Dan Solin's Newsletter, March 30, 2017

Maryanne (not her real name) is the head trauma nurse at a major medical center. I can only imagine how stressful her days must be and the attention she and her colleagues give to patients entrusted to their care.

Because she works at a hospital, Maryanne qualifies for its 403(b) plan. These plans, which are available to those who are employed in public schools, hospitals, not-for-profits and members of the clergy, are the equivalent of 401(k) plans for other employees.

It’s ironic that these worthy members of our society are relegated to retirement plans with choices that are even worse than the investment options in the typical 401(k) plan. Maryanne’s plan was no exception.

When I reviewed her options at her request, I found the majority of them were annuities. These are tax-deferred contracts that combine the worst elements of an investment portfolio with an overpriced “death benefit.” They’re high cost, high commission and high penalty investments that are particularly ill-suited for a retirement plan, where the tax deferral benefit has no value.

There were a few mutual funds in her plan, but no index funds. I picked the best of some bad choices but really couldn’t be of much help.

Maryanne was shocked when I gave her this news.

She and her colleagues deserve much better.

Ask Dan

Question from Phil:

Do you have a resource where I can get objective information about life insurance?

I’ve had good experience with TIAA. The company is very highly rated. You can get solid information online or on the telephone. They don’t pressure you to buy.

If you will be spending $10,000 or more yearly on insurance, I highly recommend a fee-only insurance advisor. One that I can personally recommend is Scott Witt at Witt Actuarial Services.

Recommended resource of the week

Each week I’ll recommend a resource that provides sound investing advice.

This week’s pick is: http://www.humbledollar.com

Why I like it

Humble Dollar is authored by one of my favorite financial journalists, Jonathan Clements. He spent almost two decades at The Wall Street Journal where he was the personal finance columnist.

Humble Dollar is an excellent source of common sense, well-supported advice. I also recommend Jonathan’s books. His latest is: How to Think About Money.