Dear Mr. Berko: I’m 69, and my wife is 77. We have no debts and no children. When we married 51 years ago, we decided children are a waste of time, energy and money. After 37 years of working with the same firm, I’m quitting. I don’t know how I lasted that long, because the company and its owners are not nice to work for. But I have $317,000 to roll over from my 401(k) to an individual retirement account. A broker we met recommended a list of high-yield stocks paying 12 to 18 percent. Another adviser, who counsels retiring employees, said that the safest and best investment would be an annuity that right away would pay us $1,479 a month, or $17,748 annually, till both of us die. He calls this an immediate annuity, because it would begin paying us immediately.
This 401(k) is the only asset we have other than our Social Security and our big house, which is worth $225,000. We’re thinking of selling our big home and buying a smaller town house for $116,000. After paying moving costs, we would have about $100,000 remaining. We’d invest $60,000 of that in those 12 to 18 percent stocks, giving us $7,000 to $9,000 annually, and keep $40,000 for emergency cash. My wife and I get $28,000 annually from Social Security. If we could get nearly $18,000 from an annuity plus $7,000 to $9,000 from stocks, that would be the cat’s meow. We need at least $55,000 a year to live on. Your thoughts?
— SA, Indianapolis
Dear SA: Imagine a man who dies without children at the end of a million years of evolution. His ancestors lived through the ages, fished, hunted saber-tooth tigers and woolly mammoths — and it all ends here in a puddle of blood. His whole lineage and whatever potential his progeny might have had in the centuries ahead are gone. How sad and incomplete!
Getting a safe 12 to 18 percent dependable income would be purfect but impossible, even with highly regarded speculative issues such as Mesabi Trust, Portugal Telecom, TICC Capital, LinnCo, Northern Tier Energy, Calumet Specialty Products Partners or Dominion Resources. Broker No. 1 knows his high-income stocks, but he should also know that these would not be suitable issues for you. This Neanderthal is dangerous to society, and if he were to take a long walk off a high alp, Indianapolis would be a safer place for investors.