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Putting A Human Face on Retirement Investing

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As this letter goes to press, a bank will be wiring to my mom’s account a sum representing her entire life savings. I’ve been involved in planning for this moment for seven years, since my dad passed away, and I was overjoyed that this moment had arrived. My mom, on the other hand, was scared. She was intensely worried about how she would get through such a transition. I glibly pointed out that she would need to sign her name in a few places and accept a very large check. My attempt at humor did not work. She wanted me to be with her when papers were signed. And of course I was there for that and will be there every step of the way in the future.

The truth is that life transitions, even if accomplished through a two-second physical act, are emotionally very fraught. Such transitions should never be faced alone. That’s what family is for, and when it comes to finances, that’s what financial advisors are for. I have already arranged for a meeting of my mom, myself and her new financial advisor. There’s much to talk about, but as we develop a strategy to fearlessly face the decades ahead, I take comfort in the fact that my mom’s financial advisor knows exactly who the enemies are: inflation, taxes and fees, the financial world’s axis of evil. (The advisor’s fees are as nothing given his aggressive fight against these enemies.)

Our annual retirement issue covers some of these topics and much more besides. On the inflation front is Prof. Milevsky’s fourth lesson in our Retirement Income University series. He explains a fundamental point: that retirees’ rate of inflation is usually higher than the general wage earner’s inflation rate, and further that with a little effort one can calculate a personal rate of inflation. Our profiles in success, Bud Kasper and Emerson Knowles, have a lot of expertise on the tax implications of retirement investing. Kasper trains regularly with IRA guru and CPA Ed Slott and Knowles’ MIT education helps him view tax-involved estate planning as “an engineering problem.” Ron DeLegge brings us up to date on the too-slow but inevitable acceptance of ETFs as mainstream 401(k) investments, which should bring costs down for your clients.

In addition, read our book review on breaking into the employer retirement plan business; our interview with ING’s annuity business chief, Harry Stout; our feature on the emerging class of longevity products and the need for advisors to switch gears from accumulation to distribution; and of course our cover story, “A Tale of Two Retirements,” which gives the human dimension to retirement investing, whence it should never depart. Which brings me back to my mom: Having signed the docs, she no longer feels quite so heartsick, but she admits she will continue to feel a little unsettled until she meets with her financial advisor.