Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Had no obligation meeting with a financial advisor, looking for feedback
Old 11-04-2018, 08:20 AM   #1
Dryer sheet wannabe
 
Join Date: Nov 2015
Location: Boston
Posts: 23
Had no obligation meeting with a financial advisor, looking for feedback

I manage my own investments, but decided to have a meeting with an advisor since there was no obligation. I will be 61 in a month, retired, no pension, no kids, heirs etc and have about $1.1 mm in assets with about 35% in tax deferred investments. No debts, live pretty frugally, in good health for now and withdraw about 3.2% of portfolio. I am thinking of taking SS at 67 and will get approximately $1400/month.

I told the advisor I was concerned about long term care since I have no LTC insurance and was thinking of a deferred annuity. He suggested putting $200,000 into a variable structure contract with an income guarantee, fee around 1.3%, could get around 6%. At present, I am not paying federal tax but pay state tax of 5.1%, so I was a little concerned about tax consequences of withdrawing $200,000. I believe I can have about a $37,000 gain without incurring federal tax so would that mean I would pay about $1900 in total to state on the gain?

Another thing he told me is that I do not have to be concerned about getting a reduction in SS in 2034 if the government does nothing about SS finances by then. He said ONLY people 41 years and younger would take a hit. Is that true? I thought we would ALL be looking at about a 22-25% reduction if NOTHING is done.

I was looking for feedback. Also, what are some of the best alternatives to LTC?

Thanks
__________________

petestan is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 11-04-2018, 08:34 AM   #2
Thinks s/he gets paid by the post
 
Join Date: Jan 2018
Location: Tampa
Posts: 4,567
Quote:
Originally Posted by petestan View Post
I manage my own investments, but decided to have a meeting with an advisor since there was no obligation. I will be 61 in a month, retired, no pension, no kids, heirs etc and have about $1.1 mm in assets with about 35% in tax deferred investments. No debts, live pretty frugally, in good health for now and withdraw about 3.2% of portfolio. I am thinking of taking SS at 67 and will get approximately $1400/month.

I told the advisor I was concerned about long term care since I have no LTC insurance and was thinking of a deferred annuity. He suggested putting $200,000 into a variable structure contract with an income guarantee, fee around 1.3%, could get around 6%. At present, I am not paying federal tax but pay state tax of 5.1%, so I was a little concerned about tax consequences of withdrawing $200,000. I believe I can have about a $37,000 gain without incurring federal tax so would that mean I would pay about $1900 in total to state on the gain?

Another thing he told me is that I do not have to be concerned about getting a reduction in SS in 2034 if the government does nothing about SS finances by then. He said ONLY people 41 years and younger would take a hit. Is that true? I thought we would ALL be looking at about a 22-25% reduction if NOTHING is done.

I was looking for feedback. Also, what are some of the best alternatives to LTC?

Thanks
Bolded - this statement is absolutely not true. As of now, the reduction would affect everyone. It is roughly 23%.
__________________

__________________
TGIM
Dtail is offline   Reply With Quote
Old 11-04-2018, 08:36 AM   #3
Moderator Emeritus
braumeister's Avatar
 
Join Date: Feb 2010
Location: Flyover country
Posts: 13,521
If he flat out lied to you about the SS cut (and he did), how can you trust anything else he said?
__________________
I thought growing old would take longer.
braumeister is offline   Reply With Quote
Old 11-04-2018, 08:36 AM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
target2019's Avatar
 
Join Date: Dec 2008
Posts: 5,365
Where does FA interest lie? Is he advising as if he were your fiduciary?
Since he is not your advisor with an agreement, he can say many things, and will not be held accountable later.
I've done similar (sit with an FA), and always found large holes in what the FA initially said to me. It is a sales pitch, and part of what FA tries to sell you is that he/she has some higher understanding of finance and investing.
target2019 is offline   Reply With Quote
Old 11-04-2018, 08:38 AM   #5
Thinks s/he gets paid by the post
 
Join Date: Jan 2013
Posts: 2,161
This is not a financial adviser looking out for your best interest, this is a salesman that stands to benefit greatly from what he wants to sell you. Run away from this deal and the salesman and don't look back.

No one knows for sure what will happen with Social Security. AFAIK, reductions when the trust fund runs out would be across the board, but who knows what Congress will decide? There is nothing in the law or regulations about people 41 and under.

