Top 3 Retiree Financial Planning Options

May 24, 2018

As you approach your retirement, it is vital that you have access to high quality financial successfully transition your lifestyle. To illustrate the importance of doing so, let’s consider a hypothetical case. Assume you are a 65-year-old couple due to retire in the next one year. You have stashed over $1 million in 401(k), taxable, and retirement investment funds. Currently, you have invested your savings in different instruments to cover you against social security fluctuations or to supplement your pension plan. In addition to that, you are currently servicing a $75,000 mortgage.

With assets above $1 million, you can hire the most competent financial advisory team as needed. Also, this amount of assets calls for competence in making the most appropriate decision. Keep it in mind that you are near the end of your professional engagement, which means that you are not in a position to recover from any financial mistakes.

Hiring a financial advisor can help you address issues like where and how to invest your assets, minimize your exposure to risk, determine when to apply for Social Security, identify your long-term healthcare needs. Your advisor won’t help you with everything you need as most have demanding engagements. You need a financial planner to successfully deal with diverse areas of estate planning and to reduce the impact of taxation on your assets. The importance of financial planning cannot be overstated as without this advice, your accumulated assets can be wiped out in an instant.

Even so, what are your available options?

Option #1: Hire a Money Manager

One approach is to hire a money manager also known as a Registered Investment Advisor (RIA). An RIA is responsible for continuous management of your investment portfolio. Also, an RIA can provide expert investment advice in areas like hedge funds and real estate. Other RIAs can offer advanced financial planning services at no extra fees. Try talking to the investment section of your bank or independent RIA agents. On the other hand, you could opt to hire the services of a fee-only planner with fees levied based on the number of assets you hold. Most fee-only planners charge typical fees of 1% to 1.5% of your asset value.

Option # 2: Consult a Fee for Service Advisers

Consider consulting with a fee-for-service advisor who charges an hourly rate for an appointment. Go this route if you need to purchase long-term healthcare or medical insurance. Typically, their services are paid for using commissions or fees. Expect to pay $250 for an hour, $2,000 for a financial plan, or commission rates for insurance policies.

Option # 3: Retain the Services of a Premium Financial Firm

Another option would be to obtain financial advice from a premium financial advisory firm. Typically, you will have a dedicated financial advisor assigned to manage your portfolio. This ensures that you get the best possible financial guidance to help you with your investment, asset allocation, estate planning as well as annual reviews of your financial status. However, you need to observe due diligence regarding the firm you are contracting as well as comparisons between different providers. Most likely, your current investment fund manager will offer this service free. Other investment fund managers will provide you with a dedicated account exec if you have more than $500,000 assets in your portfolio. With assets of over $500,000, it is probable that you could qualify as a private client, which escalates the level and quality of advice you eventually receive.

Planning for retirement requires that you have a clear picture in mind what you want your sunset years to be like. For this reason, you must have a good picture in mind of what you want to accomplish during your retirement. Only in this way will you save adequately, act decisively, and ensure that your retirement is a success.