Retirement Roulette

4. What Mike said. Mike is an insurance agent for Guardian Life Insurance. Temma found him by following up on a Guardian ad for financial plans. She told Mike she didn't want insurance (she's single, with no dependents). He assured her that he also offered ""traditional planning.''

Why am I not surprised at what happened next? Mike ""proved'' that 401(k)s were a waste by greatly inflating the tax she'd owe when she took the money out. Most people, he said, should ditch these plans and put their money into--yes--life insurance, instead. Temma's 401(k) is so terrific that, in the end, he had to concede it was actually ""a little'' better than the policy he was touting. So he urged her to buy insurance with her outside savings, instead. Mike made no effort to estimate what Temma would need to retire on. He calls his service ""Personal Financial Engineering.'' I call it garbage.

5. What Tom said. Tom, of Merrill Lynch, ran Temma through a computerized plan costing $175. It covered all her potential future income, including employee benefits. Tom concluded that Temma is already saving enough to retire at 65.

6. What two mutual funds said. Vanguard and T. Rowe Price put Temma's data through their computerized retirement planners. Their projections differed substantially (a reminder that we're not dealing in ""truth''). But both also showed that she's saving enough.

7. What a trusted planner said. The late John Allen of Arvada, Colo.--whose computer I'd follow anywhere--died suddenly, while working with Temma, and is much mourned. He'd concluded that she's saving more than she has to, and could quit before 65.

With four projections in essential agreement, that's probably the answer. But if Temma had stopped with Hank, Harold or the first John--whose computers are on steroids--she'd have come away scared of retiring broke. Most boomers do indeed need more savings, but that's no excuse for ""experts'' to fudge about how much.

© 1998