Ask Terry Questions Retirement funds — should I move?

Retirement funds — should I move?

By Terry Savage on October 04, 2015 | Investments

Terry, I am considering moving approx. 80K to a new American Fund NBARX. I have approx, 165K total in retirement accounts, and have approx. 50K in mutual Funds. They are split 60% Bond, and 40 % Equity based off of large capped stocks.
My question is, I plan to start collecting Social Security @ 63, as of 12/13/15. I am trying to stretch my 80K initial investment to cover at least 20 years. Your thoughts please.

Terry Says:  Well, wait.  You definitely don’t want to start taking Social Security at age 63!  That would be a HUGE mistake.  You should at least wait until full retirement age, about 67, to take SS.  That’s the equivalent of gaining 8% per year — and that will create a higher base check on which you will receive future SS payments adjusted for inflation.

Second of all, how on earth did you pick that fund?  You’re going to pay your broker a commission up front of 5.75 percent of all the money you put in!!  Plus, you’ll pay 3/4 of one percent every year in management fees!  That’s not a good deal.  You could spend that amount of commissions and first year fees — nearly $5,000 — to live on for a year, making it easier to delay taking SS!

Go to Fidelity or Vanguard or T. Rowe Price and ask about their income funds.  They have no initial commission, and much lower annual fees.  They will also “model” how much you can withdraw every year to make sure your money lasts as long as you do.  Show them all your investments and let them help you plan, not only on how to invest, but how much to withdraw.  And if you could work for another two or three years, it would make a very big difference in your retirement security.



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