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Questions To Ask A Retirement Financial Advisor

Older couple talking to a retirement professional

Retirement is an exciting time most of us anticipate with gusto. The cessation of work after many hard years of service and the chance to usher in freedom, travel, and relaxation is a rite of passage – but managing finances during retirement is of paramount concern.

You should strongly consider meeting with a financial advisor before you retire. Obviously, it’s in your best interest to ask them the right questions, especially if it’s the first time you’re meeting with this financial professional.

Here is a list of 11 key questions to ask as you reach the cusp of retirement. 

  • Based on how much money I have saved up now, is this a good time for me to stop working? If not, when will I be able to retire?
  • How should I financially prepare in these last few months of work for my retirement?
  • Do I have to work in retirement? If so, how much do I need to earn?
  • What are my most substantial retirement risks?
  • Should I invest / continue to invest?
  • Will I still have to file taxes in retirement? If so, what will I pay per year based on your estimations?
  • When will my retirement accounts run out? What do I do when/if that happens?
  • Do you have any resources or education I can look into to prepare for retirement?
  • Should I consider annuities?
  • What should my monthly spending be on my retirement?
  • How will I pay for healthcare now that I’m retired? What will it cost?

How Do I Prepare For A Retirement Advisor Meeting?

Your financial planning meeting is coming up. When it comes to retirement planning, you want to have all your ducks in a row, so to speak. How do you prepare for this type of meeting?

Here is a checklist of all you need.

1. The Above List Of Questions

You don’t have to ask every question on the list during your first meeting. You will have other opportunities to learn more about managing your retirement before you get underway.

Keep in mind that when you meet with a potential advisor, you want to be sure that you’ll be working with the right person to help you keep and grow your hard-earned money.

So, you’ll want to prioritize the questions about the advisor’s years of experience, services, investment strategy, and fees, as this information will help you decide if they are a good fit for you and whether to work together. 

Are they a certified financial planner? What is their investment philosophy?

It’s a red flag if they want to be overly aggressive with your investment portfolio or try to push you into investments that are above your risk tolerance.

2. Insurance Information

The financial consultant will wish to see as much financial data as you can provide them, including your insurance policies and coverage.

They might recommend areas where you can save on insurance or even advise on other types of insurance you might need at retirement age (for example, long-term care insurance).

3. Monthly Budget

The advisor will want to know what you spend per month and on what.

Rather than rattle off this information based on what’s in your head, create a budget in a spreadsheet, calculating everything you spend throughout the month. 

No expense is too small, from regular coffee runs to Starbucks to Netflix or other streaming services.

If you’re unable to afford retirement, your financial advisor might recommend areas where you can reduce extraneous spending so you can meet your retirement goals in the next few years.

They can also help you develop an affordable budget for retirement life.

4. List Of Goals

The financial advisor will want to review your tax returns from at least the last year. If you have a few years’ worth of returns, bring them.

Seeing what you pay in taxes will help the advisor formulate your retirement plan.

5. Tax Returns

The financial advisor will want to review your tax returns from at least the last year. If you have a few years’ worth of returns, bring them.

Seeing what you pay in taxes will help the advisor formulate your retirement plan.

Read about which states don’t tax retirement income.

6. Insurance Information

From life to car and home, bring all your insurance documents to the meeting with the retirement financial advisor.

They will likely discuss financial risks if you aren’t covered by insurance and what kinds of insurance plans you should pursue in retirement.

7. Pay Stubs

Although your income will dwindle or drop off entirely in retirement, it’s still important for a financial advisor to know how much you’re making.

That money will go toward helping you make your retirement aspirations a reality.

8. Debt Summary

Most of us have debt, so don’t try to hide yours. Your advisor must know how deep in the hole you are, as that will affect your ability to retire and your budget once you stop working. 

Ideally, you should pay off all debts before you stop working, but your advisor will recommend your best course of action.

9. Mortgage 

Is your home paid off, or will it be in the next several years? How much do you pay on your mortgage?

These are questions your financial advisor will have for you when you sit down to discuss retirement.

10. Investments

If you currently invest in stocks or bonds, produce a document for the financial advisor meeting showcasing your investments, how they’ve grown, and their future projected growth.

The advisor will suggest how to handle your investment products going forward. 

11. Retirement Income

If your employer has provided a 401(k), bring all documentation to the meeting with your retirement financial advisor.

You should also have other retirement income tracked if you’ve saved independently. 

12. Other Financial Statements

Document all other financial statements that don’t fit into the above categories to give the advisor a full picture of your financial life. 

Do These 9 Things In The Last Year Before Retirement

Let’s say the meeting with the retirement financial advisor went well and you two determined you’re within a year of retiring.

Your head may fill with dreams, but you must remain steadfast and focused, giving every day the importance it deserves to take you one step closer to your goal.

Here is what to do in the ensuing year before you retire. 

Make A Retirement Plan

You have a lot of questions to answer as you near retirement, such as what kind of income you’ll receive, how much you’ll be taxed for it, how you’ll access your money, if you should invest, how much to invest, and what to spend.

