Should You Hire A Retirement Planner?

retirement planner

 What Could A Retirement Planner Do For You?

If you’re deep in the mud of retirement planning, then you know how complicated and confusing the different options can get. So is it time to hire a professional, or can you keep going on your own?

At the end of the day, that depends on you! Deciding if the work on your hands is worth the savings, or if the weight off your shoulders is worth the cost, will come down to the work itself.

Here are a few of the top things that a professional does for you to help decide if you should continue to go on your own, or if it’s time to hire a retirement planner.retirement planner

Calculate how much savings are needed: A primary focus of your planner should be creating a retirement savings plan that is appropriate for your situation. They should assess a targeted amount of retirement savings that you need to accumulate (your “retirement number”) and perhaps more importantly, the amount you need to save each year to reach your goal.

Investigate whether a Roth conversion is appropriate: Your planner must recognize that it’s not only how much you save, but how much you get to keep and spend that matters. An assessment about “asset location” must be made. Is it more efficient to have assets that are subject to ordinary and/or capital gains treatment, tax qualified treatment, Roth treatment, or some combination? The point is to maximize tax effectiveness in retirement (called tax diversification). Central to all this is the decision whether or not to initiate a Roth conversion.

Evaluate if a rollover is a viable option: If you are changing employment, you may be able to leave your funds invested with the prior employer, roll them over to the plan at your new job, or roll them to an IRA. Can your planner tell you the conditions under which a rollover is in your best interest? More importantly, are they aware of the circumstances under which they should forgo a commission and leave the money in your prior employer’s plan?

Solve the pre-retirement distribution issues you encounter: Can your planner tell you if a plan loan or a plan distribution best suits your needs? Do they know how to avoid the 10% penalty using substantially equal periodic payouts or using another exception under code section 72(t)? If you are getting a divorce, does the planner know about the rules pertaining to qualified domestic relations orders (QDROs)?

Diagnose your optimal retirement age: Choosing the age at which you retire is an art form, which any capable retirement planner will know how to approach. The retirement age decision must factor in the financial feasibility of retiring, your ability to keep working, the psychological implications for you, and the specifics of your unique situation. Your planner should also be well versed in the opportunities and rules surrounding phased retirement.

Assess the best age to claim Social Security: Planners must know about Social Security basics in order to implement the nuanced strategies for when to claim benefits. For example, the file-and-suspend strategy and the restricted-application strategy are still available, despite the fact that they are set to expire soon. They can also help you set up an online Social Security account, explain to you the benefits you get for delayed claiming, perform a breakeven analysis to see if claiming prior to 70 is warranted, and show you the best ways to minimize the taxation of Social Security.

Determine the best strategy for turning retirement assets into retirement income: Can your planner create a plan that will maintain your desired lifestyle over the course of your lifetime? The new word for this is decumulation. Others call it drawing down retirement assets. No matter what you call it, there are a variety of ideas on how you should parse out your retirement savings from systematic withdrawals, to age banding, to the flooring vs. discretionary strategy.
– via MarketWatch

How To Know A Good Retirement Planner

If you decide you want to hire a retirement planner, it’s vital to do your homework and really know who you’re talking to. If they’re going to handle your money and give you financial advice, they need to be reliable! Take a look at these ideas and see if your candidate is up to snuff.

What Type of Advice Can a Retirement Planner Give Me?

A retirement planner or retirement advisor will be able to offer advice on:

  • When to take social security benefits in a way that is best for you
  • What pension distribution choices are right for you
  • If an annuity is a suitable investment for you
  • Which accounts to take withdrawals from each year, and in what amounts, to minimize the retirement taxes you will pay
  • What amount of retirement income you could reasonably expect to have
  • What withdrawal rate is appropriate when taking money from a traditional portfolio
  • How much of your money should be in guaranteed investments
  • What types of taxable income your investments will generate
  • How you can rearrange investments to reduce taxable income in retirement
  • Whether you should leave your money in your company plan or roll it into an IRA account
  • If you should pay off your mortgage prior to or during retirement
  • If a reverse mortgage is a good option for you
  • If you need long term care insurance
  • Whether you should keep your life insurance policies or not

How Much Do Retirement Planners Charge?

Retirement Planners may charge in any of the following ways:

  • An hourly rate
  • A flat fee to run a retirement income plan or retirement cash flow projection
  • A quarterly or annual retainer fee
  • A percentage of assets that they manage on your behalf
  • Commissions paid to them from financial or insurance products you buy through them
  • A combination of fees and commissions

A Good Retirement Planner Will Not:

Make recommendations until they understand your expected time horizon, your level of experience with investments, your goals, your tolerance for investment risk, your need for guaranteed income, and a thorough understanding of all your current resources such as assets, liabilities, and current and future sources of income.

A Good Retirement Planner Will:

Want to know where all your investments are so that your portfolio as a whole will make sense and can be optimized to produce a steady stream of retirement income.
– via The Balance

Are you going to hire a professional retirement planner?

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