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I posted this on the "Information Desk" listings and it was recommended that I post it here as well:

I am trying to develop a game plan for my impending retirement. Up to this point I have just used a 401K and have not really developed any strategy. As I am currently 41 and retirement is not that far away my initial step was to hire a professional. He performed a financial analysis which identified exactly where my money was going, what areas my money is currently invested, amount of income desired once retired, etc., etc. I feel this makes sense - find out where you are, where you want to be and what it will take to get you there. No argument on those points.

After the initial analysis, the first step was to take my 401K which I had with a previous employer and set up a brokerage account. The "old" 401K would be invested in various funds/stocks which would represent my comfort factor for risk, liquiditiy and voltility. I felt good about this as well because it balenced out my investment into a good mix of stocks, bonds and mutual funds, (again, I am not a financial expert - thats why I hired a professional - but this investment strategy also seemed to make sense).

Now for the kicker - my investment advisor then recommend a Universal Variable Life, (UVL)insurance policy as another retirement vehicle. The company I am currently working for does not match any monies for their 401K and the general concensus is that it is not a very good program. My adviser explained that the UVL provides a tax shelter for my "investment", (i.e. my premium after the cost of the life insurance and any fees are deducted). To put it in my terms, (that is laymen's terms - which when it comes to financial matters are the terms I prefer), the money is invested by the insurance company and as you near retirement the insurance comapany "loans" you back the investment you made at a low interest rate to be used as income. Because this is a loan - there are no taxes levied against this "income". The "tax shelter" seems to me to only be a "pay the taxes after I am dead and leave whats left to my surviors" anyway. Bottom line is you will pay taxes at some point right? This is a very sinple explanation but that was the gist. I have read what is said on TMF's website regarding UVL and the warnings they provide, (very complicated, read the fine print, etc.). I am in the process of reading the policy but wanted to get some feedback as I do have several questions and concerns, such as:

1. Should the UVL be used as my primary retirment investment? From the payment schedule it looks like quite a bit of my money for retirement would be going into this fund which, depending on my income, may prohibit me from investments in other areas.

2. As I have yet to read the full policy - the money invested and the payments seem to be a very long term commitment. I do not know yet what the ramifications are if I decied to "bail out" early, (say after 10 years), and decide to put my money elsewhere. Like I said, I will read through the policy to see what the consequenses are, but I do not want to put my money into something that I can not get out of if I so desire or that yields no ROI after 10 years due to penalties for not sticking it out.

3. I know that my investment advisor does not provide his services for free. I will be meeting with him this week and will ask him exactly what his compenesation is when/if he does sell a policy of this type. Is this appropriate? Obviously, I need to know if there is perhaps a conflict of interest if the "sale" of this type of policy yields him the most money in his pocket compared to other investments they offer. Trust is built over time - he was recommended by a friend but I have only known him for 3 - 4 weeks.

4. I feel the yearly amount to be invested is pretty high, (over 10% of my gross income). While I do not have a problem investing that kind of money, I do have a problem investing that much all in one area - the UVL policy. Additionally, I wish to purchase a house in the next year, (this is considered by me to be an investment - I am currently renting), and I need to save up some money for a down payment, (was recently divorced).

5. My "gut" tells me that this UVL is the wrong move. I asked a lot of questions, such as would investing in other funds which have the potential of providing a higher yield offset the "tax shelter" of the UVL, (he said no). I also asked what happens if I get laid off and can not make the monthly premiums for six months? He said that once you have put some money into the plan you can make it up later or use some of the returns on your investment to pay the premiums, (yes - I will be reading the policy regarding this as well).

I have rambled on here but need some feedback. If UVL is not the way to go should I just stick more money into the brokerage account? I was thinking of going to my tax accountant, whom I have had a professional relationship with for the past 5 years, to see if she could put me in touch with someone who could provide a second opinion. If I was about to have a life threatening surgery I would certainly get a second opinion. As my retirement will be my life some day why not do so for this?

Can anyone provide some guidance!?!?

Thanks in advance
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