Ask Money

Consolidating retirement accounts

Chris Farrell Oct 25, 2010

Question: I have been investing for retirement for 25 years and, through many changes, employers and alternative options, I now have a highly diverse and diversified portfolio.

Problem: It has become very easy to put money away that will continue to accumulate in value. As I will soon be 59 1/2, and contemplating retirement, how to I convert this into a steady source of income?

Problem #2 (Please don’t laugh) I have a 401K, three 403B’s, a pre-tax IRA, an after-tax IRA, a Roth IRA, five IRA’s and a 459. How to I go about consolidating? George, Cherry Hill, NJ

Answer: I’m not laughing. I am chuckling (and sighing in exasperation) since your experience is commonplace in today’s multi-job more-than-one career economy. Little wonder, too, with the retirement pension system remarkably Balkanized.

Still, it’s a manageable problem. The main cost will be your time.

The first thing I would do is focus on how you want your retirement money allocated. In other words, how much do you want to be exposed to the stock market, the bond market, international equities, CDs, and other major investment categories? To do this, mentally erase all the various kinds of retirement account labels such as 401(k) and Roth-IRA and study the underlying portfolios. This exercise will give you a big picture look at your retirement savings. I would make sure that you are well-diversified.

Once you figured out your overall asset allocation I would decide what investment company you’d like to manage your accounts. I would pick a low-cost provider with good online service and broad-based investment options. You could then start consolidating your accounts–or at least the ones you can–with that company or companies (if it takes more than one to meet your needs).

Before making any transfers I would talk with company representatives to make sure you understand their procedures and to preserve the tax-deferred benefits of the various retirement plans. Like I said, this will take time.

By the way, the best news is that you’ve been saving for 25 years despite all your job changes. Congratulations. The rest is bookkeeping.

Now, to your first question, how do you turn these savings into a steady source of income? That’s a big focus for you over the next several years as part of your retirement planning. For instance, what will be your expenses? What do you plan to do during retirement. Will you still be earning and income. When do you plan on taking Social Security. Would you like the financial security of annuitizing part of your retirement savings?

Of course, I’ve answered your question with a slew of additional questions–it’s in the nature of the beast. Retirement is one of those big financial and lifestyle transformations where it can pay to consult with a professional, someone who can lay out some options and trade-offs. I would also spend time on the website of Henry “Bud” Hebeler at He deals a lot with the retirement income issue.

You could also consult a wonderful, thoughtful book on retirement by Ralph Warner, the founder of, the self-help legal organization. It’s called, Get a Life: You Don’t Need a Million to Retire Well (Fourth Edition). He’s right.

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