Answers and Guides from Top Financial Advisors

Hi Melodie! I'm not quite sure what you are asking, so I'm guessing here. Did you want to know how to view your 401(k) account information and balance? If so, check with your Human Resources department. They will have information on how to access your plan information online. I like Gina's answer as it relates to viewing the plan in context of how it works. You may also want to see how it is incorporated into your overall retirement planning.

Marvin,

I'd love to help you out on that question, but... you've not provided much information here, aside from your name and your question.

A couple of things that would help, is, who your employer (or previous employer) is.

Which Company handled the plan you were involved with, etc...

If you can give us some more information here, maybe we can help. My crystal ball just isn't working well with all the tornadoes here in the Midwest.

Best Regards...

Rod

There are two ways to look at your account balance:

1) The old fashioned way, which is from a paper statement from your custodian, which is usually sent on a monthly or quarterly basis. 2) The newer way, which is online, real-time, all the time.

It will depend what you signed up for and what the capabilities of your Custodian and Third Party Administrator are.

If you do not have access to any of the above, then a call to your company's HR supervisor would be the best course of action.

Hope this helps.

Rita, I probably cannot tell you specifically what to invest in, based on a few short paragraphs about you.

I recommend you seek out a good financial advisor in your area. Find someone who is not trying to sell you the moon and the stars; someone you feel comfortable with, that is looking out for your best interests.

And this is why. You really should have a financial plan. You need to address income, safety and longevity, as well as possible liquidity concerns. You need to take a risk tolerance questionnaire so you more accurately know what level of risk you can tolerate. You need to know what it takes for you to be able to sleep at night.

I would expect you need some growth, but not above your personal comfort level. I would not recommend VTINX as your only holding, It is fairly conservative with relatively low risk. I would agrue that in a well managed and diversified portfolio as part of an overall financial plan, you can get greater diversification and performance without much difference in risk. And VTINX or something similar, could be a part of that plan

I know of $80,000 Non qualified and 23,000 Qualified. I don't know what is in your cash emergency savings. Though you would not actually co-mingle the monies, you can strategize the 2 accounts to come up with a plan. I am not so comfortable with you putting all your savings in an annuity. You would get a guaranteed income, but your money becomes illiquid. If you can work out a cash flow plan that works for you with a portion in an annuity, that makes more sense to me.

Without knowing details, I have concerns about you not expecting to live more than 12 years. Though it may be true, the possibility exists that you plan for 12 years, and then outlive all your money. Irony.

Again, without knowing all the details, I would try to set up with a financial advisor a low fee, well diversified, risk managed portfolio. I would try to be on a budget where you live as frugally as you comfortably can. Try to stretch those retirement dollars. Retirement planning and wealth management are important on any level. If you look, you can, and will, find an advisor that makes sense to you and will help you.

Hi Rita, Congratuations on your retirement. To preserve your $60,000, and if this is the only money you have to work with, consider an immediate annuity where your beneficiaries receive whatever you have not received from the $60,000 - if you outlive the annuity, it will pay the monthly income benefit for your life. At your age, you should be able to find a company who will give you at least $400 of income per month for life, I'll be happy to help, give me a call.

Hi Toni, All good answers above. Remember, every dollar you place somewhere has a cost associated with it, nothing is free. You used the word "sell," everything is for sale, the real question is what is it you want to buy and for what reason are you making the commitment. Your personal commitment to your future is what you need to think about. Once you have that outlined, then plan with the appropriate financial products that will get you there, with an advisor who is on YOUR team to guide you toward your accomplishments.

Hello Melodie, The first step is to understand your personal planning. What are your goals, your cash flow. If the company offers a match, when will their contributions on your behalf be vested (meaning if you work for them for the time envelop allowed in the plan, for example seven years, then you receive a percentage of their contribution each year until you have successfully completed working for the company for the full vesting period where their contributions are 100% in your account. Each contribution you make however cannot be lost back to the plan. If you happen to stop working for the company during that vesting period, you can roll your contributions and any vested contributions to your personal IRA. Please give me a call for more specifics on your personal planning situation.

