The Washington Post recently ran two stories that highlighted the need for personalized retirement planning advice.
“Want a one-time windfall over a monthly pension?” examines a dilemma that many retirees face—if your employer offers you a lump sum instead of monthly pension payments, should you take the windfall? The Post points out the pros and cons of these options and specific situations where one choice is clearly advantageous but adds, “Still financial planners are nearly unanimous in saying that the choice, tempting as it may be, should be rejected by most people,” since they may mismanage or outlive the large sum.
The Post also published a piece on how brokers are urging federal retirees to leave the low-fee Thrift Savings Plan in favor of IRAs. Brokers say they are merely offering different options. John Turner, director of the Pension Policy Center was concerned that retirees were paying an unfortunate price so brokers could profit. To see the kind of advice others were getting, Turner called brokerages as if he were a potential client and found that all except one advised him to ditch the Thrift Savings Plan and get an IRA instead. It may be too late for some, but according to the Post:
“The Labor Department has said it will propose rules in January that brokers and other advisers act in clients’ best interest during rollovers, what is called a “fiduciary standard.” Brokers are generally held to the lower standard of selling products that are suitable for their customers, meaning they don’t have to put their clients’ interests first as long as they select appropriate investments.”
Again, it is so important to get personalized retirement advice. You may be in a situation where you can do something that would not work for most people, but it is not easy to be sure without expert advice.
Remember that Fee-Only financial planners do not make money from certain financial products. You pay a Fee-Only financial planner directly to look out for your interests.