Gazing into the Retirement Crystal Ball

Posted on November 14, 2010 7 Comments

When I think about what kind of meeting lets you see into the future, I picture a fortune teller with a crystal ball.  It’s a scene straight out of the Wizard of Oz; the winds are whipping outside, and inside a small room with luxurious fabrics on the walls, a mysterious turbaned man gazes into a cloudy crystal ball to forsee my future.

In reality, there was no fortune teller, no whipping wind, no crystal ball.  Instead it was just me and a little woman named Michelle in a hot empty office overlooking Lake Michigan, working over a laptop, some forms and two Blackberry phones. This was my retirement planning check-in, and my glimpse into my future.

When I changed jobs last year, I brought my investments with me. Then my new job offered me the option to open a new retirement account. I never rolled over my old accounts during the past year because I wanted to wait and see whether the two accounts were growing (or shrinking) at similar rates. After a full year of nearly identical growth, I thought it was best to combine the accounts to avoid paying double fees. Also, I learned that the University automatically created another retirement account for me on my first year anniversary, creating a confusing sea of paperwork and adding to my growing list of retirement accounts.  Through my employer, I set up a  free meeting with Michelle, a retirement counselor, so she could walk me through the process of rolling over my old accounts. I’m glad I did.

Michelle told me there wasn’t really much difference between my old retirement account and the new one; mostly just a tax code difference on the employer side – non-profits offer 403B and for-profits offer 401ks. Other minor differences are explained here. The kicker is that both accounts were invested in the same fund (for the most part) with the same company. The only difference is that the accounts had two different target retirement dates.  Michelle was happy to combine all my accounts into one, but she asked me if I preferred one or the other.

I chose one of the funds (even thought it was hard! I sure don’t want to be working until I’m 66 but I wanted to select the more aggressive option). Turns out that somehow I wasn’t paying double fees on the accounts so that shouldn’t have been a concern, but it will be nice to have everything in one account vs. two for the next time I have to roll over a retirement account.

The bigger concern, however, is a pension/cash balance plan sitting vulnerably tied to my previous employer. The company stopped making contributions about 18 months ago, and though the money is fully vested and in my name, I’m worried it won’t be there much longer. Michelle said I was right to worry.  I spoke with a friend this weekend who said I’m better off taking the penalty, getting the money out sooner rather than later, and using it for a downpayment or other investment. I need to research those options but at this point it seems like a good idea.

After we discussed my options, Michelle called the customer service line and helped me through the process to roll over my old retirement account. She spoke to customer service reps, provided account numbers, and explained everything to me while we waited on hold for the next rep on the line (we talked to multiple people). She emailed me forms to fill out, answered my questions, and provided me with information to reach the manager of that pesky pension plan.

I walked out of the meeting with a little more of a roadmap to organize my retirement funds, and a lot more knowledge. She may not have worn a turban, but in the end Michelle was probably more helpful than some fake crystal ball.

Category: Money
   Tags: Retirement

Comments