The Intersection of FIRE and Disney

[Sjm9911]

Ok , ill bite, for me a recession is a buying opertunity. As long as you have some disposable cash and can wait a bit for a return. As you said, not everthing is cut in stone qith savings. And sometimes the chance taken can be a big break. I will also agree that everyone is diffent, and if your saving, fire or not, thats a great start for retirement. I re read the thread and have been postulating my next moves as i get a bit older. While i can retire now, i think i will wait untill im 55 or a bit sooner. So thats like 7 years. Still young enough and will save a bit more. I am going to go after the morgage a bit, not so much becasue i can swing it later but in case i die early. I want my daughter to have a mostly paid off house. Im also going to move some money around to riskier stuff to curb inflation down the line. I have time to wait and the pension i have can alow me to do that. While i may not be part of the fire saving, and all about retireing early, i did get some good tips and reasurance that im on a good path.

 

[Hoosier John]

Also - @Hoosier John reminding us of this comment... Seriously, @GlamMistress - this is like the most epic comment of the entire thread!!

Yes, that was an OUTSTANDING prediction. Reading it in the fall of this year, and knowing about the huge March stock market drop, I couldn't believe her prediction and timing from years prior!

 

[GlamMistress]

Yes, that was an OUTSTANDING prediction. Reading it in the fall of this year, and knowing about the huge March stock market drop, I couldn't believe her prediction and timing from years prior!

It's been a wild year for so many reasons. I quit my job for a much needed break right as the recession started - DH and I are thankful for our FIRE habits giving us that choice. So I took six months off from working and when I was ready to go back, I landed a position with work/life balance and a bigger paycheck. Even with me not working half the year and the wild stock market dives in the early COVID days, DH and I are poised to have a banner year on our returns. Keep investing, stay the course. Slow and steady I suppose.

 

[disfanforlife]

It's been a wild year for so many reasons. I quit my job for a much needed break right as the recession started - DH and I are thankful for our FIRE habits giving us that choice. So I took six months off from working and when I was ready to go back, I landed a position with work/life balance and a bigger paycheck. Even with me not working half the year and the wild stock market dives in the early COVID days, DH and I are poised to have a banner year on our returns. Keep investing, stay the course. Slow and steady I suppose.

That is fantastic, I am so happy for you!

 

[alryan]

A few random thoughts this morning. Checked our retirement accounts and hit another 100k threshold. Looks like we crossed the previous one for the first time in April 2019 and then again in May 2020. Either way, pretty good. I know the stock market is crazy good but it still unbelievable sometimes just how much it can grow when the balance starts to get larger.

For a variety of reasons, promotion for DH, which had enabled us to save my paychecks since summer, a small inheritance, cash back from credit card rewards, travel completely subsidized by credit card rewards, and continued decreased spending due to reduced activities, I find that we have $40k over our emergency fund in checking/savings accounts. My husband and I talked about things we could do with that money as it doesn't need to be sitting in a savings account making next to nothing. We do have 2 older vehicles that I plan to drive until I can't anymore, but as they are a 2002 and 2005, a new vehicle is in our future, although I hope they can both last another 5 years. So some money does need to be available for that. Options that we discussed are paying down on our house. Current balance is $71k at 3.25%. So even if we did the entire $40k it wouldn't be enough to knock it out. We currently have 9 years left so it will be paid off at least a year before DH will retire. Except for this money all of our money is in retirement accounts, so we could use some to start an investment account and potentially use that for a new vehicle down the road. Or option 3, spend some of it doing things around the house that need updating.

For now we have decided on a combination and that we will start with spending some money on the house. We are currently in the process of a bathroom remodel and new floors, but since all the materials were purchased with my credit card rewards, we still won't be spending that much. But we could use new furniture, lighting fixtures, and a mattress. So maybe with labor we'll spend $10-$15k. For those of you on the credit card thread, this will help with my $30k MSR for the 2 Biz Plats I just got. So then when that is all done and paid for maybe start an investment account? I know there are different schools of thought on whether or not to pay down on a house, especially with a low interest rate, and I would really love to have it paid off early, but then I see the gains our retirement accounts are making and would love to get some nonretirement money into that.