Dump this guy and find a fee-only true CFP fiduciary if you feel you need advice.
Another Reader is online now   Reply With Quote
Old 11-04-2018, 08:48 AM   #6
Moderator
Jerry1's Avatar
 
Join Date: Nov 2014
Posts: 2,997
Quote:
Originally Posted by Another Reader View Post
No one knows for sure what will happen with Social Security. AFAIK, reductions when the trust fund runs out would be across the board, but who knows what Congress will decide? There is nothing in the law or regulations about people 41 and under.
This is my understanding as well. No one knows at this point. We do know that the fund will be underfunded in 2034 if nothing is done. Between now and then anything could happen. It would have been better if he stated that his opinion is that they won’t change benefits for people already in the system. Logical, but nothing to bank on at this point.
__________________
Every day when I open my eyes now it feels like a Saturday - David Gray
Jerry1 is online now   Reply With Quote
Old 11-04-2018, 08:59 AM   #7
Full time employment: Posting here.
 
Join Date: Dec 2006
Location: chicago burbs
Posts: 723
As of now, everybody should be concerned about a ss haircut. Look at this way, this fa will be less concerned about it if he gets you and others to sign up for annuity product.
golfnut is offline   Reply With Quote
Old 11-04-2018, 09:04 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 8,569
His solution was an annuity, with a fairly high fee. Wonder how many questions that is his answer to?

His SS answer is indicative of how clueless he is.
RunningBum is offline   Reply With Quote
Old 11-04-2018, 09:09 AM   #9
Thinks s/he gets paid by the post
VanWinkle's Avatar
 
Join Date: Oct 2017
Location: Brighton
Posts: 1,211
Quote:
Originally Posted by petestan View Post
I manage my own investments, but decided to have a meeting with an advisor since there was no obligation. I will be 61 in a month, retired, no pension, no kids, heirs etc and have about $1.1 mm in assets with about 35% in tax deferred investments. No debts, live pretty frugally, in good health for now and withdraw about 3.2% of portfolio. I am thinking of taking SS at 67 and will get approximately $1400/month.

I told the advisor I was concerned about long term care since I have no LTC insurance and was thinking of a deferred annuity. He suggested putting $200,000 into a variable structure contract with an income guarantee, fee around 1.3%, could get around 6%. At present, I am not paying federal tax but pay state tax of 5.1%, so I was a little concerned about tax consequences of withdrawing $200,000. I believe I can have about a $37,000 gain without incurring federal tax so would that mean I would pay about $1900 in total to state on the gain?

Another thing he told me is that I do not have to be concerned about getting a reduction in SS in 2034 if the government does nothing about SS finances by then. He said ONLY people 41 years and younger would take a hit. Is that true? I thought we would ALL be looking at about a 22-25% reduction if NOTHING is done.

I was looking for feedback. Also, what are some of the best alternatives to LTC?

Thanks
1.3 expense is not the whole enchilada for this type of contract, and 6% also includes a return of your principal- so more like 2-2.5% return. Run away as you likely already have the assets to cover LTC on your own. Having no heirs makes a big difference in how much LTC you can handle out of your assets.
__________________
Retired May 13th(Friday) 2016 at age 61.
VanWinkle is offline   Reply With Quote
Old 11-04-2018, 09:20 AM   #10
Thinks s/he gets paid by the post
Ready's Avatar
 
Join Date: Mar 2013
Location: Southern California
Posts: 2,370
If I found myself in a meeting like that, I would let the individual know that I'm happy to hear their advice, but if they plan to recommend any products that they personally earn a commission on, they will be viewed as a sales pitch and not credible investment advice. Then see where the conversation leads you.
Ready is offline   Reply With Quote
Old 11-04-2018, 09:41 AM   #11
Thinks s/he gets paid by the post
flintnational's Avatar
 
Join Date: Mar 2008
Location: Atlanta Suburb
Posts: 1,350
The "no obligation" meeting invites I receive in the mail include a free dinner. I would hold out for the free dinner.
__________________
"Oh, twice as much ain't twice as good
And can't sustain like one half could
It's wanting more that's gonna send me to my knees" - John Mayer
flintnational is offline   Reply With Quote
Old 11-04-2018, 10:25 AM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 10,803
Quote:
Originally Posted by RunningBum View Post
His solution was an annuity.
Not to defend the "advisor," but actually OP brought up the idea of an annuity.

Quote:
I told the advisor I was concerned about long term care since I have no LTC insurance and was thinking of a deferred annuity.
Now, the advisor apparently suggested a variable annuity while OP asked about a deferred annuity, so that's suspect. But the advisor did not bring up annuities out of the blue.

