How A Retirement Planner Can Help Secure Your Retirement Finances

March 11, 2019

The popularity of mutual funds and 401(k) retirement plans has encouraged many people to create DIY retirement plans. It seems easy: just read a few books, watch some videos, talk to friends, and you’re all set! If YouTube can teach you to replace a bathroom faucet in just 10 minutes, why can’t you educate yourself about retirement?

The problem is, of course, that simple DIY home projects just aren’t comparable to retirement financial planning.  A DIY retirement plan is more like DIY surgery – really not a good idea!  This is a time when it really pays to consult the experts.

Retirement Planners vs Financial Planners

Financial planners work with you to identify your goals and develop savings and investment strategies to help you accumulate wealth.  A retirement planner is a type of financial planner, one who has specialized knowledge about Social Security, Medicare, tax laws, annuities, long-term care costs, and other financial situations specific to retirees.

Retirement planners consider the whole of your financial situation in retirement and help you develop a plan to make your money last as long as you do.

What Advice Can Retirement Planners Offer?

Consider these specific questions that people in or nearing retirement need to answer and plan for:

  • What’s the best age for me to retire?
  • When should I start taking distributions from my 401(k) or IRA?
  • When should my spouse retire?
  • Will my spouse have enough to live on after I’m gone?
  • How can I stay in my home as long as possible?
  • What is the best investment mix for me after I retire?
  • How will a part-time job or investment income affect my Social Security benefits and taxes?
  • Should I pay off my mortgage?
  • Am I eligible for a Health Savings Account and should I set one up to pay future health care costs?
  • Do I need long-term-care insurance?
  • Should I buy life insurance or keep my policy in force?

Part of the difficulty in retirement planning is that the answer to one question almost always affects other questions as well.

Take retirement age. If you were born in 1960 or later, your full retirement age is 67.  While you can start receiving Social Security benefits at age 62, you’ll only receive 75% of the full monthly benefit. If your spouse is claiming a spousal benefit based on your account, his/her benefit is also reduced.  Those reduced benefits mean that you or your spouse may need to find part-time work, downsize your home, take retirement account distributions, or find other ways to cover expenses.  Each of these options has potential tax and liquidity implications.

Retirement planners understand how all these pieces fit together.  They work with you to understand your total financial situation and retirement goals and create a complete financial plan to help you meet them.

How Much Do Retirement Planners Charge?

It really depends on the services you require.  Like most financial planners, retirement planners use a variety of payment models, including:

  • Flat fee-for-service: Clients can choose between a mix of services to determine what they need. For example: a retirement income projection, cash flow analysis, or comparison between different types of retirement strategies.
  • Hourly rate: Make sure you get a cost estimate and list of services before choosing this model.
  • Retainer fee: You pay a flat quarterly or annual fee for advice and account management services.
  • Management fee: The planner receives a flat percentage based on the amount of assets they manage. You can often negotiate lower fees for higher investment amounts.
  • Commission-based: You pay little or nothing for advice, but the planner receives fees and commissions from the products offered to you.

Fee-only advisers receive all their money from clients, so the cost may be higher. Many clients feel more confident working on a fee-only basis because there’s less chance of conflict of interest. However, there’s a lot of work involved in creating individual retirement and financial plans.  Most fee-only advisers have investment minimums.  If you use a commission-based adviser, make sure you understand the fee structures and relationships the adviser has with affiliated companies.

Guide to Finding a Retirement Planner

Naturally, you want someone you can trust with your personal information and assets!  Be careful, because it’s legal for anyone to set up an office or Web site and call himself a “financial planner.” Remember that it’s “Buyer Beware” time, so make sure your retirement planner is credentialed and their organization is registered with the Financial Industry Regulatory Authority (FINRA).

Credentialing organizations’ requirements vary, but most require a minimum level of formal education, specific courses in investing, retirement, taxes, etc.,  continuing education (to maintain credentials), testing, and codes of ethics.

  • Retirement Income Certified Professional: Requires 3 years of professional experience, 9 semester hours of coursework, proctored exams, 15 hours of continuing education every 2 years, and code of ethics.
  • National Association of Personal Financial Advisers: Association of fee-only advisers who sign a fiduciary oath to work in the best interests of clients. Applicants meet specific professional and ethical standards for membership.
  • Certified Financial Planner: Certification applicants must have at least a Bachelor’s degree from an accredited college or university, complete of coursework in major financial planning areas, pass a certification exam, show proof of at least 4,000 hours of qualifying experience, and adhere to the code of ethics.
  • Certified Retirement Services Professional: Sponsored by the American Bankers Association. Applicants must have at least 3 years’ experience, complete required coursework, pass the exam, complete 30 continuing education credits every 3 years, and adhere to the code of ethics.

Need more information on investing, investment advisers, investment fees, and other information about financial planning?  FINRA is a federal agency charged with protecting American investors “through effective and efficient regulation of broker-dealers.”  Visit the FINRA investor resource page to access information and learn more about investing safely and wisely.

Learn more about managing your finances with less worry and financial strain in our “Five Financial Resolutions for Seniors” article. And on the subject of wise finances, learn how to save money in our Big List of senior citizen discounts.

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