Q: I’m 66, retired, and am a full-time caregiver to my wife, now bed-bound. I have a $300K IRA (through my last job) earning 1 percent (oh boy). They are closing the IRA account due to company being bought out, etc. and is now defunct. Do you have any suggestions for another IRA vehicle, or basically any advice on what to do with the money?
A: My guess is that in addition to the company being bought out the decision to close the IRA could be linked to the to the recent Department of Labor ruling on fiduciary obligations with IRAs.
I’m surprised at your 1 percent return. That seems low for a diversified portfolio where a 3 percent to 5 percent has been more typical considering how well the markets have done in recent years.
I got in touch with Patrick Zumbusch, founder and chief executive of Wellspring Financial Partners in Tucson, Ariz. He had a number of suggestions. As with most personal finance issues, there is no right or wrong answer. It depends on what is right for you.
1. Notwithstanding your wife’s ill health, Zumbusch says, odds are that one of you will live to age 91. You will want the savings to work for you for a long time.
2. To the specifics of your question, he urged you to find an adviser that adheres to the fiduciary standard and open an IRA account with them. The main website for finding fee-only financial planners that adhere to the fiduciary standard is the National Association of Personal Financial Advisors at napfa.org. Interview several about how they would work with you to plan for this next stage of your life.
I would also check out Vanguard, TIAA-CREF, USAA, Fidelity, Charles Schwab and other financial services behemoths that offer low fees and good service. You will want to roll the $300,000 directly to your new adviser or firm to preserve the IRAs tax shelter.
3. Like me, Zumbusch recommends investing in a broad-based index fund investment strategy. You will pay extremely low fees.
4. Sooner or later you will need to decide on how much of the portfolio should be in stocks, bonds and other assets. The new adviser will help you do that. Zumbusch likes the adage of 110 — Age = Percent in Equities as a starting point.
5. He recommends keeping six to eight months’ worth of expenses in cash, just in case.
6. Last, consult with an eldercare attorney or an adviser with expertise in senior care to make sure you are taking advantage of all the public options available to you.
Hope this helps.
Chris Farrell, senior economics contributor, “Marketplace,” commentator, Minnesota Public Radio.