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JP in NJ

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  1. Ira - Thanks for the reply. I was inspired to hear of your own early retirement and subsequent ukelele lessons. I had a friend, since passed on, who played well. He'd play in front of kids and mentally handicapped adults, twirl the ukelele in his hand, pop himself on the head with it on the last drum beats of a number, then laugh himself silly....my kind of guy! I'd love to begin living the musician's life. Anyway (off on a tangent again) (I'd make a lousy Federal Reserve Chairman).....you raise an interesting point: What if someone faced with unfavorable options from an employer simply bypasses the use of those employer options altogether? I would have to do a couple of projected 1040 tax forms for '05, my last full-salaried year. I would check to see what the difference would be between fully funding the employer tax shelter or stopping it now and opening a '401' plan on my own. Of course, the tax deferment with the latter would not be as great as the $14,000. + over-50/$4,000. which the employer 403(b) plan offers for '05. The key factor would be to figure out exactly what the fees would amount to for both the guy from Lincoln Financial and the front-loads from American Funds, in total. These could then be compared to the tax savings, and I would have a clearer idea as to which way to go. The problem is this: With Valic, I have always found it difficult to figure out exactly how much is coming off the top to pay the fees. I look closely at the quarterly reports and end-of-year reports and, though a reading comprehension teacher, have a difficult time reading these statements. Maybe it's me, but they don't exactly spell it out for you. Maybe we should contact Elliott Spitzer over in New York and see if he is making that part of his industry-wide reform: The company should be required to spell out how much EXACTLY, in dollars and cents, the annuity client has paid out in fees at the end of each calendar year. Anyway, maybe I can get this guy from Lincoln Financial to tell me exactly how much it would cost me in commissions, loads, fees and other charges if I signed up with him? Thanks again.
  2. Regarding the matters talked about earlier: I checked back with the persons handling the 403(b) and annuity accounts at my district's board offices, and while friendly could not really do much more than provide the names and phone numbers of the board-approved vendors. It was a short list of five, three of which (Equitable, Met Life and Prudential) all offered the same type of 'wrapped' annuity plans I have already experienced with Valic. A fifth was with Lincoln Financial Services. I spoke briefly with their representative who offered a 403(b) mutual fund package in American Funds or Russell Funds as the best alternative to the higher costs of Valic. He claimed he could make the transition from Valic to, say, American Funds a smooth one, transferring those funds eligible to be moved out of Valic without incurring early withdrawl fees, and moving others as time went by. A few questions, hopefully without starting a whole new debate: He is first and foremost a salesman, no? American Funds have front-load fees, are pretty well-managed and seem to encourage more conservative placements for retirees, and this guy is a middle person working for his firm (Lincoln) and handling the set-up of American Funds' accounts, correct? His plan seems the best of my district's generally poor choices. Or is this not worth doing? I should have - but didn't yet - find out the EXACT fee schedule involved and I will no doubt answer my own question. But in deference to what 'TR', French Teacher and others here have been saying in many other threads, he is at the same time a qualified advisor who, I have found, has handled the accounts of several colleagues who similarly moved out of their previous annunity contracts into his plan and seem happy with him. If I agree with Ira, Joel, Chad and Danc above - that Valic shouldn't get another nickel - is this the best of the other choices, what with my need for just a few more months of tax deferment? Best wishes and thanks again. James P.
  3. I am re-entering the thread after a few weeks in which I was off finding some things out about my district which I will report here in the hopes of receiving more of the excellent feedback that is the forum's trademark. First, thanks to all those who have responded so far. I have spent many a steamy afternoon of this sweltering NY/NJ summer season in the cooled comfort of an easy chair "going to school", i.e. reading this board and the related author / web recommendations that have been made here. Thanks also to Founding Father Dan who created the site, and to the cast of colorful regulars who show up here - sometimes contentiously but always in an interesting way. I am writing up a little report on what I have learned here which I will post on my district's website used by 200 teachers, staff and administrators inviting all to read up for themselves if they haven't already. Since I am inviting people I know to come read this public website, I had to edit some of my earlier posts which identified certain corrupt political figures "pimping" on local inner-city school systems in this neck of the woods. Better to keep my mouth shut, I says to myself, before Tony Soprano sends Paulie Walnuts over to my house in the middle of the night to shoot up some windows, if you know what I mean....irrelevant to the financial discussions here anyway. Oh yes, one final thing (sorry, I'll get back to business in a minute!): Thanks for the encouragement and personal anecdotal stuff in the other couple of threads in which I have participated.