Fortunately, you don’t have to answer these tough questions alone. Your financial advisor will build a plan and budget to follow so you feel adequately prepared for retirement life.

Decide What You’ll Do With Your Time

We all like to dream about how we’d spend endless days no longer burdened by work, but it’s different when you’re actually there. Having a plan can prevent you from overspending out of boredom. 

You don’t want to blow through your budget in six months by taking five trips back to back to back. That doesn’t mean you can’t spend at all, but spread out your spending and balance it with your retirement income.

Pay Off Your Debts

If possible, pay off as many debts as you can while you still have substantial income from a full-time job. You might have to plan to do this several years before retirement depending on the extent of your debts. 

You don’t necessarily have to pay off your mortgage before you retire, but by all means, do so if you can. It will make your life easier, as you’ll have lower bills.

Calculate Your Expenses

After meeting with a retirement financial advisor, you should have a good idea of where you can cut back on your expenses. However, what sounds good on paper isn’t always prudent in day-to-day life.

After all, it costs a lot to grow older!

Try out your retirement budget for a month before committing to it. You might find that canceling some services or luxuries reduces your enjoyment of life too much.

Discuss revising the budget with your advisor, seeking other ways to cut out or cut back.

Determine When To Take Social Security Benefits

You can begin claiming Social Security between the ages of 62 and 70. There is no hard and fast rule on when to start, leaving the decision up to you.

There are advantages to waiting to claim until at least your full retirement age or even until age 70, such as a higher rate of benefits for your lifetime.

That said, if you need the benefits sooner, don’t feel any shame in claiming them. They’re yours to do what you wish. 

Calculate What Your Health Care Costs Will Be

Many retirees shift from employer-paid healthcare to Medicare or Medicaid in retirement. These broad insurance plans pay for a lot, but not everything. 

Get to know what will be covered on your health insurance versus what won’t be.

Research the various plans, including the out-of-pocket costs, deductibles, and premiums. Determine how much inflation and where in the country you live will influence costs. 

Consider Refinancing Your Mortgage

You might explore refinancing as you contemplate whether to pay off your mortgage. You have a better chance of being accepted for a refinancing loan when gainfully employed, and it’s also easier.

Prepare For Taxes

Tax time will also look different for a retiree. Understanding your tax bracket placement based on your income will help you adequately prepare for what’s to come. 

For instance, if you’re in the zero to 12 percent tax bracket, you can expect to remain within that bracket once you retire. You don’t have to change your Roth account contributions. 

Those in a middle tax bracket between 22 and 24 percent should divide retirement savings. Put about half in your Roth account and the other half in a tax-deferred account. This will help you prepare for the tax rate fluctuations likely in this bracket.

What if you’re in the higher tax bracket, such as 32 to 37 percent? Your tax rate will decrease or stay the same, so continue pouring into your tax-deferred accounts, whether a Thrift Savings Plan, 457(b), 403(b), or a traditional 401(k).

Make An Emergency Fund

Everyone needs a savings fund for emergencies, including in retirement. Your HVAC system doesn’t know or care that you’re retired when it breaks down, nor does your car when its check engine light won’t turn off.

An emergency fund will help you pay for life’s sudden expenses without draining your retirement fund. Ask your advisor how much to put into the emergency fund based on your income and retirement savings.

Watch Out For The Top 5 Retirement Mistakes

The information discussed above should help you get a good head start on your retirement goals. As you go along, don’t fall into the following traps.

1. Waiting Until You Retire To Plan Your Retirement

Retirement takes a lot of preplanning before you’re ready to walk away from your full-time job for good.

If you don’t bother with preparations, you’ll find yourself back at work within a few years, possibly working full-time again (and if not, certainly part-time).

2. Taking Social Security Too Soon 

The great debate of when to take Social Security is one of the most important decisions you will make on your retirement journey. We already talked about the benefits of waiting until the cusp of 70 to claim your Social Security benefits.

Those who take them earlier are often forced into doing so because of a lack of financial preparation and planning. 

3. Making Poor Investment Decisions

Investments can create long-term income sources but only if you select sound investments and strategies.

Investing in a random, unproven stock or making other unwise financial decisions can drain you of money you need for your future. 

4. Putting All Your Eggs In One Basket

Diversification is the name of the game in retirement. If you have one asset class or investment, spread your money out among that and other investments. Create a rich portfolio with many types of assets.

This way, if one or more of your revenue streams dries up, you’re not necessarily doomed to return to work. 

5. Not Working With A Retirement Financial Advisor 

There’s no need to go it alone when handling your retirement financials. The right financial advisor can assist you even several years before retirement, ensuring you’re handling your money wisely so you can retire according to your goals. 

Bottom Line 

Retirement advisors can help you prepare for for the Golden Years that are on your horizon and can manage your financial needs once you enter retirement.

Now is a great time to speak to a financial advisor, even if you’re not thinking of retiring for several years! 

*NOTE: we are not financial or tax experts and this article is not meant to provide financial advice or legal advice. Always check in with your financial adviser, accountant, or other expert for guidance about your unique financial situation.

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