Get smart with your money
If you leave a job or retire, you’re often encouraged to roll over your 401(k) or other workplace retirement account into an individual retirement account. That might not be the right move.
In my latest for the Associated Press, why having more investment choices isn’t necessarily better.
Today’s top story: What to do when your holiday gifts haven’t arrived. Also in the news: A new episode of the Smart Money podcast on financial accomplishments, how pet insurance can keep costs in check, and the benefits of an unpaid internship.
Your Holiday Gifts Still Haven’t Arrived. Now What?
Remain calm.
Smart Money Podcast: What Our Listeners Accomplished This Year, Part 1
Pet Insurance Can Help Keep Costs for Your Furbaby in Check
A pet insurance policy can pick up part of the tab if your four-legged companion gets sick or injured.
Get Skills — Not Bills — at an Unpaid Internship
It can cost thousands of dollars to do an unpaid internship, and many take on credit card debt to get by. Here are ways to limit that high-interest debt.
https://www.nerdwallet.com/article/credit-cards/get-skills-not-bills-at-an-unpaid-internship?utm_campaign=ct_prod&utm_source=syndication&utm_medium=wire&utm_term=lizlizweston-com&utm_content=1104059
Dear Liz: You recently answered a question about taking a lump sum retirement versus an ongoing pension. You didn’t mention that the pension will stop when the employee dies (whether it’s after 40 years or 40 days) or when the spouse dies (same thing) if that was chosen. The children get nothing. What about taking the lump sum and putting it in a fixed indexed annuity? Yes, there is a yearly fee, but then the money can continue to the spouse, children and on and on and on.
Answer: See above. There’s more than a single “yearly fee” with these annuities, which are complicated insurance products that tend to have high costs and pay high commissions to the advisors who recommend them. If you’re considering this investment, you should run it past a fee-only financial planner first.
Many people dislike the idea that an annuity stops when they do, which is why insurers are often willing to sell you — for an additional fee — a guarantee that something will be leftover. There may be better, less expensive ways to leave a legacy, which a fee-only planner can discuss with you.
Dear Liz: I am starting to receive marketing mailings from financial advisors inviting me to a free lunch or dinner to listen to annuity investment presentations. I went to one recently by a fee-based financial planner who told me he also acts as a broker when investing in annuities. He’s been pressuring me to invest all of my retirement funds into a fixed indexed annuity. Isn’t this a conflict of interest? I assume he gets paid by both me and a commission from the insurance company if he signs me up for this investment. Why do financial planners force annuities on seniors? Is it because they know they will also get commissions? Is it better to sign up with a fee-only financial planner? I’ve read that the fee-only planner will act only in my interest, not pushing investments that bring in a commission.
Answer: Yes, yes and yes.
Remember your folks telling you, “There’s no such thing as a free lunch”? Remember that the next time you get one of these offers for a “free” meal (or a timeshare presentation, for that matter), because you could end up paying dearly. These presentations are made by salespeople who can be really good at talking people into products that are not in their best interests.
A good advisor would never pressure you or suggest putting all your investment eggs in a single basket. Look instead for advice from a fee-only (not fee-based) financial advisor who will agree, in writing, to be a fiduciary, which means they’re committed to putting your interests ahead of their own.
Dear Liz: My husband has Parkinson’s disease and is showing early signs of dementia. I’ve been advised to get a financial power of attorney. If all of our accounts are joint, is this necessary? What will that do for me?
Answer: A power of attorney gives you the authority to make decisions on your husband’s behalf. You wouldn’t need one to pay the bills from your joint accounts, but this document could be invaluable if you wanted to take action on jointly held property, such as selling a car or house or refinancing a mortgage. Otherwise, you might have to go to court to get a guardianship, which can be expensive.
Please don’t wait. For the document to be valid, your husband needs to be able to understand what a power of attorney is and what it does. You’ll also need a power of attorney for healthcare, which is sometimes called a healthcare proxy or advanced directive, to make decisions regarding his medical care.
There are do-it-yourself options, but given your husband’s condition you may want to hire an experienced estate planning attorney who can offer personal guidance and help make sure the documents won’t be challenged.
Today’s top story: A year-end checklist to make the most of retirement age. Also in the news: How the government’s next step to fight inflation could impact savers, myths about iBuyers, and why you shouldn’t spend a dollar to save a nickel on gas.
A Year-End Checklist to Make the Most of Retirement Savings
Age brings unique opportunities and obligations, including some important year-end tasks that can help you make the most of your money.
Inflation Keeps Surging: Government’s Next Step Could Impact Savers
Fed officials project as many as three 0.25 percentage point interest rate hikes in 2022.
The Property Line: Don’t Be Misled by These Myths About iBuyers
They aren’t responsible for runaway house prices and can lessen some seller pain points. So why all the hate for iBuyers?
Don’t Spend a Dollar to Save a Nickel on Gas
It’s about the worst time possible to buy any car unless you absolutely have to.