaper. Ditch the car loan.
2) pay off the furnace loan ASAP.
3) max out traditional IRA ($5500/year)

--this much will knock your AGI down from $59k to around $47,500. A $6,200 standard deduction plus $3950 in personal exemptions gets you just about to the 15% bracket, and FICA taxes will definitely put you under.

Now what?  Well, it probably depends on your state income taxes.  If you're in a state with high income taxes (CA, NY, IL, and the like), I'd recommend increasing your 401(k) contributions to reduce your tax burden.  If you're in a state with low or no income taxes, I'd actually recommend contributing to traditional investments for the next few years until you feel that you have enough to cover the first 5 years of early retirement while you build your Roth Ladder (you *do* know what that is, right?).

There are lots of other variables to consider--future events that could change your financial situation:
1) marriage - raises the thresholds for income tax brackets, more room for IRA contributions, more deductions/exemptions
2) kids - higher expenses, but much lower taxes
3) salary changes.  If you think your salary is going to increase a lot, you may want to contribute now to a Roth and later to a traditional IRA

I live in CT, how does that relate to other states in regards to income tax?
As far as that order goes, you think the money is best used to pay off my furnace loan? I would think the return on getting the head start with the money in my 401k or IRA would be better. 

ShoulderThingThatGoesUp

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« Last Edit: January 29, 2015, 02:30:00 PM by ShoulderThingThatGoesUp »

boarder42

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #25 on: January 09, 2015, 01:49:27 PM »
i dont think you should move up that target date fund that will just increase your exposure to bonds.  i wouldnt put anything in a target date fund. 

bonds are the enemy at 24

ysette9

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #26 on: January 09, 2015, 01:50:29 PM »
I really think you need to focus on getting rid of your debt, build up an emergency fund, and then worry about investing. Get your short-term problems fixed and then buckle down on the long-term stuff. There is no reason to be carrying around a loan for a furnace; that is just silly.

extremelyFRUGAL

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #27 on: January 09, 2015, 02:00:11 PM »
Can you explain how you got:

A $6,200 standard deduction plus $3950 in personal exemptions

zolotiyeruki

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #28 on: January 10, 2015, 07:14:21 AM »
Here's all state income taxes.
That link is broken.  :(   Connecticut's state income tax is based on AGI, with a rate of 3% for the first $10k, plus 5% over that (for you.  There are higher brackets that you don't fall in), with a $14k personal exemption for yourself.  So your taxable CT income would be $59k - ($6k 401(k) + $5500 IRA + $14k exemption) ~= $34k, and your tax bill for CT would be about $1500, for an effective rate of about 2.5%.  That puts it in the top 3 states.

(by comparison, Illinois' personal and dependent exemptions are a fraction of what the federal government gives, and few deductions are allowed, and it's a flat 5%)

A $6,200 standard deduction plus $3950 in personal exemptions
For the 2014 tax year, the federal standard deduction for single filers is $6200, and the personal exemption amount is $3950 per person.

finitelement

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #29 on: January 29, 2015, 06:52:30 AM »
I was able to get my effective tax rate down to 8.2%.  I made 56.5k (raise came later on in the year), only approx $1500 in 401k, and was able to deduct $5500 IRA, along with other things like my furnace.  Effectively bringing my taxable income down to approximately 34k.  My AGI was about 51k. Did I mess something up?

Here's all state income taxes.
That link is broken.  :(   Connecticut's state income tax is based on AGI, with a rate of 3% for the first $10k, plus 5% over that (for you.  There are higher brackets that you don't fall in), with a $14k personal exemption for yourself.  So your taxable CT income would be $59k - ($6k 401(k) + $5500 IRA + $14k exemption) ~= $34k, and your tax bill for CT would be about $1500, for an effective rate of about 2.5%.  That puts it in the top 3 states.

(by comparison, Illinois' personal and dependent exemptions are a fraction of what the federal government gives, and few deductions are allowed, and it's a flat 5%)

A $6,200 standard deduction plus $3950 in personal exemptions
For the 2014 tax year, the federal standard deduction for single filers is $6200, and the personal exemption amount is $3950 per person.

What is the $14k personal exemption??
« Last Edit: January 29, 2015, 06:54:40 AM by finitelement »

zolotiyeruki

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #30 on: January 29, 2015, 10:14:48 AM »
I was able to get my effective tax rate down to 8.2%.  I made 56.5k (raise came later on in the year), only approx $1500 in 401k, and was able to deduct $5500 IRA, along with other things like my furnace.  Effectively bringing my taxable income down to approximately 34k.  My AGI was about 51k. Did I mess something up?

Here's all state income taxes.
That link is broken.  :(   Connecticut's state income tax is based on AGI, with a rate of 3% for the first $10k, plus 5% over that (for you.  There are higher brackets that you don't fall in), with a $14k personal exemption for yourself.  So your taxable CT income would be $59k - ($6k 401(k) + $5500 IRA + $14k exemption) ~= $34k, and your tax bill for CT would be about $1500, for an effective rate of about 2.5%.  That puts it in the top 3 states.

(by comparison, Illinois' personal and dependent exemptions are a fraction of what the federal government gives, and few deductions are allowed, and it's a flat 5%)

A $6,200 standard deduction plus $3950 in personal exemptions
For the 2014 tax year, the federal standard deduction for single filers is $6200, and the personal exemption amount is $3950 per person.

