Frank Armstrong, III, CLU, CFP™, AIF, is the founder and principal of Investor Solutions, Inc., a fee-only registered investment advisor. He has more than 30 years’ experience in the securities and financial services industry. His bestselling book The Informed Investor was cited by BusinessWeek as one of the best investment books of the year. Frank has twice been named by Barron’s as one of the top 100 independent financial advisors. He was a featured columnist on Morningstar.com for a number of years and is a frequent contributor to AccountsWorld.com and FundsInteractive.com. He has appeared on “CNN Headline News,” “Your Money with Stewart Varney,” “PBS Morning Business Report,” CNBC, “Money Life with Chuck Jaffee,” and public radio stations around the country. Frank is widely quoted in the media, his articles appear in major financial magazines and Web sites, and he lectures nationwide on principles of investment management.
Jason R. Doss is an attorney with the Atlanta-based law firm, The Doss Firm, LLC. He represents consumers against the financial services industry in securities arbitrations and consumer class action litigation. Jason has a proven track record of fighting for consumers’ rights and for taking major corporations to task. Over the last few years, he has initiated some of the largest consumer class action cases in the country. Since 2001, Jason has been an active member of the Public Investors Arbitration Bar Association (PIABA), a national organization devoted to representing investors in securities arbitration.
Acknowledgements | p. xiv |
About the Authors | p. xv |
Introduction | p. 1 |
Overview of the Retirement Problem | p. 7 |
You Are On Your Own | p. 8 |
Surviving in an Era of Cradle-to-Grave Insecurity! | p. 8 |
The Changing Face of Retirement | p. 15 |
Work Optional | p. 19 |
The Retirement Problem | p. 20 |
Meet Your Retirement Plans | p. 23 |
Defined Benefit Plans | p. 24 |
Pension Plans | p. 24 |
Defined Benefit Plans | p. 25 |
Defined Contribution Plans-An Overview | p. 30 |
For Plan Sponsors | p. 30 |
For Participants | p. 31 |
The Basic Defined Contribution Plan | p. 32 |
Investment Control and Safe Harbor Provisions | p. 35 |
Funding Options | p. 35 |
Portability | p. 36 |
Profit-Sharing Plans | p. 37 |
Employee-Funded Plans | p. 38 |
Generic Problems with Pension Plans | p. 39 |
What Is Wrong with Self-Funded, Self-Directed Plans? | p. 39 |
Investor Behavior | p. 43 |
The 401(k) Plan | p. 47 |
The 403(b) Plan-Not-For-Profit Enterprises | p. 50 |
Is Your 403(b) Plan Broken? | p. 52 |
The Roth 401(k), 403(b) Option | p. 55 |
Section 457 Plans for Municipal and State Employees | p. 56 |
Making the Most of Your 401(k), 403(b), or 457 Plan | p. 58 |
Choosing the Right Plan Options | p. 58 |
Integrating Your Retirement Plan Assets into Your Total Financial Plan | p. 59 |
IRAs | p. 60 |
Learning to Love IRAs | p. 60 |
Setting Up Your IRA | p. 62 |
Types of IRAs | p. 62 |
Regular | p. 63 |
Roth IRAs | p. 65 |
Non-Tax-Deductible IRAs | p. 66 |
Rollover IRA | p. 68 |
Keep Up to Date | p. 71 |
Summary | p. 71 |
Retirement Planning for the Self-Employed | p. 72 |
How Does Your Plan Stack Up? | p. 75 |
Total Expenses | p. 76 |
Quality Fund Choices | p. 77 |
Adequate Funds Choices to Diversify the Portfolio Properly | p. 77 |
Suggested Asset Allocations | p. 77 |
Company Stock: Just Say "No" | p. 78 |
Bells and Whistles | p. 79 |
Individual Advice | p. 79 |
Company Match | p. 79 |
What Can Go Wrong | p. 80 |
DB Plan Termination | p. 80 |
Voluntary Freezes or Terminations | p. 80 |
Distress or Involuntary Terminations | p. 81 |
Conclusions | p. 84 |
Defined Contribution: Plan Sponsor Failure | p. 84 |
Should You Contribute to It? | p. 87 |
Alternatives to Qualified Plans | p. 89 |
The Good | p. 89 |
The Bad | p. 90 |
The Ugly | p. 90 |
Alternatives | p. 90 |
A Game Plan if Your Employee-Funded Plan Falls Short | p. 91 |
Summary | p. 92 |
Help from the Courts | p. 93 |
Where Are You in Your Career? | p. 95 |
Early and Mid-Career | p. 97 |
Changing Jobs: Smart Moves for Your Pension Plan | p. 99 |
Take the Money and Run! | p. 100 |
Systematically Looting Your Retirement Funds | p. 101 |
Age 55 Separation from Service | p. 102 |
Company Stock | p. 102 |
Reinvesting the Net Proceeds | p. 103 |
Creditor Proofing | p. 103 |