Take your time! Before you can properly invest your $60,000 of savings you need to fully understand your monthly expenses. Compare your monthly expenses to your monthly income which seems to be just social security. Now if your expenses exceeds your income, the difference is your monthly short-fall amount. I would take this amount and multiply it by 24 months and determine the amount of un-investable funds that should be maintained in a cash account. review annually and increase from the investment account.

Now deduct your amount of un-investable funds from the $60k to determine your available funds to become investable funds. Now you have to determine your risk appetite or risk tolerance before you can invest. I would expect it to be maybe a 50% stock and 50% income mix. This is critical to determine before you invest any dollars in any investment(s).

Also before you invest any money in any funds review the operating expenses or costs of what you invest in. You may not control the market results but you do control where you invest and the related costs of investing!! Low cost ETF's may be your best option.

No professional can make an investment recommendation for you based on the limited information you have already provided. But please be careful before you invest your life savings because the risks and costs vary widely.

Do you know what is in the Vanguard Target Retirement Income Fund? There is a high probability that fund will experience a significant downturn at some point. Either the stock market portion will get it or rising interest rates will. That doesn't mean it is a bad fund, you just need to understand the potential for volatility. You might be better off purchasing the individual funds that make up your fund and drawing down from the specific assets over time. This is the beauty of dealing with no load mutual funds, you can get the economies of scale with a relatively small amount of money. Good luck to you and be flexible with your distributions.

Rita, The answer to your question depends on your financial situation (i.e. sources of income and assets other than the $60K you mentioned), lifestyle and expenses, health and family health history, investment knowledge and experience, risk tolerance and time horizon for various financial objectives. I would suggest you hire a financial advisor who will ask for this information and then be able to provide you appropriate and effective advice. As others have stated, at 71, you can't afford to make mistakes with your retirement savings. Working with a financial advisor should increase the likelihood that you will make the right decisions and be able to maintain your lifestyle, comfort and financial security throughout retirement.

Rita,

As you know, at your age you have to be very careful what you do regarding investing your money for your retirement. Unlike a younger person, you can not afford to make a mistake primarily because you will not have enoughy time to recover any losses you may experience.

So, first I need to say that because you can not afford to lose any of your $60,000, you should only consider putting your money in the most conservative investments. Only problem is that conservative investments will not give you a very high rate of return on your money, although your principal will be very safe and you should not have to worry taking a loss.

My specific recommendations for you to consideration would be for you to put some of the $60,000 into a government insured bank CD or if you think you will want to spend some of that money soon, consider placing some of it into a bank money market fund. Check a few banks in your city to get the best rate you could find.

Another choice for you to consider is to give some or all of your money to an insurance company and put your money into an annuity that can be used to supplement your $350 per month. Because there are many choices of the type and the terms of an annuity that you can get, I suggest that you find an annuity specialist that can explain your choices to you and perhaps even make a recommendation to you. The primary reason that I like the annuity option for you is because the annuity can be structured to pay you a monthly amount and even delivered directly to your checking account. And by the way, the monthly amount can be paid as long as you live. In other words, you can structure the annuity in such a way that you will not be able to outlive the monthly annuity payments.

Good luck to you.

Sincerely,

Herbie Glass,

How much are looking to withdrawal monthly? What is the longevity in your family and how is your health? Do you have consumer debt or a mortgage? May want to consider putting half in an annuity to guarantee payments for life and then invest 20k in a high dividend etf fund and 10k in the money market for emergencies. Unfortunately 60k is not what it used to be and will not provide much of an income or cushion for health issues, etc. If you own a home without a mortgage, you may even consider a reverse mortgage to create more access to funds. Would need to know more about your situation to render a more complete answer.

Value starts to matter when the market is going down. You will never be able to figure out what the Fed is doing. I believe in technicals as much as I believe in psychics. Short-term trading is essentially a waste of time. So that leaves long-term investing. I recently wrote a blog post that addresses this very issue. You might want to read it at http://www.baldwinpartners.com/blog/running-da-bulls.