What is the $14k personal exemption??
For the purposes of your CT income taxes, it looks like you get a $14k exemption.

boarder42

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #31 on: January 29, 2015, 11:13:00 AM »
Thanks for the reply!
Expense ratios as follows---
American Century Income & Growth Fund= 0.68%
American Funds Smallcap World Fund= 0.77%
Delaware Healthcare Fund= 1.13%
Ivy Small Cap Value fund= 1.21%
Janus Triton= 0.76%

T.Rowe Price Retirement 2050 Fund= 0.76% (I thought it was lower), and I thought the other ER were higher than they actually are.

Definitely stay away from anything over 1%. Keep in mind early retirement: are you going to retire in 2050? If not, maybe use a target retirement fund with a closer target date, it'll reduce your risk as you approach retirement.

i would not pick a closer target date if i were you... unless  you want to end up overly bond heavy way to early. 

finitelement

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #32 on: January 29, 2015, 11:51:28 AM »
I'm doing the target date for my IRA until I meet the minimum for Index requirements with Vanguard.  I will keep investing in target date for my 401k.  Any ideas on what index funds I should choose in vanguard for my trad IRA?

Philociraptor

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #33 on: January 29, 2015, 12:32:19 PM »
I'm doing the target date for my IRA until I meet the minimum for Index requirements with Vanguard.  I will keep investing in target date for my 401k.  Any ideas on what index funds I should choose in vanguard for my trad IRA?

What's your target asset allocation?

finitelement

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #34 on: January 29, 2015, 12:56:55 PM »
I'm doing the target date for my IRA until I meet the minimum for Index requirements with Vanguard.  I will keep investing in target date for my 401k.  Any ideas on what index funds I should choose in vanguard for my trad IRA?

What's your target asset allocation?

All stock, maybe

70% total stock index  VTSAX
30% international  VTIAX

boarder42

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #35 on: January 29, 2015, 01:19:45 PM »
I'm doing the target date for my IRA until I meet the minimum for Index requirements with Vanguard.  I will keep investing in target date for my 401k.  Any ideas on what index funds I should choose in vanguard for my trad IRA?

What's your target asset allocation?

All stock, maybe

70% total stock index  VTSAX
30% international  VTIAX

thats a good mix for someone your age i like it... there are too many risk averse people who will tell you... you need more bonds... but you're building wealth... if the market crashes you dont 100% have to retire at your target age.  you can work one or 2 more years.  IMO this is a much better way to build wealth than to have any bond exposure.

Philociraptor

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #36 on: January 29, 2015, 01:22:26 PM »
I'm doing the target date for my IRA until I meet the minimum for Index requirements with Vanguard.  I will keep investing in target date for my 401k.  Any ideas on what index funds I should choose in vanguard for my trad IRA?

What's your target asset allocation?

All stock, maybe

70% total stock index  VTSAX
30% international  VTIAX

thats a good mix for someone your age i like it... there are too many risk averse people who will tell you... you need more bonds... but you're building wealth... if the market crashes you dont 100% have to retire at your target age.  you can work one or 2 more years.  IMO this is a much better way to build wealth than to have any bond exposure.
Just to be difficult, I follow the never less than 20% and never more than 80% rule on bonds. I use the Vanguard LifeStrategy Growth Fund (VASGX), which is 80/20 stocks/bonds, 70/30 US/international. 1 fund, minimal management.

If you want to be 100/0 stocks/bonds, 70/30 US/international, there's nothing wrong with the total stock market and total international stock market funds. Use them.
« Last Edit: January 29, 2015, 01:28:17 PM by Philociraptor »

finitelement

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #37 on: January 29, 2015, 01:29:59 PM »
I'm doing the target date for my IRA until I meet the minimum for Index requirements with Vanguard.  I will keep investing in target date for my 401k.  Any ideas on what index funds I should choose in vanguard for my trad IRA?

What's your target asset allocation?

All stock, maybe

70% total stock index  VTSAX
30% international  VTIAX

thats a good mix for someone your age i like it... there are too many risk averse people who will tell you... you need more bonds... but you're building wealth... if the market crashes you dont 100% have to retire at your target age.  you can work one or 2 more years.  IMO this is a much better way to build wealth than to have any bond exposure.
Just to be difficult, I follow the never less than 20% and never more than 80% rule on bonds. I use the Vanguard LifeStrategy Growth Fund (VASGX), which is 80/20 stocks/bonds, 70/30 US/international. 1 fund, minimal management.

Is there a lot of management that goes into the admiral stock index funds? 
I have some bond exposure through my target retirement with my 401k.  (0.76 ER though)

Philociraptor

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Re: 24 years old- 401k / Roth IRA questions- Dreaming Early Retirement
« Reply #38 on: January 29, 2015, 01:31:45 PM »
I'm doing the target date for my IRA until I meet the minimum for Index requirements with Vanguard.  I will keep investing in target date for my 401k.  Any ideas on what index funds I should choose in vanguard for my trad IRA?

What's your target asset allocation?

All stock, maybe

70% total stock index  VTSAX
30% international  VTIAX

thats a good mix for someone your age i like it... there are too many risk averse people who will tell you... you need more bonds... but you're building wealth... if the market crashes you dont 100% have to retire at your target age.  you can work one or 2 more years.  IMO this is a much better way to build wealth than to have any bond exposure.
Just to be difficult, I follow the never less than 20% and never more than 80% rule on bonds. I use the Vanguard LifeStrategy Growth Fund (VASGX), which is 80/20 stocks/bonds, 70/30 US/international. 1 fund, minimal management.

Is there a lot of management that goes into the admiral stock index funds? 
I have some bond exposure through my target retirement with my 401k.  (0.76 ER though)
Management like what? You buy funds, you rebalance on schedule or when your allocation hits certain thresholds.