I was hoping to request some advice. I am meeting with a new financial planner today to do some retirement plannig and review our investment portfolio. I'm about 10 years from retirement and will have a government pension. I'm interested in the planner providing recommendations on asset allocation and steps we should take to achieve our goals. I would value the board's suggestions on questions I should ask the planner or links to such questions. The planner works for Merrill so I'm sure he will be recommending their various products. Our situation is a little complicated in that we have a special needs son that we need to plan for. Thanks so much for your advice.
Comments
Regards,
Ted
Nerd Wallet:
https://www.nerdwallet.com/blog/investing/10-questions-ask-financial-advisor/
Motley Fool:
https://www.fool.com/slideshow/13-smart-questions-everyone-should-ask-their-financial-advisor/
Dave Ramsey:
https://www.daveramsey.com/blog/questions-to-ask-financial-advisor
Employers usually have a retirement packet that they share with new retirees. Gather as much information about the retirement process with your employer. I did this and discovered there were many choices I needed to consider with this part of retirement planning. In my case, I selected to move some of my 403b investment to purchase an "extra annuity" through my employer (a somewhat unique option). I shared this option with a few financial planners and they confirmed that using some of these 403b dollars to buy this annuity was a very good option. I fine tuned the amount of the "extra annuity" based on my projected retirement income needs.
These financial planners typically will not be experts on all the options that your employer offers...it's your job to bring these choices/options for discussion.
I applied for a 30 year mortgage (actually a 15/15 ARM @ a rate of 2.875 fixed for the first 15 years) and also took additional cash out on this loan. I planned to use the cash for home improvements that I knew I now had time to do myself (retirement offers time to do this) as well as serve as a on demand cash for opportunities. Another story for another time, but cash was king back in 2010.
This decision to refinance my home loan prior to retirement effectively locked in my principle/interest payments for 15 years into retirement and since I completed this process while I was still working I qualified for a much larger mortgage due to my higher "debt to income ratio".
Regards,
Ted
Will you be able to keep the Thrift Savings Plan?
Often, at retirement, these plans can no longer be contributed to and may also have to be transferred out of the Thrift Savings Plan. This was the case for a relative who work for a government employer (military) who recently retired a few months ago.
Any health care benefits for retirees?
Any life insurance choices?
Any death benefits for spouse/dependents?
Allocation is currently 26% C fund, 21% S Fund, 10% I fund, and 43% G fund.
TSP holds itself out as " similar to a 401(k) plan in the private sector." In the private sector, by law you must be allowed to keep your money in your 401(k) so long as you have at least $5K there.
Many plans allow you to keep your money even if you have a lesser amount. With TSP, "If your vested account balance is $200 or more, you can leave your entire account with the TSP until the account withdrawal deadline." The deadline it's talking about is just the usual rule that RMDs begin the later of age 70.5 or separation from service.
https://www.tsp.gov/PlanParticipation/LoansAndWithdrawals/withdrawals/index.html
It's pretty obvious that someone who is not working for an employer cannot make payroll contributions to that employer's sponsored plan (TSP, 401(k), 403(b), etc.) But TSP seems very flexible in the types of other post-retirement contributions it allows.
It accepts rollovers from IRAs and transfers from retirement plans at other employers. "Not only can you leave your money with the TSP, you can simplify your financial life by moving money from plans into your TSP account." However, it doesn't look like it can accommodate Roth money, as it limits IRA rollovers to traditional IRAs.
https://www.tsp.gov/PlanParticipation/EligibilityAndContributions/RolloversTransfers/index.html
This link lists them ( this link does reference Roth balances)
Withdrawals After Leaving Federal Service: Withdrawing Your TSP Account
I'd always assumed that one could take partial withdrawals on demand. It does look like TSP is very restrictive here - limiting you to one partial withdrawal.
On the other hand, it looks like it's more flexible than most 401(k) plans (though not necessarily 403(b)s), in giving retirees the option of taking the money as an annuity (effectively as a traditional pension). It also strikes me as flexible in allowing you to define your own mix of options - lump sum, fixed payments (until the money is exhausted), RMD payments, and/or the "pension" (annuity) option.
So you have a lot of options that you can mix and match, but you're locked into them. You can't take bigger or smaller monthly payments as needed. More flexibility in some respects, less in others.
They reduce w/ higher assets; if you turn over millions, they go under 1%, and increasingly well under (marginal).
There are institutional advisers (yours is one, maybe, being w/ ML?), whom one is always advised to stay away from by indies even though many do very good work, whose fees are lower sometimes, or were back in the day, because they were getting spiffed from placing you in the institution's funds and paying said brokerage small fees for stock transactions. The pricing revolution of the last decade has reduced much of that, I hear.
You probably get more answers in mfo here than most private cpa or investment advisor imhi
https://www.nerdwallet.com/blog/investing/merrill-edge-review/
https://www.forbes.com/sites/marybethstorjohann/2018/01/09/what-you-dont-know-but-should-about-your-thrift-savings-plan-tsp/#1d33e38227ba
SEC, Investor Bulletin: Investment Adviser Sponsored Wrap Fee Programs
https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_wrapfeeprograms
Merrill Lynch INVESTMENT ADVISORY PROGRAM WRAP FEE PROGRAM BROCHURE, March 26, 2018
https://olui2.fs.ml.com/publish/ESIGN_EXPAN/TandC/MSGDisclosure.pdf All of the links that people posted here to questions to ask include the question: is there a fiduciary relationship. "Suitability" is a term used to indicate that the advisor isn't a fiduciary. I hope your specific client agreement does require your advisor to act as a fiduciary. That would explain why as @slick noted, you'll have problems getting Vanguard funds.
Note that in retirement accounts (IRAs, 401(k)s, etc.) an advisor must give you credit for any 12b-1 fees and management fees paid by a fund that is run by (in this case) Merrill Lynch or affiliate. But not for 12b-1 fees paid by any other funds.