I am retired. What should I do with my 401(k)?

Question

I’m retired and still have a 401-k with my former employer through Fidelity. I went to a financial advisor thinking about rolling it over to an IRA and get invested to stocks or etc. However, with the quarterly fees that will be taken from my assets balance, will be a big money from me. Hence, much better to roll it over to Traditional IRA/CD.

Invest it for 5-yr terms. At present, my 401-k was sitting on Fidelity Freedom 2010, but since I’m retired thought will move it to “Fidelity Income Fund”. In addition, I have no idea if the recent exchanged on my asset allocation was right by adding PIMCO and Vanguard. So really confused.

My plan is at least to wait for several months until I can recoup for the lost of thousands of my hard earned money lost in 2008 as well as for this yr 2012.

Please I need your help whether I can keep what I had exchanged as well as to move it to Traditional IRA/CD.

Thanks much for your help!

Chris

Answer

It’s difficult to say what the right thing to do is without know your entire financial picture. You might want to find a fee-only financial advisor who will only charge you for the consultation and let you manage your money on your own, saving you the quarterly fee.

If you simply wants to move your money out from your employer’s 401(k), you could ask Fidelity to walk you through the process of setting up an IRA with them and have the investments rollover to your IRA account. This is probably the easiest and cleanest option. You can also try the same thing with Vanguard, which I prefer over Fidelity. Be sure to read this article for more information: 401(k) Rollover to IRA: What is it and How does it work?

As for what is the right investments for you and whether you have the right asset allocation or not, it is impossible to say without knowing what else you have going on, your risk tolerance, and your needs. This article may be helpful: The Ultimate Guide to Asset Allocation, but it probably won’t answer all of your questions.

One thing to keep in mind is that you just retired and will probably be using your retirement fund for the next 20-30 years, so putting it all into income generating investments is not the right answer. This is where a fee-only financial advisor could really help you determine what to do next. Depending on your specific situation, some of these guys might be able to help: Jeff Rose and Neal Frankle.

Best wishes,

Pinyo

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