My dad is 66, still works 9-5 (95k pa) and his current portfolio is as follows:

VT - $119546

401k (VTSAX+VTMGX)- $41794

(Total $161340) 57%

BNDW - $53520

ibonds - $40000

Savings Ac - $27510

(Total $121030) 43%

I started helping him invest his savings 2 years ago in a 2 fund portfolio after reading up a lot on Reddit.

The VT/BNDW are spread between a Fidelity rollover tIRA and brokerage ac.

Intends to work as long as he can. Only income in retirement would be social security payments (approx 3.5-5k/mo combined for himself and my mom, depending on when he retires)

Current expenses are around 2.5k/mo:

Apartment rent - 1k/mo

Groceries - 500/mo

Medicare premiums for both - 500/mo

Car insurance and other misc exp - 500/mo

His current 401k contribution is $1200/mo. The ~$42k is invested in 100% stocks (mutual fund equivalents of VTI and VXUS). Given his financial stats above, should he max out his contributions until retirement ($30k/year) or is there a reason not to?

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[deleted] t1_jdsjjyw wrote on March 26, 2023 at 9:17 PM

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[deleted] t1_jdsjxfc wrote on March 26, 2023 at 9:20 PM

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BastidChimp t1_jdsphlx wrote on March 26, 2023 at 10:00 PM

Have him open up and max out a Roth IRA asap. There are no RMDs in a Roth IRA. Invest in covered call ETFs like XYLD and REITs like O for its monthly dividends and reinvest them while he can still work. Later he can roll over his 401 K into his trad IRA. Then he can slowly convert his trad IRA into the Roth IRA.

ToothPicker2 OP t1_jdsxktd wrote on March 26, 2023 at 11:02 PM

So $7.5k/year in Roth IRA until retirement?

And max out the Traditional IRA simultaneously too?

Invest in the covered call ETFs just in the Roth? Currently, he’s only invested in a 2-fund portfolio of VT & BNDW (Boglehead philosophy) since our investment knowledge is zilch.

wanttostayhidden t1_jdt1fzo wrote on March 26, 2023 at 11:31 PM

>So $7.5k/year in Roth IRA until retirement?

>And max out the Traditional IRA simultaneously too?

No, for those over 50 the limit for IRAs is $7500 total across all your IRAs. Doesn't matter if that is 1 IRA or multiple, traditional or Roth.

ToothPicker2 OP t1_jdt1o7b wrote on March 26, 2023 at 11:33 PM

Oh that’s right.. so I’m wondering if he’s making a mistake by holding a traditional IRA instead of Roth IRA