The new investment plan. Questions.

**disneysteve** · 09-06-2011, 02:17 PM

Yes, you can roll your existing Roth to Vanguard. The easiest way is to contact Vanguard and tell them you'd like to do that. They'll handle everything for you.

If you are putting $500/month into your Roth, remember that you will hit the $5,000 max before the end of the year (if you start in January). You don't want to accidentally overfund your Roth. Gets messy at tax time.

How did you decide on 300K of insurance. The general rule of thumb is 10 times income. How much do each of you earn. And what exactly is "term 80?" What does the 80 refer to?

**Spiffster** · 09-06-2011, 02:36 PM

Originally posted by disneysteve View Post

Yes, you can roll your existing Roth to Vanguard. The easiest way is to contact Vanguard and tell them you'd like to do that. They'll handle everything for you.

If you are putting $500/month into your Roth, remember that you will hit the $5,000 max before the end of the year (if you start in January). You don't want to accidentally overfund your Roth. Gets messy at tax time.

How did you decide on 300K of insurance. The general rule of thumb is 10 times income. How much do each of you earn. And what exactly is "term 80?" What does the 80 refer to?

Whoops, you are right, max we can go is about $415/month each.
Term 80 provides death benefit to 80 years of age... probably would be way too expensive by that time though, not 100% sure how that works but I know it goes up the older you get.
300K would pay off the house plus 50k (50k for funeral costs and a little extra) We have no debt outside of the mortgage. If we both die, then our siblings (her brother / my brother) are the beneficiaries. 10 times salary would be about 600k and 500k... too much for us considering we run such a tight ship debt-wise.

**Scanner** · 09-06-2011, 02:43 PM

Yes, if you have a mortgage of 250K, that tells me you lead a pretty decent lifestyle and a substantial property to support (my guess - a house worth 300-400K, no?). 50K leftover will certainly buy some time after paying off the house, but not for long.

Something tells me you should probably be somewhere in the 500-1000K range for life insurance.

Depends on kids, college, etc. . .you don't necessarily expect the wifey/DH to keep the McMansion in the event of your unfortunate demise, but they shouldn't run out while they downsize to a little bungalow either.

Otherwise, sounds like you are cooking with gas! Good job!

**Scanner** · 09-06-2011, 02:49 PM

Oops posts crossed. . .um. . .so it soudns like no kids so I do agree you can go less on the typical "10X your salary rule". Still, can your wife support the house you are in if you were to die? IF not, is 50K enough of a "money-time" unit to buy some time while she can downsize in this market?

I would say she'd probably need 150-200K instead of 50K to help with a transitory time.

I am not sure how spousal SSI factors in for widows and widowers. . .so I am not factoring that in. I would assume you can't touch her Roth/401K until retirement but you know. . .that's a great ? for an estate planning attorney.

**Spiffster** · 09-06-2011, 02:54 PM

Originally posted by Scanner View Post

Yes, if you have a mortgage of 250K, that tells me you lead a pretty decent lifestyle and a substantial property to support (my guess - a house worth 300-400K, no?). 50K leftover will certainly buy some time after paying off the house, but not for long.

Something tells me you should probably be somewhere in the 500-1000K range for life insurance.

Depends on kids, college, etc. . .you don't necessarily expect the wifey/DH to keep the McMansion in the event of your unfortunate demise, but they shouldn't run out while they downsize to a little bungalow either.

Otherwise, sounds like you are cooking with gas! Good job!

Yes'sir, the house is valued at about $385k. Mortgage balance is actually closer to $230k. My wife and I discussed what we would need in the unlikely case that we lost a spouse. Between the homes sale and extra from the insurance claim, we would have more than enough to get by.

**Scanner** · 09-06-2011, 02:59 PM

Ok, so good, you talked about it. I think 70K is still pushing it as your house is in a very depresssed market right now (I am assuming 385K is not a starter home where you are at - the only ones selling now seem to be foreclosures and starter homes).

This means it could take 2 years to sell. If 70K + wife's salary is enough to get by on, then by all means stick with that.

Hey, maybe we are nitpicking a little bit here; you just seem a little underinsured from that perspective. Otherwise, it sounds like you are on track. Still say good job!

**Spiffster** · 09-06-2011, 03:13 PM

Originally posted by Scanner View Post

Ok, so good, you talked about it. I think 70K is still pushing it as your house is in a very depresssed market right now (I am assuming 385K is not a starter home where you are at - the only ones selling now seem to be foreclosures and starter homes).

This means it could take 2 years to sell. If 70K + wife's salary is enough to get by on, then by all means stick with that.

Hey, maybe we are nitpicking a little bit here; you just seem a little underinsured from that perspective. Otherwise, it sounds like you are on track. Still say good job!

