Do Something – Before it’s Too Late!

I awoke with a jolt and immediately sat straight up in bed. My subconscious hit me with a thought that could change someone’s life. I needed to do something – right then. Even though it was a full four hours before the bell rang opening the stock market, I needed to know that I was going to do something right then that would allow me to go back to sleep – I hoped, anyway.

It was June of 2002. Her name was Barbara and she was my client. Barbara had been a nurse anesthetist for decades and although she loved her job, she was ready to retire. The date was set. September 30, 2002. She and I had reviewed her 401k and other assets and determined that, with good management and a diversified portfolio, she should be able to retire with all the income she wanted and some left to grow – a hedge against inflation and potentially rising medical bills. Most of her portfolio was in a company sponsored 401k and diversified among several solid equity funds. That’s when it hit me, a vision of the Twin Towers in flames.

“What if airplanes go slamming into buildings again, or a dirty bomb is exploded in a major city, or schools and malls are leveled by suicide bombers,” I thought. “What if…” Well, the result of any of these horrific scenarios would mean that Barbara’s portfolio would very likely tumble in value – fast and far. So much so that it would be likely that she would not be able to retire as planned!

You see, outside of the artificial universe of investment options in most 401k plans, exist methods for attempting to safeguard against such catastrophic losses. Alternative investments, variable annuities with guaranteed life income provisions and third party management with triggers that immediately default to cash, are all available outside the walls of a 401k. But until that money leaves those walls it remains vulnerable to attack – literally!

I got out of bed and went to the phone and called my assistant’s direct line at the office leaving her instructions to schedule a conference call with Barbara as soon as she could. During that call, Barbara could instruct her 401k administrator to move all of her assets to guaranteed return investments. That way, regardless of what happened, Barbara would have all of her money, and a little interest, available to invest on September 30, 2002, and she could ease into retirement, and I could, well… sleep.