By Mike Reed, AIF and Collin C. Grover, CFP
“I’ve decided to retire soon, and I need some help.”
As financial advisors, we hear this a lot. Most people know that retirement planning involves considering expenses and managing income from assets, pensions, and other sources. What they often don’t realize is that cash flow management, while important, is only one component of the complex series of moving parts that make up a retirement plan.
Retiring is a process that requires time and careful planning––a lifetime of savings can be derailed by a few misguided choices during the transition to retirement. Engaging a financial advisor can ease this transition. Their knowledge and experience can make a complex process considerably less painful and with their help, you can create a plan and timeline that you are comfortable with.
A financial advisor is your best friend in retirement. Even if you have multiple advisors working on different parts of your plan, it is essential to have at least one advisor who knows the entire story. This ensures nothing is missed.
A financial advisor should be able to provide examples of how they have helped other clients in situations similar to yours, and they should assist you in setting a balanced exposure to various asset classes based on your individual financial situation and goals. Moreover, because nobody can predict the future, flexibility in your retirement plan should be considered necessary, not optional.
Your financial advisor can answer your most pressing questions: Will I run out of money? Will I be able to maintain my lifestyle? Can I buy a sports car?
They can also help account for the many aspects of a retirement plan, including:
- Maximizing your savings in the last few years of employment and exploring investment vehicles, like Roth IRAs, to assist in this process
- Divesting company stock options, keeping in mind any tax or diversification consequences
- Considering healthcare costs and how to transition to Medicare
- Pension claiming strategies and lump sum considerations
- Understanding Social Security claiming strategies (which were changed by a new law in April 2016)
- Looking into long-term healthcare options
- Recognizing all these factors in the context of your assets, other sources of income, goals and needs, and your individual situation
A committed financial advisor will stay engaged after you transition from work to retirement, proactively reaching out about any tax or estate planning rule changes that may affect your retirement. They’ll also stay up to date on changes in your life and your goals. Some of the questions we’ve heard from retired clients (and worked with them to resolve) are:
- What’s the best way to minimize our taxes?
- How do we change our legacy plan?
- Our family situation has changed. How do we start saving for our new grandchild’s college education?
- Living in the North is cold and no longer fun. Can I buy a house somewhere warm?
- We want to travel more. Can we afford it?
An advisor is equipped to answer these and any other questions you have pertaining to your retirement.
Whether retirement is still years away or rapidly approaching, it’s a good idea to consult a financial advisor to make sure that you’re on track to achieve your financial needs and goals. They’re able to help you assess all the viable alternatives and provide support and discipline along the way. When considering retirement, a committed financial advisor should be your first call.
At Portfolio Solutions®, we design, implement, and maintain dedicated portfolios using low-cost, passive investing methods so our clients keep more of what the global markets offer. We would rather see investors earn more by controlling their investment costs than by taking unneeded, additional risk in their portfolios.