  4. Ira - No need to apologize - the sidebar discourse/discussions/arguments fuel the engines that keep this forum chugging along in such an interesting way. It should be no big deal, I feel, to just move a question or two on an individual situation to another thread, as I have done here. The discourse, after all, has contributed to my learning more here in the last three weeks than I did in the 15 previous years as an 'annunitant' with Valic. Thanks for responding, and Joel and Chad seemed to immediately agree with you that it would be best to close out my relationship with Valic. My contract specifies 5% surrender charges on money taken out early. I search-engined this forum's previous discussions on surrender charges, and the advice was usually of the 'bite-the-bullet' variety; people were advised to pay the charges in order to set themselves up in a better plan. But most of those receiving this advice were not as close as I am to retiring. This is why I mentioned taking SEPP payouts, but instead of taking the originally-planned small payouts I was wondering what the LARGEST permissible payouts were, even if it drained the account by age 59 1/2. This would still allow me to set up a more desirable no-load account on my own. Wouldn't this - effectively playing by their rules - avoid my having to fork over the hefty hunk of change that the surrender charges would amount to?
  5. Thanks to all posters for another interesting back and forth. Steve - I can think of another profession where the client pays and pays year after year regardless of the performance.....ours. If you look at the taxpayer as client, and a badly-run public school system such as the one I have recently alluded to, examples abound: Politically-connected, No Child Left Behind "consultants" getting paid $1,500 per day for dubious advice. No-bid contractors for school construction and other supposed services. And, as Chad mentioned, a smattering of ineffective teachers who are nonetheless compensated for life. I guess Buyer Beware is always a good rule of thumb. This board, on the other hand, serves as a shining example of enlightenment, advancement and excellence. Those contributing to it are putting their time and energy toward a very positive type of activism and a true public service. Thanks again.
  6. What should I do with a Variable Annuity from Valic which has accumulated over $90,000 in the 15 years I have paid into it? I mentioned this in a recent thread, and one of those circular little arguments which seem to creep up at times on this board ensued. But hey, there's nothing wrong with that. In fact, I like circular little arguments, and the discourse here is (usually) very civil and very enlightening, so go ahead and start a debate if you care to. As I see it, there is a choice I will have to make before the summer is over. What would you do in this situation?: CHOICE 'A' is basically to do nothing but stay with Valic and to keep contributing as close to the maximum amount allowable for the rest of 2005. This despite the fact that I agree with the contention driven home many times in the 50+ pages of this forum that Valic's VA is an undesirable plan with high fees. Why stay with a plan you know is lousy? Because I am so close to the end, is why. I would ask Valic to calculate the maximum allowable monthly payout. I would stop working in early '06 and begin taking those as Substantially Equal Periodic Payments until age 59 1/2. The larger payouts would provide more income than I would actually need in retirement, but I would be more than capable of investing this extra income on my own. The high payouts might even drain a good chunk of the account, but so what? Sound like a plan? CHOICE 'B', on the other hand, would involve a '90-24' transfer before this year is out, and a setup in another 403(b) plan, one with much lower fees. I have seen Vanguard's and Fidelity's plans recommended several times in various places throughout this forum, and have no reason to doubt that switching to one of them is, indeed, sound advice. But the question then arises: At this late date, with as little as five months to go before retirement, wouldn't this changeover involve new fees that would negate the original purpose of leaving Valic (i.e. to avoid big fees)? My school district has since allowed for greater choice since the day when I signed on with Valic, but wouldn't there be up-front costs and commissions to be paid with any of these new products? Further, the experiences of those who have written to the forum while changing from one 403(b) plan to another have not always reported smooth sailing. This also has me thinking that changing at this point would seem to be a plan of action more suitable for someone with more time to go before they separate from their employer. What do you think? As before, thanks for reading this and for responding.
