G’ day, mate! Retirement ideas from Down Under

Published: Sunday, November 18, 2012 at 10:18 AM.

My good friend and Marine aviator Rick Ferri proposed a mandatory system modeled along the lines of the Thrift Savings Program (TSP) available for federal civilian employees and the military.

Our current hodgepodge of IRAs, 401(k), 403(b), et al, allows financial croupiers to rake profits from participants. Recently I found a 403(b) participant at Northwest Florida State College paid over 3 percent annually on their deferrals. The Class C shares used had an annual expense ratio over 2 percent and the advisor tacked on an additional 1 percent.

Here are a couple of takeaways: Don’t pay an advisor 1 percent to “manage” your 401(k) plan unless you enjoy giving your money away. 401(k) plans and the like have extremely high fees; adding another one is foolish.  Unless you are taking withdrawals, the TSP is the best retirement vehicle bar none. Run like a scalded dog if any advisor recommends rolling your TSP into an IRA.

In addition to good wines, Australians appear to put more emphasis on financial literacy programs than we do.  A sobering Securities and Exchange Commission report found Americans lack understanding of rudimentary financial concepts like interest rates, mortgages, risk and inflation.  More advanced ideas like portfolio diversification or differences between stock and bonds flummox investors.  The lack of basic fiscal knowledge inhibits your ability to retire comfortably.

Buz Livingston,CFP, is a fee-only certified financial planner. He operates Livingston Financial Planning Inc. focusing on hourly financial planning and investment management. Contact him directly at 850-267-1068 or at buz@LivingstonFinancial.net.



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