7 Comments

  1. IT seems like you made some good choices to move the money even if it involved quitting. Sometimes the right option just falls in your hands for all the right reasons. Good Luck

    • El, we were in need of a change, so quitting was in order. However, when we realized how quitting would benefit us, it was an easy and rational decision to make. Thanks for reading. Ed

  2. Jurema

    Dear Ed,
    I find it really brave of you to quit a teaching job and hope if I will have to quit, that I will be as lucky and positive as you and your wife were! I live in California and have worked in the same school for more than 15 years, so I have seniority status and if I were to change schools (being almost close to retirement) that means I would lose a lot in my retirement pension. Would you please comment on my situation below? Thank yoU!
    1. Like you were , I am not happy with my school 403 options. I invest in Vanguard, and this vendor charges 0.25%. to manage a vanguard index. It’s 5 times more than what vanguard charges for doing what? It’s ridiculous. I have a Roth IRA. My question is: What if I open a trad IRA at Vanguard and fully invest it + 403 from my school ($5,500 + remaining)? Is it too little to cut costs?
    2. Vanguard used to be one of our vendors. I don’t know why it isn’t anymore. We have awful options. Briefly, how did you approach HR or started a committee. I feel that talking about it in my school is a taboo and our union has the mentality that anyone who wants to be financially independent is part of the 1% group.
    Thank you again for this wonderful blog! I am Brasilian living abroad and always feel glad when I hear people interested in taking vacations there. We need good stories after the Olympic events… :o).

    • Jurema, que seja bem vinda! You say brave, and my co-workers say crazy. Obviously, I gave up being normal long ago, but it has paid off for us nicely. As for your questions: 1.) if you’re not saving more than $5,500 a year, I say to just do a Vanguard IRA. While I don’t like the 25 basis points you have to pay in your 403b, it’s not a worst case scenario. You could be in the Vanguard total stock market index fund (Admiral shares) for a total cost of 30 bips. Certainly, more than you should pay, but better than 99% of the variable annuity products out there. 2.) Yes, we’re part of the fat-cat 1%-ers who rule the world, right? The sad truth is that many teacher believe that they’re supposed to be poor and dependent. Talking about money with most teachers and administrators goes over like a fart in church. The best way to approach reform is to find out who controls “the list” of providers. Once you identify the gatekeeper, just point blank ask them “what do I have to do here to get a low-cost mutual fund provider on the list?” You mighty be surprised how easy it might be. If it’s going to be a nightmare, you’ll at least know before you waste your life energy. Did I mention that the 403b market is a true and complete disaster?

      Let it be known that I love Brazil. I have a crazy idea of going to Pomerode to perfect my portanhol while also learning German: rodizio, dunkelbier, and MPB…oh danado de bom! Good luck working your plan; be prepared to “fazer o jeitinho” if necessary. Boa sorte, Ed

  3. JD

    what is considered high fees for a 403b?! I have one through my university and put all of my contributions into equity options with around .35 expense ratio (my own TDA contributions can go into funds with .06, sadly university ones can not though I did request their investment committee reviews and considers adding the .06 S&P 500 index to the university contribution options)

    • JD,
      Your 35 basis points is not a worst case scenario, but a cheaper index fund options would be much better. Actually, about 6 times better. Does your 403b have an insurance wrapper. That’s the problem at the k-12 level. We get stuck in annuities charging 125 basis points for insurance fees, these are on top of the fund expenses. It’s easy to have total expenses of 200+ basis points. It’s a true disaster, but when I talk about it in the teachers’ lounge, I’m the crazy one. I recommend that you make sure that there are not insurance fees associated with your plan. Good luck. Ed

      • JD

        No idea about the insurance wrapper..just started learning this stuff about a year ago. Our IRA’s are through Vanguard but university 403b is TIAA and only my 403b roth contributions can go into a 3-4 index options with .06% expenses; the main chunk of contributions goes into a .35% index option with the majority of equity fund options closer to .8% and I think the lifecycle target date funds around .6%

        I recently noticed the other university vendor (Fidelity) seems to have better options for all contributions (spartan index funds with ~.06% expenses) but I also do not know anything about their fee structure, either.

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