It all depends on what investment is being referred to. Whether it's an annuity or life insurance or any other type of investment there are always fees and commissions generated, either directly or indirectly. The question here that needs to be asked of your advisor is; if he/she is an insurance agent, a broker, or a Series 65 licensed investment advisor with a fiduciary obligation. The next question that should be asked; is how he/she is compensated, commission or fees, or a combination of both. The next question would be; who pays those commissions and fees to the said advisor, is it the financial institution or the consumer? Regardless, commissions and fees will be paid either directly or indirectly. In my opinion, you should always work with a firm like mine that has a fiduciary obligation to the consumer.

The best way and simplest way to ascertain the total amount of life insurance coverage you need can be based on your debts, replacement income for surviving spouse, and funding of kids education. In my 20 years the most effective financial planning tool that I have used is the FINANCIAL NEEDS ANALYSIS QUESTIONAIRRE to come up with the best possible answer on how much life insurance to own.

John, stable value funds fluctuate much less than bond funds, but they still participate in interest rate risk. In a rising interest rate and rising inflation environment, you could see your returns decrease, even to the point of being below the rate of inflation

If you are concerned about safety or income, a stable value fund may be a compelling choice. It is generally most suitable for people at or near retirement, as it is a conservative investment and there is not very much growth potential

Romika, just contact HR for requirements, if they allow it. But as others have pointed out, you should not be borrowing from a 401(k) unless it is a true dire emergency. A 401(k) is intended to save for your retirement. If you contribute to a 401(k) you should consider that money as not a liquid asset. Think of it as gone. When you reach retirement age, you may likely need it more than you think you need it now.

In today's global economy, the answer is yes. There is a lot more to it than just the Fed and technicals. Although both are key elements, think about the overall market's reaction to bad economic news from other countries... to natural disasters... to new military conflicts in the world. None of us has a crystal ball... if we did, none of our clients would have lost a dime during the meltdown of 2008 - 2009. Thus, the best option, in my opinion, is having a good financial roadmap, know your tolerance for risk and time horizon, and invest appropriately, ie, diversification, different approaches, tactical, dynamic, etc, and keep your eye on the ball. Plus, it doesn't hurt to have a good financial advisor at your side...

Best Regards, and Good Luck... Rod

Investor sentiment also plays a big part in the stock market's movement (especially institutional sentiment). You often have an equal number of smart professionals thinking stocks are undervalued as those who believe they are overvalued. Each group is equally smart and armed with extensive research and sound justification for their opinions. However, only one of those groups will be right over any given period of time. Investing intelligently is not as easy as ads for discount brokers and online investment services want people to believe. However, I think many investors (including professionals) are too often guilty of overthinking, doing too much research and having a hard time making a decision. The more I research individual stocks, the more conflicting data and opinions I find. That's one of the reasons why I have a bias for technical analysis because it paints a picture of what's actually happening in the markets as well as who's buying and selling. With the market technical looking good, longer-term, and the Fed and other central banks greasing the wheels, I agree with Scott that the market could head much higher.

(To clarify, this question was asked of me by a reader named Viral)

Valuation based on trailing multiples can explain about 50% of an investment's forward returns when judged on a long term horizon. In the meantime the market will rise and fall and you will be able to purchase and sell securities at widely different valuations than a reasonable level of intrinsic value. I believe that it's perfectly legitimate to anticipate these swings in perception of value and analyze markets under the assumption that sometimes people will talk as if the world is ending and other times they will believe that we have attained economic Nirvana. Luckily there are cycles to the pattern of pessimism/optimism, which help us chart the probable path of the evolution of market psychology. However, no one can see the future and so we manage risk by making disciplined purchases only at or below fair intrinsic value. Simply put, value always matters.

I have been consistently bullish on stocks as the Fed has been printing money all year, and if you look at my January investor letter I wrote that:

"this year 1650 seems possible to me, and privately I would be willing to admit that I would not be surprised to see a number much higher than that. In 2013 caution, valuation and stimulus could create a potent cocktail for equities."

