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Created: September 4, 2020
Modified: June 6, 2023

Mailbag – Answering Your Investing, Insurance, and Savings Questions

What You’ll Learn:
It’s time to open up the mailbag again and answer the questions you have about financial planning and retirement. We’ll get to a dozen different questions that cover a variety of topics so it’ll be a busy show.

Are you worried about running out of money in retirement? Curious about whether you investment strategy is diversified enough? What about keeping a life insurance policy with rising premiums?

These are just some of the questions we answer on this episode of the Money Wisdom podcast. You’ve reached out with a great variety of financial and retirement planning questions so we want to do our best to provide guidance on a dozen different topics.

As we always say, you don’t want to act on these answers without consulting with a qualified professional because we don’t know everything about your life and finances. But we’d be happy to provide you with an introductory meeting to begin that process so reach out if you’re interested.

Let’s get started with today’s questions.

Mailbag Question 1: I have a pension fund from a previous job in a different state. I have the option to take a lump sum. Should I do that or leave it as is and get a monthly pension when I retire?

Joel wrote a book about this topic that talks about what to do when you’re presented with this option. Check it out here. This decision is unique to everyone but most people like the idea of taking control of the money in the form of a lump sum.

Mailbag Question 2: I’ve had half of my money with one broker and half with someone else. I wanted to get advice from two people but now it seems confusing. Am I better off having it all in one place?

For most people, it’s going to be best to stick to one advisor because each advisor doesn’t know what the other is doing. Think of it like going to two different primary care physicians. You want to stick with one that knows everything about you and your financial health so that they can give you the correct guidance.

Mailbag Question 3: Our long-term care premiums are going up this year and pretty significantly. Should we pay the extra cost or cancel it and take our chances?

The worst thing that can happen is you drop the policy and then something happens 90 days from now, which is rare that Joel will ever tell someone to cancel insurance. One option could be to keep the premium the same and reduce the benefit. There are also new hybrid policies available, which Joel will explain further on the show.

Mailbag Question 4: I’ve dabbled in trading options in my IRA over the years. I’m retiring in a year and feel once I have more time to spend on it, I’ll be able to meet on my income needs this way. Is that a reasonable assumption?

It’s not a good idea to trade options within your IRA. If that’s something you want to do, use the money you can afford to lose. You might blow it away and triple your money in a year but there’s also the risk that you could lose everything. Get a retirement income plan and figure out what you’ll need in retirement rather than touching that IRA.

Mailbag Question 5: I have our retirement savings spread out across multiple different types of retirement accounts. Which should I pull money out of first?

We can’t answer that without knowing your financial situation, your marital status, your plans for leaving a legacy, and other important items. There are many different factors including tax planning, but think about the accounts you have more control over are likely the ones you want to spend down last. It’s too complicated to answer here so we’d want to sit down with you to give you the correct answer.

Mailbag Question 6: What’s your opinion on all the robo-advisor stuff. Is it something to look into?

These aren’t really advisors in the sense that you’ll get financial advice. They typically find out your risk tolerance and automatically rebalance for you. They’ve been around for a while though and are just being rebranded. It’s probably better than no financial plan but this software is likely being written by someone in their 20s. Do you want to take their advice on your future?

Mailbag Question 7: If interest rates finally start going back up, should I change how I’m saving?

If you like safe money and don’t owe anyone money, then interest rates going back up is good news for savers. So you might want to bring more money back to the bank but there are other options like annuities. Ultimately though, rates going up are positive unless they go up too quickly and hurt other assets.

Mailbag Question 8: I’m 55 and worried about the stability of Social Security. I’m not sure if it will be around for my lifetime. What do you think?

First off, if you’re worried then you should build a plan around this issue that gives you peace of mind. Joel feels it will still be around for someone your age, but it could be in a different form or with different requirements. For someone much younger, you might not be able to count on it so plan that way.

Mailbag Question 9: How much of my portfolio is okay to have invested in one stock? Almost half of my $2 million is invested in one company.

At $2 million, you likely have enough to retire comfortably. But what happens if that company you’ve invested a million in loses 40 or 50% of its value? Then you might have some problems. So most advisors will tell you probably have too much invested in that one company. Don’t sell it based on this answer. Instead, get with a professional to help you determine what’s best.

Mailbag Question 10: Some people in the media say I should invest primarily in mutual funds and they say I can expect annual returns north of 10%. I’m intrigued by it. Where do I find these funds?

Question anyone that tells you to expect double-digit returns. It’s not impossible but they might be reaching to get there. That 10% would be outpacing the market so you’ll be taking on more risk to get there. If you don’t need that kind of return, don’t stretch for it because it will hurt you eventually.

Mailbag Question 11: I’ve heard a guy advertising that he specializes in planning for people with at least $1 million saved. I’m not sure if he has a specialty or just wants to attract people with more money. Is this really a specialty?

There aren’t many investments available with million-dollar minimums. Most of the time the same investments can be had at the $250,000 level. It’s likely the want higher earners but we don’t really know. In our office, our mission is to meet with everyone. We have blue-collar roots and have carried that into our business.

Mailbag Question 12: I’ve looked forward to retirement for a long time but I can’t shake the feeling that I’m going to run out of money. Is there any solution to fighting this feeling?

Our simple solution is to get a retirement income plan and analysis. You tell us how much you want to spend every month and we do all the other work to come up with a strategy that will help you hit that income number in your bank every month.

Joel will go into more detail on each one of these questions on the show so listen to hear all the information. Thanks for listening to this episode. We’ll be back again next week for another show.

[0:23] – Mailbag Question 1

[2:12] – Mailbag Question 2

[3:35] – Mailbag Question 3

[5:06] – Mailbag Question 4

[6:36] – Mailbag Question 5

[8:41] – Mailbag Question 6

[10:19] – Mailbag Question 7

[12:10] – Mailbag Question 8

[14:14] – Mailbag Question 9

[15:34] – Mailbag Question 10

[17:00] – Mailbag Question 11

[18:48] – Mailbag Question 12

Thanks for listening to this episode. We’ll be back again next week for another show.

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