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Q & A: Retiree aims for the right asset mix

By Guy Halverson / February 5, 2001



Q I'm 62, retired, and get $571 a month from Social Security, which I estimate to have a net present value of $75,000. I also get $1,405 from a pension with an estimated NPV of $218,000. Finally, I have about $300,000 in stock-index mutual funds. By one way of reckoning, I am 100 percent in stocks. But if I factor in the NPV of my fixed-income accounts, I am about 50/50 fixed income/equities. Which is correct? Should I move some stocks to bonds, or sit tight?

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D.L., via e-mail

A Your reckoning of a 50/50 split is a good way to assess your financial assets, says Nikki Ross, a financial planner and author of "Lessons From the Legends of Wall Street" (Dearborn).

"Your mutual-fund portfolio may seem excessive with stocks," but you are correct in wanting to offset inflation during your retirement, she says.

Ms. Ross suggests you make certain your stock holdings contain a mix of of domestic, international, large-, mid-, and small-cap firms. She also recommends you shift some money into managed funds that focus on technology, healthcare, and finance.

Finally, if you buy bonds, select top-quality intermediate-term corporate bonds, or inflation-adjusting US Treasury I bonds.

Q I just left my job after 10 years but still have a contributory retirement plan there. My contributions, made with after-tax dollars, were put in company stock. Can I have that account rolled over into an IRA?

R.M., New York

A No. According to a rollover specialist with Vanguard Group (800-662-7447), since your contributions are not in a tax-sheltered account, "you would roll the money over to a regular [non-IRA] account." He recommends you have the account transferred "in kind," that is, as stock, to a regular brokerage account. This way you avoid capital-gains taxes until you decide to sell the shares.

Questions about finances? Write: Guy Halverson

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