Evaluating My Parent’s 401k Portfolio, Part 2 – QandA

So I gave my mom a call today to ask her some questions about her 401k portfolio. Here’s a summarized transcript:

Me: I looked at your 401k statement.
Mom: Good!
Me: What kind of other retirements assets you and Dad have?
Mom: Umm… I think I have a Rollover IRA too.
Me: Did you roll it over into your IRA or 401k?
Mom: Umm… I don’t know.
Me: I saw a line on your 401k statement that said “Rollover Amount: XXX”

Mom: Oh yeah! I rolled it over to my current 401k
Me: Anything else? Do you have any other IRAs or stuff like that?
Mom: I think I have some other IRAs, but they are all in different places?
Me: You should consolidate those into a good brokerage. Where are they held currently?
Mom: I don’t know. I can find out.

Me: What about Dad?
Mom: He has a plan from work too, and has I think something like 50/50 stocks/bonds… Oh, and an annuity.
Me: How much is in the annuity and how much is in the 50/50 stock/bonds mix?
Mom: I don’t know. I’ll send you a statement next time we get one.

Me: Ok, about your 401k. Did you know you have about 70% in stocks?
Mom: Really? I just chose the “Moderate” option.
Me: Uh… ok.
Mom: Should I change it around? What should I change it to?
Me: I’ll need to know the rest of the stuff we talked about first. Does Dad have online access to his account?
Mom: No
Me: Ok… well, get back to me
Mom: Oh! I read this thing in the newspaper about this guy who didn’t have much money, like $50,000, but he gave it to some guy and he said they managed it for him really well. Should I go to a guy like that?
Me: Uh… just let me take a look first.

This was not meant to make fun of my Mom. She is a smart woman. I think this is actually the state of the majority of people in their 40s and 50s though. They have a healthy chunk of money in a their nest egg, but have this fuzzy idea of what it’s invested in. They have multiple IRAs and 401ks and 403bs from different places floating around.

This is why I think getting a qualified fee-only financial advisor with references (not “some guy”) is good for lots of folks. I don’t mind giving them my parents some help but I am still learning and don’t profess to know it all by any means. I would like to set them up with one and sit down with all of them sometime, but that will be tough as the live across the country.

Now to wait for my Dad’s statement…


  1. I don’t think you made your mom sound bad or anything, that’s simply how finances were treated in the baby boomer era for the majority of them. There is a belief that you’ll be fine because your pension and social security should hook you up in your elder years and the 401k/IRA is simply gravy. A lot of those people passed on those same beliefs to their children – which is why you find a “lot” of fiscally uneducated young people.

  2. Anonymous says:

    This is exactly the way my parents are with their money. My dad makes very good money, but doesn’t want to take the effort to research different investement options. Instead, he headed straight over to Wachovia and gave the “investment guy” at the bank the keys to the kingdom. Think this guy is fee-only? I think not…

  3. yeah I agree with you, a lot of people do know a lot of stuff but investment and retirement aren’t their forte. My dad doesn’t know anything about retirement funding, he knows only to save and social security but my mom do know how to invest which is good. I suggest consolidating and reassessing their retirement assets, they seem to be too spread out into various accounts and the fees from those different accounts could be taxing to their funds. Good Luck

  4. You don’t truly an advisor for simple allocation for retirement. A couple online retirement calculators will do.

  5. I would agree with B. You know more than you think you do and you have added help of people who read your blog. You also have the advantage that your parents, so far, are willing to listen to you.

    The best I can do with my mom is get her to a 5% equity position. At least the cash portion is earning high interest and she is only living off the interest.

  6. Only 5% equity? That seems a little low. 25% in quality equity companies or good low risk equity mutual fund sounds good.

  7. I would be interested in learning more about the annuity your dad has and what you think about it. My husband’s only retirment option is an annuity (he works at a college) and I have heard some negative things about annuities. We are thinking about not contributing to it next year and putting the 10 % into a Roth instead, the college already contributes 13 % – which is pretty good.

  8. Loi Tran
    – *I* know she’s low on the equiy allocation, but I can’t convince her otherwise. She’s from the “old” country – hard cash is where it’s at. Done after 8th grade, work the farm, etc. After thinking about is some more, she really has 60% real estate (rental/own house), 38% cash, 2% equity. At least, principal isn’t used for living expenses.

  9. I think i am nuts. I am anti 401K and I am 30 years. I rather enjoy the money now than later. To date, this is my accomplishments:

    1) Entirely own a $135,000 condo that generates $800 rental a month.
    2) No credit card or any other debts
    3) Cash savings of $58,000
    4) Stocks worth $33,000
    5) Own 2 cars outright.

    So am I dumb not to still invest in 401K? When I think i can use the money more wisely today.

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