Ask Terry Questions My 403b choices have high fees; should I do more Roth

My 403b choices have high fees; should I do more Roth

By Terry Savage on March 07, 2020 | Financial Planning / Retirement

Hi, am single, 66 yrs old, will work pt time ($25k yr) til 70, I contribute to job’s 403b. I have just over $400k in IRAs already from career teaching jobs. I collect CPS pension and just started (at FRA) reduced SS ($165 mo after Medicare comes out.) Only debt is house & car. I pull net extra $1600 mo from pt time job. Should I max out 403b (high fees .50%) or max out Roth ($7k yr, vanguard target 2025), or half and half. or pay off car ($20k) or house (4% int, bal 175k). Thank you!

Terry Says

Wow, you’re doing a great job, and I can make only incremental suggestions. Here they are:
1. Roth IRA — I don’t think 50 basis points is too high for your 403(b), but I do think it would be a good idea to diversify your taxable vs after-tax investments. So add to your Roth at Vanguard. And invest very, very conservatively. Start by making the contribution in a money market mutual fund, then when the world is officially totally scared, move half into the S&P 500 index fund.

2. If you have enough income, you could now refinance your house –probably down to just above 3%. It’s worth a try. Go to GuaranteedRate.com to see how much you could save monthly. Then it’s your decision — just stretch it out for 30 more years to make the lowest payment? Might be attractive, tho if you were younger I’d suggest a 15 year complete payoff.

3. Ditto ifyou have money left over: Pay off the car loan. Or buy a new, less expensive car for cash and plan to drive it for 10 years. Choose carefully.

Overall it’s a delight to answer a question from someone who has obviously been doing the right things for a long time!

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