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Dear Mr. Berko:

Dear E.P.:

You and millions of retirees are sucking on a very sour pickle. So many Americans who worked for 40 years, paid into Social Security, paid federal income taxes, paid their debts, paid state property taxes, voted in every election, paid for health insurance, never took a dime from the state or federal welfare trough, saved their money and raised their kids to be contributing citizens have gotten the royal shaft in the last few years. It’s scary and it hurts — like having a root canal without anesthetic. Well, here are three solutions; I’ll just give you the AARP version.

Consider purchasing a single-premium immediate annuity with half of your $385,000. An investment of $190,000 at 8.5 percent would provide you with $16,000 a year for the remainder of your joint lives even if you both live to be as old as Moses or Methuselah. A large portion of the immediate annuity income would be return of principal (probably 75 percent), and the remainder would be taxable income.

There are three caveats: The first is that your money is tied up forever. So if you and your spouse are mortally trampled by a herd of wild camels next year, the insurance company keeps every remaining riyal, and your estate or your kids get bupkis. The second is that there is no inflation protection, because the payout never, ever changes. And the third is that there are literally hundreds and hundreds of insurance companies offering this product, and probably 82 percent of those policies are not worth a tinker’s damn, even though some offer initial yields as high as 20 percent. Of the remaining 18 percent, very few are owner-friendly, so you’ll need a maritime lawyer, a psychic and a congressman to understand the contract terms. Buy a no-load annuity for the best income result.

Or, consider investing about $200,000 in a portfolio of dividend-paying stocks. Mix some master limited partnerships like Inergy and Enbridge Energy with Century Telephone, Pengrowth Energy, AT&T, GlaxoSmithKline, Progress Energy, Lilly and several closed-end bond funds. The right mix should provide you with a 6.5 percent current return ($13,000) plus potential growth with potentially increasing dividend income. Then place the remaining $180,000 in a one-year, 2 percent CD, which will give you $3,600 a year in interest income. I think the risk of investing in equities is worth the potential gain.

Lastly, you can invest $250,000 with a money manager, who should be able to provide you with an average 8 percent return (capital gains plus dividends) over a 10-year time frame. Some years may be better than 8 percent, and some years, the manager may not be able to do as well. But if you select the right portfolio manager, he may be able to provide you with similar long-term results to the single-premium immediate annuity, and your heirs can inherit the remaining principal.

But no matter what choice you decide upon, you cannot afford to make a mistake. It’s a scary jungle out there. Going it alone is frightening and can give you lots of sleepless nights. And depending on a salesman you hope you can trust is like carrying an anvil on your back. So when you’ve decided upon an investment plan, please feel comfortable sending me another e-mail. I’d be pleased as a pasha to review your decision and, hopefully, give you my imprimatur.

Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, Fla. 33775 or e-mail him at mjberko@yahoo.com. © 2009 Creators.Com