Take control with a retirement plan

Bakersfield Life Magazine
February, 2011

A local nurse who attended a retirement planning course I conducted through the Levan Institute for Lifelong Learning at Bakersfield College, came into my office recently seeking a second opinion regarding an investment.

Two years ago, she bought one of the most expensive investments on the market that had management fees in excess of 3 percent a year. It was a variable annuity with a living benefit. It also had a large exposure to the stock market. Upon discovering its deficiencies, the nurse wanted out of the investment.

I cautioned her that before she made any decisions, she should develop an “income plan” for her retirement. That would allow her to see what her income would be and determine if it would be sufficient to sustain her in retirement. The plan also would allow her to develop strategies, which might include eliminating her costly investment.

I likened her position to that of a doctor treating a sick person. He wouldn’t begin treatment with any old medicine he had in the office. First, he would have a good nurse check the patient’s vitals. He would then review medical records, conduct tests and maybe even consult other doctors to confirm a diagnosis. Those are cautious steps that should be taken regardless of their costs.

After putting her income plan together, I created a few alternate plans to see how her retirement might look if she exchanged her costly investment for another. The result: No alternative was better.

So I set out to see if I could make lemonade out of this lemon of an investment. By utilizing her other investments, I was able to maximize the benefits of her expensive investment to create more income for her. Granted it was less income than if she had not purchased the expensive investment in the first place.

Maneuvering through the land mines of this economy and dodging the sometimes deceptive “good investments” that are being marketed complicate creating a financially sound retirement. It just doesn’t happen. It takes planning and discipline.

People can and must take control of their retirement futures. Knowledge is the key. Classes, such as the one I teach through the Levan Institute, hold the keys. Click here to sign up.