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Decisions and A Bold Move

September 23rd, 2009 at 07:18 pm

1. Estate Documents: Decided to go for a DIY simple will instead of a trust. I think a trust would be better, but I don't have the confidence to do one on my own. After reading as many reviews as I could find, decided to use NOLO. Ordered their Simple Will book plus CD, and their book on Special Needs Trusts plus CD (because of my brother's situation). I decided against the on-line version since I'll need to do 2 wills (one for each of us), and I know I'll be redoing them in the future, so might as well have the disc I can use over & over again without having to pay over and over. DH has already conveniently forgotten his promise to let me hire an attorney when we turn 50. Sigh. Also, I want to read up (especially on the Special Needs Trust) before I get started.

2. Roth Conversion: We have looked at the idea of converting our IRAs to Roths upside down and sideways and have decided that it's not the right decision for us. We will NOT be converting. Since running the numbers involves making lots of assumptions, I could be wrong, but based on what I know for sure right now and our best guess of what the future will hold, it doesn't make sense for us. Everything we are reading is saying "convert, convert, convert" so I guess we are going against the grain yet again by not converting.

3. Readjusted Tax-Def Retirement Plans: I have mentioned before that we got a bit aggressive with DH's 2008 tax year contribution to his tax-deferred retirement plan, due to the "clearance price" on stocks, putting 100% of it in the Vanguard S&P 500 Index Fund. Last night we moved almost everything in both of our tax-def plans to the Vanguard Wellesley Income Fund. It has a target allocation of 35% stocks (tho currently it's 39%) and 65% bonds. The only portion of our plans that did not go in to Wellesley is a piece that we have to keep separate for tax/recordkeeping reasons that is still in the STAR Fund. DH actually wanted to go to 100% bonds, but I completely disagreed, so we went with Wellesley. This represents a pretty significant shift for us (according to Morningstar X-Ray, we were at 51% stocks before the shift), and I think it marks the beginning of our pre-retirement retreat from stocks. Right or wrong decision? Who knows? Time will tell. But a lot of thought went in to it, and again, as unconventional as it may be, it seems like the right move for us.

4 Responses to “Decisions and A Bold Move”

  1. baselle Says:

    Re: converting to the Roth. Also heard that you want to diversify your money between taxable, tax-deferred, and tax-free. You just never know how congress will vote 20-30 years hence.

  2. LuxLiving Says:

    Going forward towards retirement is quite the guessing game, isn't it? Shhhhheweeeeee!

    For us it is truly such as in our May/Dec romance there is 13 years difference in our ages - and he NEEDS to make it STABILIZE thru his lifetime and I NEED to make it GROW enough to make it last thru mine! Makes for some interesting discussions.

    Let us hear on the Special Needs Trust as we are in the same boat with FrugalSon. We have legal/lawyer visit/trustee appointee business that needs getting re-done now that FrugalSon is older, driving, working, living not quite independently. He'll never earn in his lifetime (unless married to a big earner) enough to support himself unless we do things right!

    Good for you guys getting things taken care of!

  3. Broken Arrow Says:

    An investment move based on personal financial needs rather than market performance is always the right move. Smile

  4. monkeymama Says:

    The ROTH thing is very individualized (every one is different) and if your situation is filled with unknowns, I Am sure you made the best choice you could. (I was going to say you made the "right" choice, but I guess the "right" choice is impossible to guess. "Best choice" is more like it).

    I have seen plenty of anti-ROTH articles. Admittedly, I think a lot of those articles miss a lot of the points of why ROTHs are so amazing. (I've read that tax advisors must have personal gain to promote them. LOL. PErsonal gain - telling our clients to have tax-free retirement distributions? How does it help us, reducing the need to file tax returns in the future?) BUT, if I had a middle-aged client in the 25% tax bracket telling me they didn't want to contribute to ROTHs, or convert to ROTHs, I Wouldn't blame them! HEck, not sure I would. In that situation, it's like 50/50. Too many unknowns. There is something to be said for taking tax breaks today instead of tomorrow!

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