Dian's Column
Dian's Archive


Investing your IRA rollover dollars

- Alan Lavine and Gail Liberman

What do you do after you've rolled over your 401 (K) pension into an IRA?

You've got a lot of cash to reinvest. Before you do, financial advisers recommend that you figure how much income you need to meet expenses. Consider your rent or a mortgage, food, clothing, transportation, utilities, health care and other insurance as well as travel and entertainment.

Milton Ezrati, senior economic and market strategist for Lord Abbett, a Jersey City, N.J.-based investment company, says to ask yourself two important questions when you retire.

  • How long must the investments provide retirement income?

  • How much is the cost-of-living apt to rise during retirement?

    "It would be imprudent for a retirement investment strategy to rely on actuarial tables alone, which underestimates the average life span," he says. "Medical science has made great strides in lengthening life. Half of the population will live longer than the tables suggest."

    Ezrati suggests that retirees:

  • Build retirement investment plans around a cost-of- living increase close to 5 percent to 7 percent annually.

  • Keep at least 30 percent of assets in stocks.

  • Take systematic withdrawals from stock funds in taxable accounts. With a systematic withdrawal, you typically take about 4 percent to 6 percent of your assets annually from a mutual fund. But your remaining balance continues to grow.


    Spouses Gail Liberman and Alan Lavine are syndicated columnists. You can purchase Alan Lavine & Gail Liberman's latest book Quick Steps to Financial Stability (QUE Publishing 2006) online at www.moneycouple.com or at your local bookstore. E-mail them at MWliblav@aol.com.

    To read more columns, please visit the column archive.

  • [ top ]