The reason I chose 1650 is because I have an outlook for S&P earnings somewhere around $100 this year. I believe a 16x multiple is a high multiple to be paying and that we are unlikely to see a 20x multiple like we did in the 90s. This level, 1650 also coincides with what I consider to be full valuation of a number of individual securities that I follow. In general these companies have about 10% more room before I would characterize their valuation as the maximum realistic value for all economic circumstances. I have always expected them to reach this value before the cycle turns under the assumption that people will price in the most optimistic scenario at the top.

You can't see the future, but you can buy and sell securities at favorable prices. It's difficult to know exactly what the final buyer will pay for a company at a peak price, but you can know what the maximum reasonable value is for someone to purchase who is making extremely bullish assumptions.

For example, I can know how much TSLA would be worth if it sold as many cars as Toyota. That's a number that is greater than today (probably somewhere between $60 and $100 B). Given all the operational risk and decades that it will take the company to actually grow to Toyota's size, would I ever pay that much money ($100 B) for the company today? Absolutely not! Might someone else? Certainly! But every dollar that the stock trades above the intrinsic value of the company represents true long term risk of capital destruction. I personally become unwilling to assume that risk at certain prices which I come to based on personal analysis of what I understand/know about a company. What I am willing to pay for a company and what someone else with different information/understanding may be willing to pay could be very different.

Liz, it sure is different. Take a look at her statements. I know they are sometimes difficult to read, but look for the different lines that say IRA or Roth IRA. There should be different account numbers. If they exist, simply point it out to the financial advisor.

Both IRA’s and Roth IRA’s have named beneficiaries. If you are a named beneficiary, you can claim the account directly from the financial institution.

I wrote a guide about the differences between the two. Please review Should I Convert to a Roth IRA It explains the differences between the 2

IRS laws now allow you to do a Roth conversion from a 401K to a Roth 401K, but only if your plan has a Roth 401K option AND allows you to do the conversion. Current statistics show that more than half of all plans will NOT allow you to convert. You will need to check with you HR department or the plan provider. I like the Roth IRA even for people in their peak earning years. Considering the fiscal condition of the government, I think there's a high probability that most people's tax rates will be same or higher in retirement. Also, I think traditional iRAs are a better deal for the IRS than for the individual. I would rather forgo a tax deduction on $2,000 today in exchange for the ability to receive $2,000 or $3,000 tomorrow tax-free. But, I would still consult with your CPA and financial advisor before doing a conversion. They may know if reason why you would be better off not converting.

Jack, there are 2 points to consider. the first is if your employer offers a Roth, and the second is if they will allow a conversion.

I have trouble believing that your employer does not offer a Roth option. To this point, you should be able to easily direct future contributions to a separate Roth 401k account.

As to being able to convert your current traditional 401(k) account to a Roth; the HR person you spoke to may or may not be knowledgeable on this subject....he or she really may or may not have even understood what you are trying to do. I would direct that question to the plan administrator. Their contact info should be on your statement. If not, just call HR and ask for their phone number. The plan administrator is the one who would execute such a conversion.

You mentioned not paying more taxes. Keep in mind that if you participate in a Roth, the monies going in will be taxed as ordinary income, regardless of whether it is new contributions or a conversion.. And you mentioned early withdrawal or distribution fees. You should not see any, except, as you mentioned a possible custodian maintenance fee.

Hi Jack! I'm a fan of Roth 401(k) plans, so I can see why you would want to do this. You have already taken the first step in contacting your HR group. It sounds like your company retirement plan does not allow a conversion, so you have to abide by the plan rules. However, if your company does offer a Roth 401(k) type of plan in addition to a regular 401(k), you should be able to discontinue contributions to the regular plan and begin designating any new contributions to the Roth 401(k). While this does not impact the savings in your current account, you can make a change so that going forward, your contributions will grow tax-free and be tax-free upon withdrawal.