The Money Trail

Whe

n my moment came, I was like many other people who are offered an early early-retirement package: I hadn't given a moment's thought to retiring. The idea presented many appealing possibilities, however, like taking the long, leisurely trip to Barcelona that I'd been dreaming about. But before I could take that journey, I had to embark on another — a crash course in retirement finances and a quest for an adviser I could trust to help set up my retirement portfolio. My journey was bumpier than expected. And I arrived only after gaining a painful education.

I started at the discount brokerage firm where I had an account. There I met with Mr. Income Annuity. He was short, stocky, substantial — bullish, you might say. After much computer analysis, he recommended that I spend a not insignificant sum on a five-year annuity and prescribed a "wealth-replacement" plan. But I didn't like the idea of replacing wealth. I preferred the idea of holding on to wealth.

Mr. I.A. also thought I should immediately flip my company 401(k) into a personal IRA. "There are no advantages to keeping your 401(k)," he said. Gee, I thought, usually everything has advantages and disadvantages. I eventually discovered, for example, that when you draw company stock from a 401(k), it is taxed more favorably than if you draw it from an IRA. I needed to move on.

Next I lunched with Ms. Muni Bonds. But municipals aren't great for someone in the 15% tax bracket, as I expected to be. I attended a delicious complimentary dinner, at which I met Mr. Cash-Flow Chart, who later projected how fantastically my retirement savings would grow. Unfortunately, his math was as fantastic as his chart. Mr. Financial Planner was recommended by a colleague. All I needed to hear of his financial plan was that it was a plan to relieve me of a large chunk of my finances each year in return for his services. Then, through a family friend, I met a good-looking, reassuring, take-charge kind of guy who appeared to be Mr. Just Right. His recommendations seemed sound, and the interest rates he mentioned were attractive. I signed on.

But all was not well for long. I was appalled at the controversial, risky stocks that began popping up in the stock portion of my account. (Do Tyco and WorldCom ring a bell?) I opted out of this part of the portfolio and requested more input into the selection of my fixed-income investments. Then the unthinkable happened. I was dropped! I was told that our relationship wasn't "philosophically consistent." Actually, I think I asked too many questions — like, What is this extra $50,000 doing in my account? In any event, it was a humbling experience. As a friend put it, "It's like being fired by your shrink."

Desperate by now, I went back to where I started, almost, to another branch of the first firm I consulted. Here I met a rep who recommended well-respected funds that he — and Morningstar — liked. We also discussed conservative but decently paying fixed-income possibilities. Strange as it sounded to me by then, he actually believed he should "preserve my clients' assets and make them grow at a reasonable level. Losing principal is the biggest pitfall." I'd finally learned that the return of principal is more important than the return on principal.

Finding Mr. Finally Found Him was a learning experience. Here are the lessons: 1) Start thinking about retirement finances as you approach 50. Early retirement is great, but early planning makes it even greater. 2) Be aware that brokers are supposed to do what's best for the brokerage house, which isn't necessarily what's best for you. Be wary. Double-check anything that doesn't sound right. 3) Remember that choosing an adviser is very personal. Know yourself. Decide what level of risk you can accept and whether you can be comfortable with someone else making decisions for you. 4) Get as many free meals as you can.

As for me, finally, I can kick back, relax and book that flight to Barcelona.