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Subject:  Horror Stories II Date:  3/5/2003  9:41 PM
Author:  pauleckler Number:  35829 of 88544

I thought the Horror Story discussion was interesting. Let's do another.

58 yr old Mr. Blenis, took early retirement package from GTE, four years ago (1998). His nest egg of $500K has declined in value to about $300K.

He has a 72(t) distribution plan paying $2K per mo from his plan.

His wife, 55 yo, earns $29K as an office manager.

He has returned to work as auto parts delivery driver at $10.50/hr about one-half his pre-retirement rate.

At retirement he took a lump sum payment, about half of which was his own contribution to company retirement program. He could have taken $1K/mo annuity. Financial adviser advised lump sum. They were concerned about the future of the company after merger with Bell Atlantic. He has had a heart attack and was advised that lump sum would ensure his wife got funds in the event of his death. Annuity would otherwise stop at his death. He was calculated to need 20 years of annuity payments to recover the $250K offered as a lump sum.

He is concerned that his current situation allows nothing for the unexpected. He is managing to save $100/wk in a credit union savings account.

He has a meager mortgage on their home: 15 yr fixed at 5.1% interest. Payments on their car (2000 Chevy Monte Carlo) and truck (1998 Dodge pickup) were recently rolled into the mortgage to make interest deductible. Their $25K trailer counts as a second home. Its interest is also deductible. The two bills together total about $1000/mo.

Their living requirements are modest. The eat out about twice a week. Their favorite place has a $7.95 early bird special. They enjoy taking the grandkids to bluegrass festivals where they also camp. He would like to have more time to camp.

Recently the quarterly premium on his health insurance increased from $150 to $400.

What would Fools recommend for this one? What should he have done?

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