Lastly, DH and I decided to go with a high deductible health plan and HSA for next year, as his company upped the matching yearly contribution to $3000, making it pretty much risk free. We also maxed our flex to spend on braces that for sure one of my sons will need next year. So by my calculations his paycheck will go down about $100. We'll see how close I am. With the extra money that we have I'm wondering what you all think of just paying our medical bills as they come oop and not even touching the HSA if we don't have to? This also gives me the benefit of being able to put the expenses on a credit card Any and all thoughts are appreciated.

 

[TarraLee]

alryan, We pay OOP for medical expenses, and plan to always do so unless there's a larger event, where we'd choose between using short term savings or HSA. We think our biggest expense in retirement will be health care, so trying to leave as much of our HSA to grow until then as possible. Counting HSA as retirement and asking for cash discounts and using flex spending, CC points, etc. for current medical care.

Having the same dilemma about paying down mortgage, holding for possible opportunities to purchase rental property in a downturn, or adding to brokerage account. It's a good problem to have, and I'm grateful, but still pondering which to do. Good luck to you!

 

[Budzooka]

alryan, We pay OOP for medical expenses, and plan to always do so unless there's a larger event, where we'd choose between using short term savings or HSA. We think our biggest expense in retirement will be health care, so trying to leave as much of our HSA to grow until then as possible. Counting HSA as retirement and asking for cash discounts and using flex spending, CC points, etc. for current medical care.

Having the same dilemma about paying down mortgage, holding for possible opportunities to purchase rental property in a downturn, or adding to brokerage account. It's a good problem to have, and I'm grateful, but still pondering which to do. Good luck to you!

Same. We fund our HSA each year, but pay medical bills OOP. We are maxing out retirement contribution vehicles and anything over our emergency savings goes into a brokerage account. We view it as a retirement account that is not regularly accessible, but have discussed with our financial advisor we might need to for college starting next year after the 529s are exhausted.

We did a thorough analysis about what to do with a fairly decent payment we received at the end of last year and decided to put it all in the taxable account. Mortgage rates are so low we should outearn and it wasn’t enough to pay the entire amount, so would still have that payment. We bought a new car last Nov and thought about paying cash, but got 1.9% financing on it, so same thought process.

Can certainly understand the comfort in paying down debt, but we decided a certain level of debt is acceptable for the right price and just need to manage it. No wrong answer here and good position to be in.

 

[mgarbowski]

Lastly, DH and I decided to go with a high deductible health plan and HSA for next year, as his company upped the matching yearly contribution to $3000, making it pretty much risk free. We also maxed our flex to spend on braces that for sure one of my sons will need next year. So by my calculations his paycheck will go down about $100. We'll see how close I am. With the extra money that we have I'm wondering what you all think of just paying our medical bills as they come oop and not even touching the HSA if we don't have to? This also gives me the benefit of being able to put the expenses on a credit card Any and all thoughts are appreciated

We have had HSA/HDHP since 2013 and have paid for all medical expenses OOP since then so the money in the plan can grow. If you can afford it, it is a nice way to add to your tax-free/tax-deferred retirement savings. I recommend that you start keeping all your medical receipts and track them regularly, because you can withdraw funds from the HSA with tax benefits [disclaimer I'm not providing tax advice but this is my understanding] up to the total amount of your qualified medical expenses from the time you begin the HSA/HDHP plan until your HSA is empty. You are not limited to expenses incurred in the year you make the withdrawal. But you need the receipts in case you are audited or otherwise challenged and keeping a running total will make it easier than waiting 10 years or more to start adding everything up. And you need to make sure to know what is a qualified expense.

I input mine annually. Usually there are not so many individual receipts that doing one year at a time is a great burden. Also pro tip: most pharmacies will give you a record of your qualifying prescription costs for the entire year (or quarter, or even a few years back if their system allows it, etc). You just have to ask. Then you don't even have to input every individual refill into your recordkeeping spreadsheet.

