Jill on Money: Lump Sum, Annuities, Diversification

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We started the show with a special guest Steve Vernon, who writes the "Money for Life" blog on MoneyWatch.com and is an expert on all things retirement. Steve was trained as an actuary, so I saved some juicy, number-crunching questions for him.

Is it better to take a lump sum or a guaranteed monthly income from a retirement plan? That's what Janice, Dea and Fred all wanted to know. Steve explained that a guarantee can be a pretty sweet thing when it comes to retirement, especially if you don't have the time, willingness, expertise or risk appetite to manage your money.

Charlie and Lora asked Social Security questions - see links below on some different strategies to employ, when planning your benefits. As Steve reminds us, don't hesitate to seek counsel when making these elections. A fee-only CFP or CPA should be able to steer you in the right direction.

Richard asked about retirement annuities, which gave us the opportunity to discuss the topic in broad terms. Steve is not a fan of deferred annuities--neither the variable nor the fixed varieties. But he does like immediate annuities, where you invest a lump sum with an insurance company and in return, you receive a stream of income for either a specific period or the rest of your life. Check out Vanguard Annuity Access to get quotes.

Stewart from Alaska recently retired and rolled over $450K into a Vanguard account. Stewart is finding that saving and accumulating while he was working is easier than worrying about diversifying in retirement! Luckily, he has a pension and rental income that more than covers his needs, but he does need some help allocating the portfolio from growth into balanced. Ted has the opposite problem: he's scared or a market melt-down and as a result is sitting in cash.

Check out the 90-second video below that provides tips on how to get back into the stock market:

We fielded allocation questions from Mary in Nashville, who has received a lump sum from the sale of a house, while Beverly needs alternatives to the rock-bottom CD rates that are prevalent.

Our younger fans weighed in with questions about credit (Jenny and Jeremy from Georgia), while Sam is wondering whether he should use his company's 401 (k) plan.

What to do when you just don't know the cost basis for an old stock? That's Roger's problem. After 30 years and few mergers and acquisitions, it's nearly impossible for him to track down the actual cost. That said, the IRS asks that you take your best guess to figure it out.

Here are web sites and resources mentioned in this week's show:

-- Jill's Blog

-- 9 Questions to Ask a Financial Advisor

-- NAPFA: National Association of Personal Financial Advisors (fee-only advisors)

-- Best CD Rates

-- How to generate income from your portfolio

-- Social Security estimator

-- When to take Social Security?

-- Social Security File and Suspend

-- Social Security: Double-Dipping

-- Immediate Annuity Calculator

-- Retirement Calculator

-- Life Expectancy Calculator

-- Life Insurance calculator

-- Retirement Plan Required Distribution Calculator

-- Financial documents: What to shred, what to keep

-- Estate Planning: the Documents You Need

Thanks to everyone who participated and to Mark, the BEST producer in the world and our new intern, Sehar. If you have a financial question, there are lots of ways to contact us:

Call 855-411-JILL and we'll schedule time to get you on the show LIVE

Send an email: [e-mail]

Tweet me: @jillonmoney

Post a comment on this blog

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After working for the same IT Company for more than 29 years, I faced the situation a few years ago - either waited until I reached full retirement age then drew full pension and full Social Security benefit or drew early pension and early SS benefit ASAP. I explained to my better-half a while back that if I chose the former way then I have to withdraw from my 401K to fill the gap before I reached full retirement age. I then decided to implement the latter way with my 401K at a little bit more than 5 percent compounded interest rate which grows 15K yearly. Since we live a frugal life, my pension alone is enough to cover our monthly expenses which leave my SS benefit becoming discretionary spending each month. Our plan is to pass along our around 1 mill asset to our offspring so that they could have a head start when they reach their retirement age. After all the pension is a thing of the past. We can only hope the SS system would last for many generations to come. God bless everyone.