Regardless, there is little an "advisor" can bring to the table for FIRE aspirants either in the accumulation or withdrawal phase, so the details are really moot. Just DIY and benefit from better decisions and planning from the person who knows you the best: YOU. And enjoy zero fees while participating in a fun hobby.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 11-04-2018, 10:39 AM   #13
Dryer sheet wannabe
 
Join Date: Nov 2015
Location: Boston
Posts: 23
Thank you to all who replied. I thought the SS statement was in error and I appreciate everyone's input regarding the annuity. I will stay with doing it myself.
petestan is offline   Reply With Quote
Old 11-04-2018, 11:33 AM   #14
Thinks s/he gets paid by the post
 
Join Date: Jan 2013
Posts: 2,161
OP: If you have this much in your portfolio AND Social Security coming with no debts and no heirs, you are probably covered for long term care. Most people don't do more than a year or two in LTC and you could probably do at least 8 at today's prices. If you have a home. probably more. Have a trust and a medical POA set up with some instructions on how to handle your care. Look around at these facilities near you and keep an eye on them so if things start to deteriorate, you can discuss your care with the POA.
Another Reader is online now   Reply With Quote
Old 11-04-2018, 11:37 AM   #15
Thinks s/he gets paid by the post
RobbieB's Avatar
 
Join Date: Mar 2016
Location: Central CA
Posts: 4,505
LTC is something I don't worry about. 2 out of 3 are dead before a year.
__________________
Retired at 59 in 2014. Should have done it sooner but I worried too much.
RobbieB is offline   Reply With Quote
Old 11-04-2018, 11:52 AM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 10,803
Quote:
Originally Posted by RobbieB View Post
LTC is something I don't worry about. 2 out of 3 are dead before a year.
Thanks RobbieB. None of the numbers in the article were a surprise, but they were presented in an interesting, understandable way.

My LTC self-insure plans would cover long stays for either/both DW and I, but our overall estate planning (taking care of the kids and grand kids) does work out better if we don't use LTC or our numbers fall into the likely, expected ranges.

This reminds me of how little LTCi is really "insurance." The real risk is that a couple combined spend many years in LTC and LTCi (that's being sold today) typically caps at 3 - 5 years.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 11-04-2018, 12:11 PM   #17
Thinks s/he gets paid by the post
RobbieB's Avatar
 
Join Date: Mar 2016
Location: Central CA
Posts: 4,505
Yup, even money you won't last 6 months.
__________________
Retired at 59 in 2014. Should have done it sooner but I worried too much.
RobbieB is offline   Reply With Quote
Old 11-04-2018, 12:12 PM   #18
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Location: Huntsville, AL/Helen, GA
Posts: 3,752
I think a good advisor might be suggesting that you need a good will with healthcare directives, etc. This can be a problem with single people without children.
Bamaman is offline   Reply With Quote
Old 11-04-2018, 12:27 PM   #19
Moderator
samclem's Avatar
 
Join Date: May 2004
Location: SW Ohio
Posts: 14,292
Quote:
Originally Posted by RobbieB View Post
LTC is something I don't worry about. 2 out of 3 are dead before a year.
LTC is a lot more than just nursing homes.
LTCI is insurance (maybe crummy insurance, but still insurance). I think most people who buy it do it to prevent a financial catastrophe, not because they think they are >likely< to wind up ahead financially. Properly underwritten insurance is never a good bet for the insured, it is a money loser in the aggregate. It's the >unlikely< but devastating outcome people are trying to avoid by purchasing LTCI.
samclem is offline   Reply With Quote
Old 11-04-2018, 12:27 PM   #20
Thinks s/he gets paid by the post
flintnational's Avatar
 
Join Date: Mar 2008
Location: Atlanta Suburb
Posts: 1,350
Thanks RobbieB. Good information. Based on the study data in the article, 25% of the population will die in a nursing home. Of those, only 35% will last more than 1 year.

So, based on this data, the individual risk of dying in a nursing home with a stay longer than 1 year is 8.75% (25% x 35%). The risk for either member of a couple (not both) would be 17.5%* (8.75% + 8.75%). Both members of a couple would be only .07% (8.75% x 8.75%).

*Per the study, men actually died after an average shorter stay than women.
__________________

__________________
"Oh, twice as much ain't twice as good
And can't sustain like one half could
It's wanting more that's gonna send me to my knees" - John Mayer
flintnational is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Q's you could ask IF you had a financial advisor mickeyd FIRE and Money 34 11-03-2008 03:23 PM
Meeting with a financial planner Ronstar FIRE and Money 15 10-19-2007 12:41 PM
Final Meeting With My Finacial Advisor. My Dream FIRE and Money 107 01-16-2007 08:44 AM
My first meeting with a Certified Financial Planner doushioukanaa FIRE and Money 22 05-15-2006 10:29 AM
United Airlines trying to dump pension obligation BristolBane Other topics 31 05-12-2005 12:44 PM

» Quick Links

 
All times are GMT -6. The time now is 03:29 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2019, vBulletin Solutions, Inc.
×