Hi Terry: OK, I’ll admit it; I’m a DIY (Do It Yourself) investor; yes, one of THOSE that draws the silent ire of many a financial professional. Thanks to you and your guidance, along with other sound information if been able to parse from other publicly available resources, I find myself moderately confident about my retirement future, based upon the projected results I receive from some of the tracking calculators out there, offered by among others Financial Engines and T. Rowe Price. I would however like another set of eyes; one of a knowledgeable financial adviser, for a fee, to take a look under the hood of my portfolio for an objective opinion. Also, I’ve learned that a former employer of mine is about to offer me a lump sum buyout of my life annuity pension, so I need someone to run those numbers for me to see which option would be in my best interest. Both tasks obviously are very small apples to many advisers, interested instead of getting my assets under their management; where the real money to be made is. How does one find, what best could be considered a “mom & pop” type adviser, offering their services in essentially a cafeteria-style method? Perhaps there is no such thing in the financial services industry, but I thought it worthwhile to at least ask. Many thanks, Terry; as I’ve told you before, your guidance and insight has been invaluable to me.
Terry Says: Well, you’re already doing all the right things. The services you describe are exactly those offered by FinancialEngines, Fidelity, T. Rowe Price and others. And these are the least expensive ways to assess your investment and withdrawal strategies. Definitely I would contact T. Rowe Price and work with one of their financial planners. The service is free if you have some money with them.
As for the annuity decision, here’s the easiest way to assess. Let’s say they offer you a lump sum of $150,000 — or a lifetime payout of $XXX — a specific amount. . And you have to decide whether it is better — financially — to take the lump sum or the lifetime payout. So is that XXXX dollar amount fair? That’s the basic question.
Go to www.ImmediateAnnuities.com and put in your age, gender and state of residence. Then insert the lump sum amount — and click. You’ll get quotes on monthly amounts that you could receive from several insurance companies if you were to purchase an annuity today with that lump sum amount. That way, you will know whether the lump sum is a fair offer from your former employer. Of course, a lot depends on your life expectancy, health, tax situation, and need to leave money to a spouse. You might want to rollover that annuity lump sum into a joint-life annuity that would cover your spouse. But, of course, that would mean less money each month. For more advice on handling annuities contact Jeffrey.Oster@raymondjame.com — my annuity guru.
The more that I write about your situation, the more I understand your need for some overall advice. You can get that from a fee-only planner, and you can search at www.feeonly.org. Still, I think you should do your own homework so you understand what the planner is advising.