How to Make the Most of a Retirement Planning Advisor

Planning for retirement is more than just having a 401k or other savings account. There are several factors that financially play into retirement planning. From continuing to build wealth and assessing risks to minimizing taxes and proper estate outlining, a good retirement planning advisor can help you get the most from your investments. Here are a few things to consider when working with a retirement planning advisor.

Start Retirement Planning Now

The first step you need to take in your retirement investment management is getting started. Don’t wait. Seek the help of a financial advisor sooner rather than later. By starting early, you are giving your investment more time to grow. Even if you start with a small contribution, you can increase contributions as your finances improve over time.

The Department of Labor puts out a list of important steps to planning your retirement, and number one on that list is to get started and keep going:

“If you are already saving, whether for retirement or another goal, keep going! You know that saving is a rewarding habit. If you’re not saving, it’s time to get started. Start small if you have to and try to increase the amount you save each month. The sooner you start saving, the more time your money has to grow. Make saving for retirement a priority. Devise a plan, stick to it, and set goals. Remember, it’s never too early or too late to start saving.”

Dept. of Labor

The key with “starting now” is that you need a plan.  Just throwing money into a money market account may cost you tremendous opportunity.  Talk to financial specialist, make a plan, and get started.

Ask About Automation

A simple way to help ensure your retirement investment is growing over time is by automating your contributions. This could be specifying an amount to be taken out of each paycheck or setting up some other type of automatic transfer. A registered investment advisor can help you figure out the best automation option and amount for you.

Starting early and maximizing your savings through automation is a great way to pursue your financial security in retirement.  Keep in mind that you probably need more savings than you think.  A good rule of thumb is a safe withdrawal rate of 4%. For example: if you need $40,000 in income from your investments, you might need a nest egg of $1 million. This is only a basic formula, and of course each person will be different.  You may also need to increase your withdrawal to accommodate inflation in year two and beyond.  To follow our example, if inflation is 3%, you would need to increase your withdrawal by $1,200 ($40,000 x 3% = $1,200), making your total withdrawal $41,200 in year two.

Talk About Taxes

With so many people investing in 401k, IRA, and various public and private pension funds, and with the enormous complexity of the tax code, it is more important than ever to understand the tax implications of your investment choices.  Did you know that a shocking 72% of Americans are “bothered” by the complexity of the U.S. tax system? That’s a lot of people facing a lot of frustration.

When it comes to retirement savings, speak with your retirement planning advisor about taxable retirement accounts. They can help you make sense of the tax system and explain how to keep compounding your investment return via taxable accounts.

Remember the Risks

As with any investment, there are risks to retirement planning. However, don’t let this scare you. A skilled retirement planning advisor can help you assess portfolio risks such as inflation, interest rates, etc. By being aware of and preparing for these risks, you can make smart decisions that benefit your retirement planning in the long run.

Don’t Forget About Estate Planning

Among the considerations that should be discussed with your advisor is your estate plan. An estate plan dictates how you want your assets to be distributed to loved ones after your passing. As this can be a stressful topic to think about, having an advisor to help you sort through the options can be a huge relief. This means you can continue your retirement journey with confidence on how your assets are being invested.

Call Dechtman Wealth Management today to make an appointment with an advisor to help walk you through the complexities of retirement planning.