Business

Dear John: Auto-focus investment

Dear John: I am 54, and I work for a town-owned utility company. I made $70,000 this past year. My wife is a massage therapist and made $30,000.

I have an excellent retirement plan where I get 63 percent of my pay when I retire at 62, when our house and major bills will be paid off. With my wife and my Social Security and my retirement, I will make 110 percent of my pay when I leave.

Through my company I also have an [IRA]-type account that I cannot touch until age 59 ½. I have about $25,000 in this account right now. My investments are split between specialty, international, small-cap, mid-cap and large-cap stocks.

This IRA has been doing very well and had a $2,000 profit this last quarter. But with the quantitative easing coming in the near future, I fret my account will lose money and not regain it in the five years I have left before I want to use it to replace the car I now drive.

My question is this: Should I pull the money out and slide it into some sort of guaranteed spot where it earns whatever I can get — 2 percent or maybe 3 percent?

And should I just let this money sit there until the market goes through the coming fluctuation, then jump back in?

Please note, the car we drive now is a Honda Accord with 160,000 miles on it. We really take care of this car, so the IRA money is perfectly situated to buy a new car at the appropriate time. J.H.

Dear J.H.: The answer to your e-mail leaves a lot of guesswork, but I will do my best.

I checked with Edward A. Wacks, a certified financial adviser with Ameriprise Financial in Fort Lauderdale, Fla., and he wonders just what kind of IRA-type account you have.

If it is a “qualified plan,” like a true IRA, then you will be subject to a 10 percent penalty if you remove the money before you are 59 ½. Sometimes the penalty is waived, but you’d have to check first.

Both Wacks and I are concerned about your assumption that you can time the stock market and get out before the hurt comes (from the tapering of quantitative easing, for instance), and then get back in before stocks go sky-high again.

You could get hurt badly trying to do this, even if you work with a financial planner who knows what he or she is doing.

And we aren’t sure you can get the 2 percent to 3 percent return you seek. Right now, that’s a pretty tall order.

Wacks thinks you may also want to consider buying a new car now, before the one you are driving starts running up repair costs.

But since I’m a guy who drove my last car for 247,000 miles, I’m not that concerned about such things.

Look, your retirement seems pretty assured with the pension you get from your company and your Social Security. And the numbers might even be better if you waited until you were 65.

But you don’t have a whole lot of other savings, unless there are accounts you aren’t mentioning. So you really don’t want to get too daring with the $25,000 IRA stash.

Dear John: My particular attention was drawn to D.L., who said he had too much cash — approximately $200,000 — sitting in his checking account!

I am a New York state-licensed insurance agent with some certification on securities. I work for a financial company, and I would like to contact him so I can offer our high-yielding securities products, which can earn him enough cash to pay off his mortgage and still live a comfortable life.

[Can you] connect me with him so I can make an appointment with him? Thank you. M.N.

Dear M.N.: Not a chance — but thanks for the offer.