Hi all...glad to find this site but now disgusted with myself!

[Lisa99]

Hi Ron, I'd love to have a clean slate and not worry about having to document current but the BH template requires me to list everything we have now before I can ask a question about future...plus it's a good exercise for me. I'm learning as I go.

 

[Lisa99]

Next Question - Do I really need supplemental disability ins?

Ameriprise convinced me that I'm facing doom and gloom without supplemental disability. The policy is $134/month.

I have 70% of salary coverage at work.

 

[ziggy29]

Ameriprise convinced me that I'm facing doom and gloom without supplemental disability. The policy is $134/month.

I have 70% of salary coverage at work.

Based on your income and outgo, it sounds like 70% of your salary would be sufficient for you -- especially since you aren't the sole wage earner in the household. I think it might depend on the details of the employer disability policy.

My employer disability will provide 2/3 of my salary as long as I'm unable to work (up to age 65) and kicks in after 6 months.

Some folks prefer to have disability covered outside their employer's umbrella (since if you lose the job you lose the coverage), but even then I doubt the Ameriprise product is priced competitively.

 

[flyfishnevada]

No financial advice. Looks like your doing pretty well, with a few hiccups. No problem, Mon! Anyway, welcome to Nevada!

 

[Lisa99]

Thanks for the welcome Dan. We ABSOLUTELY love it here. We are still several years from retirement but we knew we wanted to retire here in your great state so took the leap last March and moved here from Texas....good riddance to the bugs and humidity!!

 

[SecondCor521]

Isn't Henderson the site of a WalMart distribution center?

Anyhow, also wanted to add that you can get an account with Alliant Credit Union that's paying 1.5%...Alliant Credit Union, I believe. I've had an account with them for a few years now and have been very pleased with them.

2Cor521

 

[Lisa99]

Hi 2Cor,

Love your quote! It fits my situation right now perfectly.

There may be a Wal-Mart distro center here but not sure. We've been here about five months so am still learning what our new home is all about.

And thanks for the credit union tip. That rate even beats the American Express Bank MM rate that I found (1.3%). Unfortunately I don't belong to any of the qualifying organizations so am not eligible to join.

 

[BigNick]

Isn't Henderson the site of a WalMart distribution center?

Henderson, NC is. But from the remark about getting rid of the bugs and humidity, I guess that Lisa might be in Henderson, NV.

 

[kaneohe]

And thanks for the credit union tip. That rate even beats the American Express Bank MM rate that I found (1.3%). Unfortunately I don't belong to any of the qualifying organizations so am not eligible to join.

pls look again. You can join any PTA and become eligible. I think there's
a link to some national PTA org on their site for $15 or $25 but I just walked next door and joined the local elementary school PTA for $6 instead.
I've been pleased w/ Alliant also.

 

[Lisa99]

Hi Nick, yes we're in Henderson, NV.

Hi Kane, I had no idea I could join a PTA since we have no kids. Right now we're leaning toward the American Express Bank. It is slightly lower at 1.3% but we already have some accounts there.

 

[kaneohe]

Yes, I suppose technically you're supposed to be a Parent, Teacher or sometimes a Student but they didn't ask and I didn't tell. I suspect they appreciate the funds and the headcount and are not about to turn down the gift horse so no practical problem for us. For you either, I suspect.

 

[Lisa99]

Very good point! Since they didn't ask and you don't have to tell I'll add that option to my list.

 

[ziggy29]

Yes, I suppose technically you're supposed to be a Parent, Teacher or sometimes a Student but they didn't ask and I didn't tell. I suspect they appreciate the funds and the headcount and are not about to turn down the gift horse so no practical problem for us. For you either, I suspect.

Plus, if they want my school taxes, they'd better be ready to accept my input and participation if I want to provide it...

 

[Texas Proud]

Thanks Ron for the encouragement. Last year the fees were 'only' $1400. But as the account grows the fees will just keep getting bigger and bigger.

The money paid to Ameriprise so far is a sunk cost and I'm not going to fret about it. I am, however, setting a goal that by December 31, 2010 I will have a solid grasp of intelligent investing and will be ready to execute on our FIRE plan.

Lisa.... good to see that you recognize that the fees etc. are sunk costs... so all you should do now is see where the big cost are (looks to me like the VUL, which I do not know what it is...)... and get rid of them as quickly as you can with as little costs as you can... (taxes, transfer fees etc.)...

You might want to look to see how much gain you have in your various mutual funds if any.... if you do not have any gain... sell them, get a check and deposit it in Vanguard or Fidelity... if you just shrink your accounts but still have money left I do not think you are hit with a fee...

IOW, shrink it down over time... no fee... when it is time to close... you just close out what is left...

 

[Lisa99]

We are in a negative position on virtually every Ameriprise fund. So taking the loss this year is something we're considering.

