The Best Retirement Strategy


Question: I am a 60 year old retired public employee with a defined benefit pension and a 403-b plan that I plan to begin drawing from in two years.  My allocation mix is 57% in an inflation adjusted bond fund, 17% in a US large cap stock fund and 26% in a real estate fund.  Should I adjust my allocation mix given my plan to begin making withdrawals in 2015? R.E.   
Answer: While you didn’t mention how much your pension benefit is, I assume that with it and your Social Security, a good portion of your basic living expenses will be covered. For retirees, I generally like to see their allocation to fixed income (money market accounts, CDs and bonds) somewhere between 40% and 60% so your 57% allocation works fine. Decide how much you plan to take out of your portfolio each year and go ahead and move two years’ worth from your bond fund to the money market account. At least annually rebalance your portfolio allocation back to your target allocation between stocks, bonds and money market account. Regarding your equity investments, real estate values dropped significantly in the 2008 market crash and are slowly improving so it could very well be a strong performer in the years ahead. Even so, it’s a relatively higher risk equity strategy. For more conservative investors, my preference is blue chip dividend-paying stocks. You’d want to hold at least twenty stocks across at least half a dozen sectors (energy, financials, etc.) or you could use a mutual fund such as Vanguard’s Dividends Appreciation Index Fund or an Exchange Traded Fund (ETF) such as DVY or SDY. 
Question: Is it legal to justify a residential real estate price by using an inflated appraisal or a false claim that an appraisal has been completed on the property? It’s often referred to as a prelisting appraisal but is not an appraisal used by a lender for mortgage purposes. C.M.
Answer: Listing agents often have other experienced agents view homes before they are listed to give estimates of the home’s value and potential sales price. The listing agent will use this information to help decide the listing price. This is an informal process and should not be confused with an appraisal completed by a qualified appraiser. It would be unethical for an agent to insinuate otherwise.
Question: I am retiring soon and I am considering moving my old 401k held by a national brokerage firm since 1999 to a safer place. When they originally took it over my balance was $70,000. It reached a high of $125,000 but dropped back to a low of $70,000. It is currently $102,000. I have always felt the managers cared more about their fees than they did about my situation. Without my permission, they charged me a fee to move money from one of their investments to another. My question is, “Will they charge me a fee to move my money to another 401k?” L.E. 
Answer: Because you will be rolling your money from an ex-employer’s 401k plan, it is unlikely that you will be charged a termination fee. You have two good choices here. First, you can roll your money to an Individual Retirement account (IRA) with a discount broker such as Charles Schwab & Company ( or Vanguard ( or you may be able to roll it into your current employer’s 401k plan. Many employer plans allow rollovers from either old 401k plans or IRAs. One advantage of doing this is that you’d have all of your retirement money in one place. My personal choice is a discount broker like Charles Schwab because they offer many more investment choices than an employer 401k plan. We have seen many cases where the big retail brokers charge a termination fee when accounts are transferred to another broker. The fee typically runs $100 to $150. The big discount brokers don’t charge a termination fee. Your best bet is to call your current custodian and confirm that there is no transfer/termination fee.