A few random thoughts this morning. Checked our retirement accounts and hit another 100k threshold. Looks like we crossed the previous one for the first time in April 2019 and then again in May 2020. Either way, pretty good. I know the stock market is crazy good but it still unbelievable sometimes just how much it can grow when the balance starts to get larger.

The recent market moves have made me realize that -- at this point (I'm 58 and have been saving for a while) -- the market has more of an effect on our progress and net worth than almost any other individual decision or event, such as getting a bonus or not, and for how much, whether to splurge on a purchase or vacation, or put extra cash towards college, or retirement, or anything, really. Of course, it can go down big as easily as it has come up, so that does not mean those decisions don't matter and we can just start spending like crazy. But short term, the relative effect really is small: if there is a big downswing then saving a bit more won't make it up, and if it markets go up like they have this fall the extra spending won't hardly be felt. It's a lifetime of those decisions that make the difference.

 

[ski_mom]

A few random thoughts this morning. Checked our retirement accounts and hit another 100k threshold. Looks like we crossed the previous one for the first time in April 2019 and then again in May 2020. Either way, pretty good. I know the stock market is crazy good but it still unbelievable sometimes just how much it can grow when the balance starts to get larger.

For a variety of reasons, promotion for DH, which had enabled us to save my paychecks since summer, a small inheritance, cash back from credit card rewards, travel completely subsidized by credit card rewards, and continued decreased spending due to reduced activities, I find that we have $40k over our emergency fund in checking/savings accounts. My husband and I talked about things we could do with that money as it doesn't need to be sitting in a savings account making next to nothing. We do have 2 older vehicles that I plan to drive until I can't anymore, but as they are a 2002 and 2005, a new vehicle is in our future, although I hope they can both last another 5 years. So some money does need to be available for that. Options that we discussed are paying down on our house. Current balance is $71k at 3.25%. So even if we did the entire $40k it wouldn't be enough to knock it out. We currently have 9 years left so it will be paid off at least a year before DH will retire. Except for this money all of our money is in retirement accounts, so we could use some to start an investment account and potentially use that for a new vehicle down the road. Or option 3, spend some of it doing things around the house that need updating.

For now we have decided on a combination and that we will start with spending some money on the house. We are currently in the process of a bathroom remodel and new floors, but since all the materials were purchased with my credit card rewards, we still won't be spending that much. But we could use new furniture, lighting fixtures, and a mattress. So maybe with labor we'll spend $10-$15k. For those of you on the credit card thread, this will help with my $30k MSR for the 2 Biz Plats I just got. So then when that is all done and paid for maybe start an investment account? I know there are different schools of thought on whether or not to pay down on a house, especially with a low interest rate, and I would really love to have it paid off early, but then I see the gains our retirement accounts are making and would love to get some nonretirement money into that.

Lastly, DH and I decided to go with a high deductible health plan and HSA for next year, as his company upped the matching yearly contribution to $3000, making it pretty much risk free. We also maxed our flex to spend on braces that for sure one of my sons will need next year. So by my calculations his paycheck will go down about $100. We'll see how close I am. With the extra money that we have I'm wondering what you all think of just paying our medical bills as they come oop and not even touching the HSA if we don't have to? This also gives me the benefit of being able to put the expenses on a credit card Any and all thoughts are appreciated.

I'm curious what others will say as well, but we've done just that with our HSA account. This is our 3rd year with the account and we just max it out each year and pay for medical expenses out of pocket. We are looking at retiring in 5-7 years, so our time frame is a bit shorter than yours, but I figure the bigger the medical account is when we retire, the better off we'll be. That's my biggest worry about retirement is the unknown of medical costs.

Edited to add that our HSA offers the option to pay your self back for expenses, so if we ever did choose to use the money, we could pay the bill with our CC and then reimburse ourselves for the costs, so that might be an option if it comes to it.

 

[Starport Seven-Five]

A few random thoughts this morning. Checked our retirement accounts and hit another 100k threshold. Looks like we crossed the previous one for the first time in April 2019 and then again in May 2020. Either way, pretty good. I know the stock market is crazy good but it still unbelievable sometimes just how much it can grow when the balance starts to get larger.

