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Questioner: Steve

Question: I am 62 years old, my wife is 60. Here is my retirement plan: I retire this year and collect SS(1400 mo.) my wife will change to Part-time this year and continue to work until 62 (PT income of 1100 mo.). She will then retire and take her SS (800 mo.) We have 420,000 in 401ks and plan to buy 4 separate immediate annuities for a total of 2000 mo.in income for the rest of our lives. Our total retirement gross income will be 4200.00 mo.   Our house is paid off, cars are paid off and we owe nothing on credit cards.  We live comfortably today on 2100.00 mo.   My plan is to take the 2100 mo. extra that we will have  and put it into an IRA until we have 150,000(6 yrs) and then buy another annuity if needed due to inflation or just continue to save it if inflation stays low. Am I thinking clearly or is this a big mistake?  Also How do you validate the integrity of a financial planner that you might hire and what is a normal fee for service I should expect? Thank you in advance, Steve

Answer: Steve thank you so much for your question. This is my area of expertise as I only deal with folks exactly like you who are in the "front door" of retirement and need assistance as to how to best put together an income distribution strategy.

I like the way you are thinking and you make some good points but the plan is flawed and needs to be adjusted. This is some of the issues you have:

1. You are not taking inflation into full consideration
2. You are voluntarily tieing yourself down to an income that will not keep pace with your standard of living
3. You are not providing yourself any liquidity for the "unforseen".
4. There is no growth component to your plan.

Retirement distribution is a different "beast". You have done a marvelous job at saving for retirement. Unfortunately, that is the easy part. When it comes time to make sure you have an income from your savings, the rules and process is totally different. Unfortunately, you only get one retirement and if you fail here, its tough to bounce back. Please make sure to find a Certified Financial Planner that deals specifically in these matters of distribution. I will warn you that there are not many. Many say they do it. But in reality its a specialized area.

There are all sorts of financial advisors and firms. However, not all of them are the same. There is unfortunately some confusion. But at the end of the day its you who have to buy the advisor. Make sure you interview a few and go with the one that provides the best plan and process and who you definitely feel comfortable with. Also you can go to my website and make sure you get my FREE REPORT 10 Critical Questions to Ask A Financial Advisor Before You Hire One at www.thefinancialqb.com. Asking some of these questions will surely help you.

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