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Q: May I suggest an article for an upcoming column: “Singles Retirement.”

There are large numbers of us singles out here nearing retirement. We have only one Social Security check and most have no pension.

What steps can we take?

Should we relocate to a cheaper area or stay near family? Many of us live in apartments, so downsizing is really out of the question.

A: Like the rest of life, much of retirement as a single depends on how adaptive you are.

While downsizing may be a “done deal” for many single retirees, my reader mail indicates that the biggest decision — and biggest opportunity — most seniors have is about shelter.

Many have much-needed equity trapped in a home or condo that is larger than what they want or need.

While living with a stranger to save money would probably be a hardship for most people, it’s hard to complain about sharing with good friends.

When I wrote “How to Survive on $15,000 a Year” in 2008, many readers responded with anger.

They said the idea of sharing with another person was repulsive. I think that’s wrongheaded. Most hope for communication and companionship.

Q: I’ve heard a lot about no-load mutual funds.

It seems to make sense that it would be best to make money with a financial planner who charges a percentage of total assets, recommending no-load mutual funds, as opposed to a broker who charges a percentage on each trade.

Is it reasonable to guess that in the case of the broker, it would take super performance of the funds to break even after you factor in the fund costs and loads?

A: The answer here is maybe, or maybe not.

But you are more likely to get advice that is not biased by a need for commission-generating transactions if you pay a percentage of assets each year.

That said, a commission-based relationship could, over time, work to your advantage. Let me give you an example:

The American Funds group offers funds with low annual expense ratios through a traditional brokerage-commission arrangement.

The selling broker gets an upfront commission and an annual trailing fee (the 12b-1 fee) that is about one-fifth of the 1 percent fee charged for typical asset-based fee arrangements.

Sadly, the American Funds group has been in net redemption — people redeeming more shares than they are buying.

So while the broker may be paid a 5 percent commission up front, it can be recovered fairly quickly when measured against a wrap account with total annual expenses approaching 2 percent.

If your commission-based funds have annual expense ratios that are lower than the funds chosen by the asset-based fee broker, your long-term cost advantage can be substantial.

The bottom line here is “it all depends.”


Copyright, 2013,

Universal Press Syndicate