financial planning after age 50

[Guest Dayle]

Both husband and wife are nearing 55. Net worth approx. 850,000 with husband self-employed in construction and wife is a school teacher considering going to part time work. Retirement accounts (state and 401k) approx. 40,000. Small money mkt investment worth 10,000. Husbands term life insurance 100,000. Wife's term life insurance 50,000. Cash on hand 100,000. Hope to retire or semi-retire in 10-15 yrs.

Financial Advisor advises the following:

Begin retirement acct. at work, matching 3% of employees contributions and each spouse contributes 6,000 per year (business is incorporated and both partners draw a salary)

Buy 750,000 to 1,000,000 universal life insurance each. Begin with 40-50,0000 payments first year, tapering off each year for 10 years.

Roll 401k into an IRA

Invest in nursing home insurance.

This seems like too much of our money is going into insurance. Are there smarter, but safe, alternatives?

[Erik Read]

Not only too much into insurance, but ask your "advisor" what he makes off the insurance policies - that's a windfall for his pocketbook!

I'd agree with the open retirement plan/account through your business, but I'd get together with a local actuary or TPA, and have them run some numbers for you to see what you can get into a plan comfortably each year. With the new tax laws, single employer business have some substantial options available to them.

Once you see what you can sock away, then decide where to put it, and discuss in more detail with your "advisor" or a new advisor how to do the investments - I'd try to stay to "No-Load" mutual funds. And pay attention to the expense ratio and "12b-1" fees that the advisor may get a portion of.

Good luck.

[Guest sdolce]

ERead's comment about consulting an actuary or TPA is very well-taken. There are many more options available than what has been proposed by their financial planner. .Some pertinent questions:

1.What are they willing/able to take out of the company and put into a retirement plan?

2.What are their salaries from the corporation?

3.Does the corporation have any other (non-union) employees?What are their ages/salaries?

There are many small-to-medium size actuarial firms around that specialize in just this kind of planning for small ,closely businesses,and many of them do not have any insurance or investment product relatonships,so they are completely independent.