As for the VUL, there is a $5290 surrender charge. That fee goes down slightly each year for the next five years.

My thought right now is to just take the hit and move on, but I think it's because I am just so ANNOYED that I've let the wool be pulled so completely over my eyes....but as someone said a couple of days ago...it is simply the cost of tuition.

 

[ziggy29]

As for the VUL, there is a $5290 surrender charge. That fee goes down slightly each year for the next five years.

And does that charge disappear after five years?

With a $40K cash value that's a current surrender charge of about 13%. Hate to say it but with a charge that high you're probably better off leaving the money there until it goes away (obviously, not adding any more). With a 13% surrender charge going away in five years, you'd have to outperform these funds by 2.6% a year on your existing balance to break even with the withdrawal.

 

[kaneohe]

Very good point! Since they didn't ask and you don't have to tell I'll add that option to my list.

actually it may not be as shadowy as that......from wikipedia....
Groups going by the PTA acronym are part of the National Parent Teacher Association (National PTA), a non-profit fomerly based in Chicago (now in Alexandria, Virginia) that was founded on February 17, 1897, with membership open to anyone who believes in its mission and purposes

So.......it's probably a naming problem....should be PTFA or PTSFA.....
for Friends.

 

[ronocnikral]

DW had a roth with an FA. he would call about once a year and "move her into some better positions."

when we went to rollover the money to VG, i started looking at the funds she was in and got disgusted with all the back end loads of 3% or more. it's a hard pill to swallow, but get it over with.

except for the VUL, as z says, 13% is significant...

 

[Lisa99]

Great analysis Ziggy. This is exactly why I've committed to not making any moves for at least 60 days. I need far more education to be able to make informed decisions.

To answer the surrender charge question:
Policy went into effect June 2006.

Years 1-5 5290
6 - 5290
7- 4232
8 - 3174
9 - 2116
10 - 1058 (end of year 10 is zero)

So it will be June 2017 before the fee is zero.

So having read the full disclosure, there is sufficient cash value to stop making the premium payments.

 

[ziggy29]

So it will be June 2017 before the fee is zero.

You have almost seven years before it's zero. Amortized over that length of time, withdrawing now with a 13% hit would cost you about 1.9% a year. So then it's a matter of looking at the funds you're in now and seeing if you think you could do at least 1.9% better per year with the money elsewhere given better performance and/or lower fees.

And that assumes no ongoing "account maintenance fees" -- if any of those are in the picture, the amount of outperformance you need will be reduced accordingly.

Having said all that, if the math winds up making it a close call, I'd probably just eat whatever small difference there might be and make a clean break. But that's just me -- wash my hands of it, consider it a lesson learned and move on.

 

[Lisa99]

My thoughts too...just be done with them. However, it's not that easy. We also have two REITs with them that mature in 2012 and 2013, so we're going to be with them for at least that long.

 

[Lisa99]

BTW Ziggy, LOVE your dog! And all of dad's family is in the hill country, we absolutely love it there.

 

[FinanceDude]

Great analysis Ziggy. This is exactly why I've committed to not making any moves for at least 60 days. I need far more education to be able to make informed decisions.

To answer the surrender charge question:
Policy went into effect June 2006.

Years 1-5 5290
6 - 5290
7- 4232
8 - 3174
9 - 2116
10 - 1058 (end of year 10 is zero)

So it will be June 2017 before the fee is zero.

So having read the full disclosure, there is sufficient cash value to stop making the premium payments.

I would stop the premium payments, let the cash value pay them, wait until the end of the surrender, and then 1035 it to a low cost annuity.

One thing to find out: Sometimes a VUL will include a liquidity feature that allows you to remove a certain percentage of it before the surrender period ends. This is quite common with VAs. Look and see if there's a "penalty-free" amount of the cash value you can 1035 without a penalty. There might not be, but its worth a phone call or a little detective work.

I have YET to see a VUL that actually "works". The idea of "protecting your family while growing your coverage through equities" sounds good on paper, but not in reality...........

 

[FIREd]

When considering whether to keep the VUL or not, keep in mind that:

1) The mortality charges (what you pay for the death benefit) are usually much higher for VULs than they are for term life insurance policies.

2) Typically VULs charge you fees in the order of 1-2% of the cash value each year in addition to the expense ratio of the underlying funds.

So, if you pay $250 a month for the death benefit (and from what you said above, you may not really need it since you already have about $1M in life insurance coverage from your work and DH's work), then that's $3,000 a year you are pouring down the drain... Second, if you pay a 1.5% annual fee for the VUL, then that's another $600 a year you pay in fees in addition to the expense ratios for the underlying funds (which are themselves pretty high, I'm sure).

So you should weight all these costs with the surrender charges before making a decision.

 

[FinanceDude]

Drives me nuts when Amerprise reps sell insurance as a retirement funding mechanism..................