For a variety of reasons, promotion for DH, which had enabled us to save my paychecks since summer, a small inheritance, cash back from credit card rewards, travel completely subsidized by credit card rewards, and continued decreased spending due to reduced activities, I find that we have $40k over our emergency fund in checking/savings accounts. My husband and I talked about things we could do with that money as it doesn't need to be sitting in a savings account making next to nothing. We do have 2 older vehicles that I plan to drive until I can't anymore, but as they are a 2002 and 2005, a new vehicle is in our future, although I hope they can both last another 5 years. So some money does need to be available for that. Options that we discussed are paying down on our house. Current balance is $71k at 3.25%. So even if we did the entire $40k it wouldn't be enough to knock it out. We currently have 9 years left so it will be paid off at least a year before DH will retire. Except for this money all of our money is in retirement accounts, so we could use some to start an investment account and potentially use that for a new vehicle down the road. Or option 3, spend some of it doing things around the house that need updating.

For now we have decided on a combination and that we will start with spending some money on the house. We are currently in the process of a bathroom remodel and new floors, but since all the materials were purchased with my credit card rewards, we still won't be spending that much. But we could use new furniture, lighting fixtures, and a mattress. So maybe with labor we'll spend $10-$15k. For those of you on the credit card thread, this will help with my $30k MSR for the 2 Biz Plats I just got. So then when that is all done and paid for maybe start an investment account? I know there are different schools of thought on whether or not to pay down on a house, especially with a low interest rate, and I would really love to have it paid off early, but then I see the gains our retirement accounts are making and would love to get some nonretirement money into that.

Lastly, DH and I decided to go with a high deductible health plan and HSA for next year, as his company upped the matching yearly contribution to $3000, making it pretty much risk free. We also maxed our flex to spend on braces that for sure one of my sons will need next year. So by my calculations his paycheck will go down about $100. We'll see how close I am. With the extra money that we have I'm wondering what you all think of just paying our medical bills as they come oop and not even touching the HSA if we don't have to? This also gives me the benefit of being able to put the expenses on a credit card Any and all thoughts are appreciated.

2 thoughts:
-We have a bunch of savings accounts we contribute to as part of our budget as a "bucket" strategy. We currently don't have a "car fund" as one of those but this is making me think we might have to add that in the new year. With a 2002/2005, I would recommend you start doing that. We do the same for home improvements also to keep that spending in check.
-I don't like paying extra towards a mortgage until it's a payoff level amount. With 9 years left, you could invest those funds and weather almost any dip in the market while beating current interest rates in savings. That is what I would do prior to paying it down.
-With the HSA you can pay OOP and then claim them later. I've heard of people letting the funds grow in the account and saving the receipts until years later to withdraw the HSA funds. I honestly don't fully understand this strategy (vs claiming it almost immediately) but it's something to look into.

 

[alryan]

alryan, We pay OOP for medical expenses, and plan to always do so unless there's a larger event, where we'd choose between using short term savings or HSA. We think our biggest expense in retirement will be health care, so trying to leave as much of our HSA to grow until then as possible. Counting HSA as retirement and asking for cash discounts and using flex spending, CC points, etc. for current medical care.

Having the same dilemma about paying down mortgage, holding for possible opportunities to purchase rental property in a downturn, or adding to brokerage account. It's a good problem to have, and I'm grateful, but still pondering which to do. Good luck to you!

We have had HSA/HDHP since 2013 and have paid for all medical expenses OOP since then so the money in the plan can grow. If you can afford it, it is a nice way to add to your tax-free/tax-deferred retirement savings. I recommend that you start keeping all your medical receipts and track them regularly, because you can withdraw funds from the HSA with tax benefits [disclaimer I'm not providing tax advice but this is my understanding] up to the total amount of your qualified medical expenses from the time you begin the HSA/HDHP plan until your HSA is empty. You are not limited to expenses incurred in the year you make the withdrawal. But you need the receipts in case you are audited or otherwise challenged and keeping a running total will make it easier than waiting 10 years or more to start adding everything up. And you need to make sure to know what is a qualified expense.