Thanks! We are trying to insure a comfortable retirement and we try to live below our means... we nitpick every little bill to save money. Eg: Recent effort was cutting cable, just have hulu, netflix, and local HD now. We got our electric bill down to only $35/month, about the same with gas etc etc... we really kinda splurged on the house, but the location is great and houses around us have been selling in the 350k range recently. We want to stay in this house for the rest of our lives.

**disneysteve** · 09-06-2011, 04:15 PM

I think you are underinsured as well. Insurance isn't just to pay off debts. It is to replace the loss of your income. Can your wife continue her current lifestyle uninterrupted if you were to die solely on her own income plus 300L? If she can, that's fantastic but I'm guessing she couldn't.

Also, I would shop around before committing to that term 80 policy. You are 31 years old. You do not need a policy that will cover you for 50 years. Your need for life insurance gradually diminishes over time. By the time you are retired, there is generally no need at all. Shop around for a 30-year level premium term policy. I'm betting it will be cheaper than what these folks are trying to sell you. Get quotes at zander.com to compare.

**Scanner** · 09-06-2011, 06:00 PM

Oh yeah, forgot to comment on that as well. . .if it's one of those diminishing payout terms vs. a "level" term, like I have (mine is 400K until the 15 year term expires), that may be okay. . .it's just that at age 75, I'd imagine you'd paying a substantial premium to perhaps have 15K coverage whereas now you are paying a substantial premium for 300K of coverage.

I kind of like "level" term lifes and just purchase more as you go along. MOst life insurance seems to come in 5, 10, 15, and 20 year increments. I have never heard of one to Age 80 but then again, I am not an insurance broker.

I guess actuaries can invent any product though.

My 15 year level term will expire in 3 years and I'll have to purchase some more. I should probably do so now as I will need life insurance til I am at least age 60 with young kids.

Honestly, sometimes this is where a financial planner/advisor can be of great assistance. . .because the ins. brokers try to upsell you products you don't really need.

WIth no kids, I am not sure why you would need life insurance protection til Age 80 either.

I'd just rearrange that a little - less of a term (probably 20 years is good enough), but more of a benefit payout.

Good luck whatever you decide.

**Spiffster** · 09-07-2011, 01:50 PM

I will review my options for term. Thanks for your help guys. I really appreciate it!

**jpg7n16** · 09-07-2011, 06:26 PM

Originally posted by Spiffster View Post

OK so I am re-assessing my retirement plans. Some helpful folks here helped me to see the light and cancel my whole life and roth with NWM. The plan for both my wife and I going forward:

Insurance with NWM:
Term 80 for each of us insured for $300K/ea (would pay off house + about $50k)
Disability for myself (wife did not qualify)
WL Cancelled!

Well done on disability coverage! Most people forget it.

What is your need for life insurance?

It's likely that life coverage is too little, for too long. Should likely be $400-600k each, to age 65. Consider either level term, or decreasing term if it's an option.

Decreasing Term Insurance Definition

Also, double check your beneficiary designation on the policy and get a will in place for other assets. Might also consider creating POAs in case either of you are incapacitated from some disability.

Investments:
Wife's 401k (8% includes 4% match from employer)
My 401k (8% includes 4% match from employer)
Roth IRA at $500/ea a month (Max allowed) via Vanguard Funds

Retirement savings is a great start, but barely on the low side. Especially if you're older.

Income (from 10x insurance in previous post): 60k + 50k = 110k
Max Roth (under age 50) = 5000 + 5000 = 10,000
4% contributed = 110,000 * .04 = 4,400
14,400/110,000 = 13.1%

Prob get the 401k up to 7-10% and keep the Roth maxed out. The goal should be 15-20% before company match, the older you are, the higher it goes.

Questions:

Can I roll my NWM Roth into a new Vanguard one?
If so , what is the process? Not asking for step by step details, just need to be pointed in the right direction.
Any other suggestions? Thanks!

These were already answered earlier.

Though some good things I wanna point out:

you have life insurance in place
you got out of WL
you have disability insurance in place
you've got a decent amount going to retirement investments
you are planning for your future
you're getting advice to fine tune things

Well done on having so much of this already in place!!

My advice is related more to the fine tuning of this plan.

Best of luck!

**Denisem1** · 09-14-2011, 01:58 AM

That’s great – I’m glad you got your insurance all sorted out. In addition to what you have, you might want to consider long term care (LTC) insurance. The chances that you might need LTC benefits are a on the higher side. Statistics show that about two-thirds of Americans over the age of 65 will need long term care services.

You can get long term care (LTC) as a rider on your life insurance policy. This type of dual policy has its advantages. It will pay out long term care benefits should you ever need them, deducting the amount from your death benefits. Your beneficiary will get the balance, if any. If you never need LTC benefits, your premiums will go towards paying death benefits in full to your beneficiary. You should compare quotes and make an informed decision. Check out free quotes on online life insurance quoting services and brokerage firms. Find how much a stand-alone LTC policy would cost as well and whether you can get wider coverage through these.

The new investment plan. Questions.