TAKING STOCK: Saving the students

Dear Mr. Berko: I am writing for two reasons. Given the right economic conditions, I will retire in 10 years at 67 but may have to work a little beyond that. I have a poor pension; our joint social security will be about $1,800 a month, though my brother died three years ago and left us $72,000, which we put in a CD at 4.5 percent. It's up for renewal, and the bank's broker wants us to buy a Target Based Retirement Fund, telling us it would pay us $23,000 a year for life beginning in 2023. We do not want to make a mistake, so please tell us what you think of this investment. The second reason is that 20 years ago, you helped us fix a debt crisis. My wife and I don't have any debts today, but our daughter and her husband need help. Our daughter is 37 and her husband is 33. She has a Masters in Music and Dance Theory and he has his Masters in Cultural "something." Both got their MA degrees 8 years ago, they have three children and $121,000 in student loans plus $81,000 in credit card and small loan company debt. He works as a telephone solicitor and my daughter, a clerk at a large department store, recently lost her job. We babysit when they're working. They are on food stamps and cannot afford to pay doctor and pharmacy bills. They are 4 months behind in rent (we have occasionally paid their rent and auto repair costs and are constantly called by collection agencies and the student loan people to pay off their loans). They are a wonderful couple but have never found jobs in their fields, which is their life's dream. We sent them to a bankruptcy lawyer who charged them a $350 consultation (I paid it), then said the $121,000 student loan cannot be forgiven in bankruptcy court but he can help them if I gave him a $3,500 retainer. They've also been contacted by many debt relief agencies, including one that gave them a very good sales pitch and promised they could help and get the phone calls and letters stopped. But they first wanted $4,500 immediately from me and then came down to $3,000. You were so good helping me with my debt problem in 1991 that I hoped you could help our kids with theirs. Please help. RS in Chicago, Ill. Dear RS: I get several letters a month from parents like you. And my first recommendation is to have those kids sterilized quickly before they reproduce again. I won't apologize for my attitude because I have no sympathy for life forms so dumb that they lack the common sense to come in from the rain. I'm passively aggressively angry at them because those dipsticks are stealing my tax dollars to support their contempt for personal responsibility, their narcissistic self-indulgence and disrespect for society. But all is not lost. Illinois Senator Dick Durbin, the No. 2 Democrat in the Senate and a "kissing pal" of your ex-governor Rod Blagojevich has a solution. Big Dick is proposing the liberalization of U.S. bankruptcy laws so former students can eliminate their student loan debts. This will be attached to the administration's proposal to forgive the portion of home mortgages that are underwater. So have your lepers hold off for 12 months and all their debts (including student loans) could be discharged in bankruptcy. That's our tax dollars at work. I think your broker's $23,000 annual income projections were given to him by Bernard Madoff's investment advisor or are quoted in pesos, not dollars. Target-date funds are mutual funds designed to be a simple choice for retirement savers who are unable to devise their personal investment strategies. Each target-date fund has a target date such as 10 or 15 or 30 years hence and typically owns stocks when the investor is younger, and then it slowly segues to bonds and more conservative investments as the targeted retirement date approaches. In theory, it's a wonderful idea, but in practice it's a piece of rubbish in Wall Street's dump of proprietary, high commission, high annual fee products, the performance of which has fallen flat on its bum during the financial meltdown of 2008-09. Some of those fancy schmancy target funds lost over 41 percent when the S&P was down 38 percent. You'd be better served with a portfolio of dividend paying stocks that have a long history of revenue earnings and dividend growth. Reinvest those dividends automatically each quarter and you should be enormously better off no matter what the market does. ---------- Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775 or e-mail him at mjberko@yahoo.com. Visit Creators Syndicate website at www.creators.com. © 2012 Creators Syndicate Inc. Published: Fri, Apr 27, 2012