I input mine annually. Usually there are not so many individual receipts that doing one year at a time is a great burden. Also pro tip: most pharmacies will give you a record of your qualifying prescription costs for the entire year (or quarter, or even a few years back if their system allows it, etc). You just have to ask. Then you don't even have to input every individual refill into your recordkeeping spreadsheet.


The recent market moves have made me realize that -- at this point (I'm 58 and have been saving for a while) -- the market has more of an effect on our progress and net worth than almost any other individual decision or event, such as getting a bonus or not, and for how much, whether to splurge on a purchase or vacation, or put extra cash towards college, or retirement, or anything, really. Of course, it can go down big as easily as it has come up, so that does not mean those decisions don't matter and we can just start spending like crazy. But short term, the relative effect really is small: if there is a big downswing then saving a bit more won't make it up, and if it markets go up like they have this fall the extra spending won't hardly be felt. It's a lifetime of those decisions that make the difference.

Same. We fund our HSA each year, but pay medical bills OOP. We are maxing out retirement contribution vehicles and anything over our emergency savings goes into a brokerage account. We view it as a retirement account that is not regularly accessible, but have discussed with our financial advisor we might need to for college starting next year after the 529s are exhausted.

We did a thorough analysis about what to do with a fairly decent payment we received at the end of last year and decided to put it all in the taxable account. Mortgage rates are so low we should outearn and it wasn’t enough to pay the entire amount, so would still have that payment. We bought a new car last Nov and thought about paying cash, but got 1.9% financing on it, so same thought process.

Can certainly understand the comfort in paying down debt, but we decided a certain level of debt is acceptable for the right price and just need to manage it. No wrong answer here and good position to be in.

2 thoughts:
-We have a bunch of savings accounts we contribute to as part of our budget as a "bucket" strategy. We currently don't have a "car fund" as one of those but this is making me think we might have to add that in the new year. With a 2002/2005, I would recommend you start doing that. We do the same for home improvements also to keep that spending in check.
-I don't like paying extra towards a mortgage until it's a payoff level amount. With 9 years left, you could invest those funds and weather almost any dip in the market while beating current interest rates in savings. That is what I would do prior to paying it down.
-With the HSA you can pay OOP and then claim them later. I've heard of people letting the funds grow in the account and saving the receipts until years later to withdraw the HSA funds. I honestly don't fully understand this strategy (vs claiming it almost immediately) but it's something to look into.

Thank you all for the insight. Looks the paying oop with the HSA is a no brainer, which is what I thought. And I will save my receipts, thank you! @Starport Seven-Five we do currently have a savings "bucket" earmarked for a new vehicle, but the $40k does include that. I tend to agree with @Budzooka and @Starport Seven-Five in regards to not paying off the house until the amount would pay it off. If this amount of money would pay off the house I think I would definitely have a harder time with the decision.

@mgarbowski your last paragraph is exactly where am at, and is related to @SouthFayetteFan post awhile back about spending money. Like you said, at this point saving more, spending more, just isn't going to make much of a difference. That was one reason why last year when my company changed hands and I lost my 401k match I stopped contributing and didn't make it up with additional Roth contributions.
It's a lifetime of those decisions that make the difference. I couldn't agree with you more on this. It does remind me of a conversation with my kids the other day when they got mac and cheese from Aldi instead of Kraft. So they asked how much more is the Kraft? $0.50. So they continue to say how "cheap" I am. Although even I in the last few years have gotten soft on some of those purchases. But without all the decisions over a lifetime my husband and I wouldn't be in the position we are in.

 

[alryan]

Edited to add that our HSA offers the option to pay your self back for expenses, so if we ever did choose to use the money, we could pay the bill with our CC and then reimburse ourselves for the costs, so that might be an option if it comes to it.

I'm hoping that is the case for us, but so far from the paperwork we've received it looks like their debit card is the only option. Of course DH didn't want to go in to HR and ask about paying for it with a credit card so we can get rewards. The account is set up, but I really haven't looked at it too closely. Once the new year comes and there is actually money in there hopefully it will be a little easier to see how the reimbursement will work.