  7. TR1982 - Your points are well taken and thanks for your response. In 15 years, though, I don't remember ever once rejecting the advice of the Valic advisors overlooking the account. I would ask a few questions, and then just go ahead and follow their suggestions, and sign on the . To Steve and Ira: Thanks also for your responses. I am seeing once again that as we seek to make ourselves financially self-educated, obtaining second opinions is always a good thing to do. All of you are providing a great service to those glancing in to read through this website and see the discussions taking place in threads like this one. James P.
  8. Thanks to the posters here for an interesting back and forth. Since I am the new poster referred to earlier by TR1982, I felt I should add these comments: First, you are correct to note that I have entered this site on a somewhat sour note of complaint about my Variable Annuity. I will show you why with numbers in a second. I should add first that I don't really see myself as neglectful or ignorant of the basics of investing. By making the right choices with a paid-for investment property and DRIP-invested blue-chip stocks, I feel quite fortunate indeed to be ready, at age 52, to take an early retirement with the New Jersey State teachers' pension system. It is with the VA that my problem lies. I have enjoyed its tax benefits and contributed a total of $70,000. to it over 15 years, admittedly with the largest contributions coming in the six years since '99. In the two examples offered above, the hypothetical $2,000 per year ($30,000 in all) grew to $58,000. or $54,000 respectively after 15 years. My total right now? Just over $90,000. Hence, my Monday morning quarterbacking has me bellyaching precisely because I have come to find out in the 11th hour that this account has performed poorly not because of disappointing market returns or misallocations but because Valic's fees have eaten away at the returns I would have otherwise realized. At no point along the way has anyone pointed out to me that this was the case until very recently. Of course, I have ultimately no one to blame but myself for being in the dark for so long about this account. Hence, my expressed appreciation for discovering this board, as mentioned, 'better late than never'. Best wishes, James P.
  9. JP in NJ


    This is my first post. I have some questions about my personal situation, but would like to first make some general comments: What a wonderful website and forum this is! It's full of informative responses made in Plain English by people who don't talk down and keep their sense of humor. It's taken me several sittings, but I read through the 50+ pages of the 403(b) Forum. Sometimes the debates got a little heated, but so what? Responding to someone who is not agreeing with you is an excellent way of improving your own articulation, no? The links are topical, too. The article on Elliott Spitzer, A.G. of New York, (4 pages in from this one) was my favorite. And every high school teacher in America should be provided a copy of the Improving Responsibility of rs voice mail (about 25 pages in from this one). An instant classic! (Have you ever seen the collection of absent-note errors?) Anyway, 26 years in inner-city high schools in North Jersey have worn me a little thin and I am blessed to be able to consider an imminent early retirement. Which leads me to this: I have been contributing to a Variable Annuity from Valic since 1990, 15 years. As I am now trying to determine the best means of using it as part of an early-retirement income, I examine your site and come away with one inescapable conclusion: It has been a poor choice! A real dog!! Why wasn't I told before? Why did I never notice?? Yes, yes, I know.....your forum goes into great detail explaining the why's and wherefore's of how these contracts came to be foisted on an unsuspecting teacher population (200,000 teachers in New Jersey alone). Well, better late than never I guess. Here's the thing (then I'll finish my rant): I do read the business section every day of the biggest daily paper in North Jersey, The Star Ledger. It features daily advice and Q&A forums by some excellent people. It has Liz Pulliam Weston's syndicated financial column, as well as stuff from the Motley Fool, Chuck Jaffe of Market Watch.com, and its own local advisors called The Biz Brain. All very good educators for those of us doing our own homework. I am just very surprised that despite all that, I never came across anything before your website which at least gave a HEADS UP, a whistle, a "YO!" that so many of us were riding the wrong bus (the slow one) with these VA's and we should maybe consider getting off at one of the next stops. Thanks, and I'll see you again. James P.
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