Load Funds, Plastic Surgery, New Rules for Retirees

ANSWER: When you pay a load, you're essentially paying for advice. A load is really just a sales charge you pay for buying a fund that's available only through brokers and financial advisors — unlike, say, a Vanguard fund, which can be purchased directly from the company with no additional charge. So if the guidance you're getting from your broker is helpful, it may be worth the price tag. But if you're comfortable investing on your own, then you probably need it about as much as a fish needs swimming lessons. (Also, keep in mind that not all financial advisors work on commissions; some charge hourly fees or take a percentage of the total assets you invest with their firm.)

While there are many good funds out there that charge a load — including those from American Funds, which are known for their reasonable expense ratios and solid team management — there's also no shortage of solid no-load (and low-cost) alternatives. Cost shouldn't be your only driver when it comes to fund selection, but higher fees can lead to weaker performance. It's not easy to beat a comparable no-load fund when you're starting $575 in the hole.

QUESTION: A few years ago I had gastric-bypass surgery, which was covered by insurance. Could my subsequent plastic surgeries, which I paid for on my own, be tax deductible?

ANSWER: You're in a gray area, but you've got a shot. Generally, the IRS doesn't allow a tax deduction for cosmetic surgery. So if the surgeries were done for purely aesthetic reasons, you're out of luck. If, on the other hand, the surgeries were done to treat a condition or to make your body function better (if, say, extra skin impaired mobility or caused rashes), then it's likely deductible, says Donna LeValley, contributing editor of J.K. Lasser's Your Income Tax 2007. Here's one way to wrap your head around the concept: Breast implants for a woman who has had a mastectomy due to cancer would qualify; breast implants for a woman who wants to look like Pamela Anderson would not.

You certainly have nothing to lose by trying to take the deduction. But remember, only those medical expenses that exceed 7.5% of your income will qualify. You have a three-year window (from your standard filing date) to file the amended return, which you can do by filling out IRS form 1040X. And be warned: The IRS may take a close look at your new return. Get letters from your doctors saying that the plastic surgery was medically necessary before you refile.

QUESTION: I'm 61 years old. What are some good investments for someone my age?

ANSWER: Unfortunately, there's no easy, one-size-fits-all investment advice for 61-year-olds. But here's one truth you can hang your hat on: Today's retirees need a portfolio built for income and for growth. "Retirees can spend 30 years in retirement. In some cases, their retirement will last as long as their working years," says financial planner Mari Adam of Boca Raton, Fla. So that means a good chunk of your portfolio should be invested in equities, such as solid, dividend-paying large-cap stocks. How much? For a ballpark figure, subtract your age from 120. The remaining amount can be held in bonds. To protect yourself from market downturns, you should also have a few years' worth of living expenses held in a cash account, like a high-yield savings account. And to make sure your money doesn't run out, plan to withdraw no more than 5% of your investment portfolio each year. Yup, that means you need a pretty big portfolio or a solid source of supplemental income like a well-funded pension plan. Coming up short? Don't pull out those golf clubs yet — you may need to work a little longer.