 

[mgarbowski]

I'm hoping that is the case for us, but so far from the paperwork we've received it looks like their debit card is the only option. Of course DH didn't want to go in to HR and ask about paying for it with a credit card so we can get rewards. The account is set up, but I really haven't looked at it too closely. Once the new year comes and there is actually money in there hopefully it will be a little easier to see how the reimbursement will work.

The debit card might probably work for ATM withdrawals. That's how mine works, in theory. As I've never taken money out I have no actual experience. I think I also have options for checks and maybe a direct transfer to my bank. They have to let you take the money out somehow, because you are allowed to defer reimbursing yourself for years. They can't just set up an option to pay providers directly with a debit card. But you have time to figure that out, as you note.

 

[SouthFayetteFan]

I'm in the minority in FIRE circles but we actually just take the reimbursement out of the HSA now for any medical expenses. It also helps that our medical expenses average < $600 a year over the past 6 years Perhaps if it were higher, we'd do something different...I'm honestly not sure. I probably would still take the reimbursement based on my strategy.

But that said, we have plenty of money in HSA, IRA, 401k and so I'm pulling that HSA cash back out (when possible) to continue to generate more liquid investments so those can start to compound as well. It's a strategy I've vetted that makes the most sense for us. I totally understand why others want to leave money in to compound though.

 

[SouthFayetteFan]

I'm hoping that is the case for us, but so far from the paperwork we've received it looks like their debit card is the only option. Of course DH didn't want to go in to HR and ask about paying for it with a credit card so we can get rewards. The account is set up, but I really haven't looked at it too closely. Once the new year comes and there is actually money in there hopefully it will be a little easier to see how the reimbursement will work.

I'd actually be really surprised if there reimbursement wasn't an option. It's pretty standard from what I've seen. Never say never, but numerous HSA providers that I've experienced and researched in my time have all have it.

 

[bernina]

I'm in the minority in FIRE circles but we actually just take the reimbursement out of the HSA now for any medical expenses. It also helps that our medical expenses average < $600 a year over the past 6 years Perhaps if it were higher, we'd do something different...I'm honestly not sure. I probably would still take the reimbursement based on my strategy.

But that said, we have plenty of money in HSA, IRA, 401k and so I'm pulling that HSA cash back out (when possible) to continue to generate more liquid investments so those can start to compound as well. It's a strategy I've vetted that makes the most sense for us. I totally understand why others want to leave money in to compound though.

Is your HSA invested? If so, I'm curious to understand the benefit of pulling out invested HSA funds to free up cash downstream to invest in something else? I view HSA as the ultimate investment tool since tax free in (which you're taking advantage of) and tax free out (again, you're taking advantage of this), and tax free growth (which you're getting but a bit less than you could since you're withdrawing a bit each year). I agree for $600 it's a drop in the bucket but curious how that $600 can make you more elsewhere? Care to share your scheme?

 

[SouthFayetteFan]

Is your HSA invested? If so, I'm curious to understand the benefit of pulling out invested HSA funds to free up cash downstream to invest in something else? I view HSA as the ultimate investment tool since tax free in (which you're taking advantage of) and tax free out (again, you're taking advantage of this), and tax free growth (which you're getting but a bit less than you could since you're withdrawing a bit each year). I agree for $600 it's a drop in the bucket but curious how that $600 can make you more elsewhere? Care to share your scheme?

My HSA is invested and compounding like crazy - the annual investment gains are already more than the annual family contribution limit & growing. It's great - but I never set out to be an HSA millionaire, and right now we're on pace to hit that before 60... So I just decided a few years ago to continue to take reimbursements now, & not have to worry about them later. It basically slows the compounding slightly and diverts those funds elsewhere. That, in turn, gives me a little more juice to grow my liquid investments which need some help. We do contribute the max to the HSA for the tax advantage (especially avoiding the FICA - I am all about my duty as an American to avoid taxes ). But then we just take a little bit back to cash out for our annual medical expenses.

