RETIREMENT PLANNING HELP

It is a matter of relativity and I am not talking about Einstein. As a young worker make a good salary and wanting to save for retirement, I hired a financial planner because I all the rules and regulations associated with buying and selling stocks and the gyrations that were happening in money market created total mental chaos. The person I chose was personably and seemed as if he who knew what he was doing, although I really didn’t have any knowledge for making that judgment. In addition, a little research revealed he had a good reputation and that his father was a successful financial planner, so I signed a contract; fine print and all; his fee would “only” be 1% of the capital he managed. Years went by and things were going nicely with all of my tax exempt retirement accounts; then came retirement and I was pleased with the results; between social Security and my savings I would have a comfortable income, at least for the foreseeable future, which in the volatile world of finance may or may not be long.

I usually shredded monthly reports, one for each of several portfolios, from the financial manager after a casual glance. This months reports was destined for the same fate until  after seeing the estimated yearly income from that portfolio and the financial planner’s fee caught my eye. Wow! As expected, his fee had actually gone down and my return on investments fell as I progressed into my retirement. After a person reaches a certain age, the government requires a certain amount be principle be withdrawn each year based on life expectancy. Of course, I have to pay taxes on the amount withdrawn, which I do not mind because I have gotten a lot god things from the government over my lifetime even though gainfully employed all my life. The money I saved had been tax sheltered and now it was my time to pay up.  

When I back calculated, something was not right.  I discovered the financial planner’s rate had increased from 1% to 1.5% over time, which I find out was allowed under the contract now that I read the fine print; however, it turns out that his fee was a  surprising 59.3% of the amount of my estimated earning for that portfolio for that year. My return on “investment” had gone down because of falling interest rates until now his income from my investment was approaching what mine was. It did not seem right but it is exactly what I had agreed to all those years ago. I should also point out that because of increases in inflation my nest egg is no longer grows as it has since I started saving and in a couple of years will shrink. It seems the financial planner had a better plan for his retirement than for me. 

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