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When Kimberly Suggs’ retail company, Right On Casual, announced that it would be ending its 401(k) plan in early 2001, Suggs knew her life was in store for some changes. Right On had a large number of longtime, high-ranking employees, and the percentage of money in the plan allocated to that group exceeded the legal limits. Suggs and the other employees were forced to find other ways to enhance their retirement savings. She used the opportunity not only to think about what to do with her retirement savings but also to evaluate where she was in life.
“I had bought my apartment for $120,000 in June 2000, so I had a mortgage and my priorities were shifting,” says the 20-year retail industry veteran. Although she was a senior buyer earning $90,000, Suggs didn’t feel her career was on the right track. A job change was imminent. Suggs, 39, and single, enjoyed a lifestyle filled with leisure activities and travel. She put away $120,000 in her 401(k) but knew that wouldn’t be enough money to retire on, so she reached out for help.
In April 2001, Suggs decided to place her 401(k) savings in the hands of Anthony G. Epps, CEO of A.G. Epps Financial Group in Rye, New York. Epps’ 17-year-old firm specializes in the wealth counseling of individuals with a net worth of $5 million or more. “I had a thorough interview with Mr. Epps to get a handle on what my future possibilities were,” Suggs says.
The interview between Suggs and Epps established the types of assets and liabilities Suggs had, and the two used that information to determine how to best invest her money to reach her retirement goals. The $1,572 monthly mortgage payments on her two-bedroom North Bergen, New Jersey, apartment, and about $5,000 in credit card debt accounted for her liabilities.
With her retirement account, $2,000 in savings, and her apartment (which had appreciated in value to $150,000), Epps estimated her net worth at about $200,000. After expressing her goals to buy a house in two years, retire with enough money to travel frequently, and maintain her current lifestyle, Suggs was ready to invest. “Once we established my net worth number, it was the basis for how I was going to invest my money, where I would ultimately end up when it was time for me to retire, and what I would need to do to get there,” she says.
“We set her up with an IRA variable annuity to give her a portfolio that will allow her flexibility for change without incurring any additional expense for transferring money between accounts or transferring across investment classes with different companies,” explains Epps. “After retirement, she can annuitize it and receive monthly benefits if she wants to, or she can pull out a lump sum. There are a number of different options.”
Suggs chose six of the 30 mutual funds Epps’ firm offers to invest: 20% of American Century Income & Growth; 20% of Mainstay VP Growth Equity; 20% of Janus Aspen