As a single family household, there's only so much money floating around to invest so I have to make choices. I certainly could achieve the exact same result by putting a little less in an IRA, or not maxing my 401k. But in any event, I need to focus on increasing my liquid investments to cover those first 5 years of Early Retirement when I'm building my Roth Ladder or whatever other scheme exists at that point to gain early access to retirement funds.

I also have some worry about the long-term outlook of wealth redistribution and tax policy changes on things like Roth and HSA. It could become an easy target for the politicians to reverse course and tax investment gains in those types of accounts for people who meet a means test. I'm trying to build a diverse portfolio within my net worth profile by striking a balance of HSA, Roth IRA/401k, Traditional IRA/401k, Liquid Investments, and CVLI. My hope is that this overarching strategy will enable us to decrease the taxation risk of having too many eggs in one basket.

 

[SouthFayetteFan]

Also of note, but probably immaterial to most, the HSA has a 20% penalty for early withdrawals and you can't withdrawal it for anything other than medical expenses until 65 w/out paying that penalty. At 65 it basically becomes an IRA (with continued tax free withdrawals for medical expenses). I could also probably type another three paragraphs on why my strategy above isn't optimal from other standpoints. But it's optimal for our strategy in light of our current situation.

 

[LeslieLou]

Hi all

I’ve dropped in on this thread here and there. I enjoy reading and learning about FI and dream of RE but am more focused on getting to the FI vs feeling like I need to stop working.

We recently starting talking with a fiduciary and I’m struggling with the costs. Currently, my DH and I have accounts with Vanguard 401k, IRA and Roth. We’d move everything to the advisor but the 401k. The fiduciary does give life planning and financial advice around insurance, long term care etc etc but I am still not sure if it’s “worth” it. Of course that’s in addition to advice around investments.

Vanguard has very low costs. The fiduciary, until we have much higher investments with him, charges between 1-1.5%
is this a normal type of fee for an advisor that does not get commissions?

For reference
DH and I are 39
We would move around $125k to the fiduciary’s care. Our balance that will stay in Vanguard is a multiple of what we will move.
We are planning to invest $500-$1k per month outside of 401ks
We may receive significant inheritances in next 10 years which would bring the fee down on a percentage basis which is one reason we sought out the advisor now- to have someone trusted when we are dealing with more complex situations

We’ve never really had a financial advisor before. I’m a serial thrift, which is probably why this is giving me heartburn

Thank you for your input!

 

[SouthFayetteFan]

Hi all

I’ve dropped in on this thread here and there. I enjoy reading and learning about FI and dream of RE but am more focused on getting to the FI vs feeling like I need to stop working.

We recently starting talking with a fiduciary and I’m struggling with the costs. Currently, my DH and I have accounts with Vanguard 401k, IRA and Roth. We’d move everything to the advisor but the 401k. The fiduciary does give life planning and financial advice around insurance, long term care etc etc but I am still not sure if it’s “worth” it. Of course that’s in addition to advice around investments.

Vanguard has very low costs. The fiduciary, until we have much higher investments with him, charges between 1-1.5%
is this a normal type of fee for an advisor that does not get commissions?

For reference
DH and I are 39
We would move around $125k to the fiduciary’s care. Our balance that will stay in Vanguard is a multiple of what we will move.
We are planning to invest $500-$1k per month outside of 401ks
We may receive significant inheritances in next 10 years which would bring the fee down on a percentage basis which is one reason we sought out the advisor now- to have someone trusted when we are dealing with more complex situations

We’ve never really had a financial advisor before. I’m a serial thrift, which is probably why this is giving me heartburn

Thank you for your input!

You might get differing answers on this, but to me at this stage, a fee like that is going to significantly impact your long-term growth. My feeling is that nobody is going to outperform the market by 1-1.5% and if they did they probably just got lucky. When you do feel that you need somebody, you could also consider a financial advisor who works on a flat fee vs. somebody who collects based on AUM - this is something I’ve seen some folks recommend.

I personally can’t imagine working with a financial advisor unless I had substantial assets (maybe $5MM+) and maybe not even then. But I’m also a personal finance junkie who is very DIY when it comes to this stuff.