Conclusion | p. 103 |
Leaving the Money in Your Old Plan | p. 104 |
Reasons to Remain in the Old Plan | p. 104 |
Reasons to Look Elsewhere | p. 105 |
One Final Consideration: Loans | p. 106 |
Rolling Your Plan into Your New Employer's Plan | p. 107 |
Costs and Features | p. 107 |
Creditor Proofing | p. 107 |
Loans | p. 107 |
Retirement Between 55 and 591/2 | p. 108 |
The Conduit IRA | p. 108 |
The IRA Rollover | p. 108 |
At Age 50, the Catch-Up Provisions | p. 111 |
Approaching Retirement Transition Planning | p. 112 |
Early Retirement Tactics: How to Avoid the Tax Traps | p. 114 |
How to Retire Early and Not Pay the Taxman a Penalty | p. 114 |
Exceptions to the Early Distribution Tax Penalties | p. 114 |
Conclusion | p. 119 |
70 is the New 65: Delayed Retirement Advantages | p. 120 |
Summary | p. 123 |
At Retirement | p. 125 |
Critical Choice: Lump Sum Versus Annuity for Distributions | p. 125 |
Annuity Options for DB Plans-How to Decide | p. 125 |
Lump Sum or Annuity | p. 126 |
Which Assets to Spend First During Retirement? | p. 129 |
Early Retirees | p. 130 |
Normal Retirees | p. 130 |
Required Minimum Distributions (RMD) at Age 701/2 | p. 131 |
Summary | p. 131 |
Paying Off the House at Retirement | p. 132 |
Additional Considerations | p. 134 |
Estate Planning | p. 134 |
Three Common Claims Brought by Investors | p. 137 |
Unsuitability | p. 137 |
Churning | p. 138 |
Unauthorized Trading | p. 138 |
What Do You Do When You Suspect That You Have Been Victimized? | p. 139 |
The Arbitration | p. 140 |
How Much Will You Need? | p. 143 |
Too Much Is Never a Problem | p. 144 |
Beware Simplistic Software | p. 145 |
Keep It Real | p. 146 |
Forecasting Your Retirement Needs | p. 147 |
Sustainable Withdrawal Rates | p. 148 |
Old Assumptions Are Hazardous to Your Wealth | p. 148 |
A Pioneering Study | p. 149 |
Summary | p. 150 |
Forecasting Your Needs | p. 152 |
Early in Your Career | p. 152 |
Later in Your Career | p. 154 |
The Three-Phase Model of Retirement: Is It Valid for You? | p. 155 |
Gap Analysis | p. 156 |
Accounting for Outside Incomes in Asset Allocation | p. 157 |
How Are You Doing? | p. 159 |
Investing to Meet Your Goals | p. 161 |
The Anti-Cramer Guide to Investment Success | p. 162 |
Start Early | p. 163 |
What Wants to Be a Millionaire? | p. 164 |
Get Market Rates of Return | p. 166 |
What Are Reasonable Expectations for Market Returns? | p. 167 |
Manage Risk, Don't Avoid It | p. 168 |
Cleaning Up Credit Card Debt | p. 169 |
Costs Matter | p. 173 |
Taxes Matter | p. 176 |
Control Risk | p. 178 |
Risk and Reward Are Related | p. 178 |
Controlling Risk | p. 179 |
An Accumulation Example | p. 180 |
Risk Is Amplified with Systematic Withdrawals | p. 181 |
Summary | p. 182 |
Determine Your Risk Tolerance and Time Horizon | p. 183 |
Concentrated Stock | p. 185 |
The Perils of Company Stock | p. 187 |
Recognizing the Effect of Volatility | p. 190 |
Totally Skewed | p. 191 |
Taking the Right Amount of Risk | p. 193 |
It's the Portfolio, Stupid! | p. 197 |
Traditional Active Managers Are a Waste of Money | p. 198 |
Market Efficiency | p. 198 |
Randomness | p. 199 |
Manager Effectiveness | p. 199 |
Build a Global Portfolio of Asset Classes | p. 200 |
Asset-Class Investing | p. 200 |
Investment Vehicles | p. 201 |
Individual Stocks and Bonds | p. 201 |
Mutual Funds | p. 201 |
Separate Accounts | p. 202 |
Index Funds | p. 202 |
Exchange Traded Funds | p. 202 |
Annuities: Just Say No! | p. 203 |
A Truly Toxic Product | p. 206 |
Building Your Buckets | p. 208 |
The Risky Bucket | p. 208 |
The Low-Risk Bucket | p. 212 |
Periodic Maintenance | p. 214 |
Investing During Retirement | p. 216 |
Bucket One-Adequate Liquid Reserves | p. 220 |
Bucket Two-World Equity Market Basket | p. 221 |
Withdrawal Strategy-Preserve Volatile Assets in Down Markets | p. 222 |
Selecting an Advisor | p. 224 |
Avoiding Advisor Risk | p. 224 |
Getting Objective Advice | p. 227 |
Reaching Your Goals | p. 233 |
Personal Savings and Liabilities | p. 233 |
You Must Save Early, Lavishly, and with Discipline | p. 236 |
Keep Time on Your Side | p. 237 |
Public Policy Issues | p. 240 |
Social Security | p. 240 |
Medicare | p. 241 |
Sinking Is Not an Option | p. 242 |
Glossary | p. 243 |
Index | p. 251 |
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