Can Dad's pension turn into a windfall for the children?

Q: My father died a few years ago and never collected his pension from the Teamsters as a Chicago truck driver from 1946 to 1966. As his son, do I have any right to his pension, which was never received?
J.M., Menard, Ill.

A: First, you have to contact the Teamsters to verify that your father was eligible for retirement benefits and that they were never paid, says Vince Clanton, a certified financial planner in Atlanta. The next step would be to determine if a liability existed, and how it would be calculated.

If you find that some benefits could be paid, you probably will need to petition the probate court in the county in which your father lived at the end of his life to reopen his estate, Mr. Clanton says. (If he had a will, the executor would be responsible for this.)

If any funds are collected by the executor, they would then be disbursed in accordance with terms of the will. If your father did not have a will, the state in which he lived has an alternate procedure to determine the final disposition of assets.

Q: What are bonds? How would they make money for me? Can bonds return more money than mutual funds or stocks? What resources might help me learn more?
D.T., via e-mail

A: Bonds are a debt security, and represent a loan to an institution. In exchange for your loan, that institution – be it the United States government, a foreign government, a municipality, or corporation – promises to pay back what you gave, plus a stated rate of interest. Bonds can be bought through mutual funds, a brokerage firm, or directly from the issuer, says Helga Cuthbert, a certified financial planner in Decatur, Ga. For example, US government-issued Treasury Bonds can be purchased directly at www.Treasurydirect.gov. This site also contains general information about Treasury bonds. Another good website, she says, is www.bondsonline.com.

As for performance, sometimes bonds win, sometimes stocks do. Between 1995 and 1999, stocks clearly outperformed bonds. But the reverse was true between 2000 and 2002 when the stock market collapsed while bonds held up, Ms. Cuthbert says.

In the opinion of Cuthbert and many other money experts, bonds offer interest payments, add diversification to a portfolio, and can act as a hedge against the relative volatility of stocks.

Q: What asset allocation would you suggest for a divorced 50-year-old female with about $420,000 in retirement funds (i.e., IRAs)? I own a home with a small mortgage.
G.M., via e-mail

A: With this much money at stake, David Hultstrom, a financial planner in Woodstock, Ga., advises you to seek the counsel of a professional, fee-only adviser. Look for someone with credentials such as CFP (Certified Financial Planner) or CFA (Chartered Financial Analyst), indicators that they're competent to manage your money.

That said, Mr. Hultstrom says you could do a lot worse than the standard 60 percent in stocks and 40 percent in bonds using investment vehicles such as the Vanguard Total Stock Market fund and the Vanguard Total Bond Market fund. Research shows that with a reasonable asset allocation mix (like the 60/40 suggestion), you can take about 4 percent from the portfolio each year and have a high probability of not running out of money while keeping up with inflation. On a $420,000 portfolio that would mean an initial withdrawal of $16,800 in the first year and then an increase each year that accounts for inflation.

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