What would you do if you had a compound fracture? Would you prefer a general practitioner to treat it, or would you rather see a trained orthopedic surgeon? No matter how knowledgeable a general practitioner is, they don't have the additional training required to do surgery. The same is true of financial and retirement advisors. No matter how talented a financial advisor is, they lack the additional training required to be a retirement advisor.
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What a retirement advisor offers
Retirement advisors are a type of financial advisor. The difference is that they've taken it upon themselves to gain the training required to help you remain financially comfortable in retirement. Here are some of the questions a good retirement advisor can answer:
How much should I save?
Retirement advisors suggest a contribution strategy to help you reach your retirement income goal.
Do I need long-term care insurance?
If you've always wanted to understand the pros and cons of long-term care insurance, a retirement advisor can help.
How do I plan for inflation?
Inflation is part of life, and a retirement advisor can help you plan for it.
How much income will I have?
A retirement advisor can give you a future income projection based on how much you're currently saving.
How much is healthcare going to cost me?
You'll learn how much to budget for healthcare in retirement and what you can expect from Medicare from a retirement advisor.
When will I be ready to retire?
A retirement advisor can help you determine if you have enough to retire. They can also help you decide the best age to begin collecting Social Security or pension benefits based on your specific circumstances.
How does my portfolio look?
A trained retirement advisor will help you determine whether the investments in your portfolio might benefit from rebalancing or adjustment.
Is there any way to reduce my taxes in retirement?
Everyone can use tax-reduction strategies, and a retirement advisor is well-equipped to help you come up with an approach that will result in the lowest amount of taxes paid.
What are the pros and cons of a reverse mortgage?
If you've ever been curious about how reverse mortgages work, a retirement advisor can walk you through the process.
Finding a legit retirement advisor
As you near retirement, it's a retirement advisor who can best serve your needs. The caveat is this: The only retirement advisor you can count on to look out for your best interest is a fiduciary. A fiduciary is someone legally or ethically bound to act in your best interest. In other words, their job is not to sell you something that benefits them, but to ensure that your needs are met.
While a retirement advisor who works for an insurance company will try to sell you insurance products and an advisor who works for a brokerage firm or large bank will focus their attention on selling investments (thus earning money for their employer), that's not how a fiduciary works.
A fiduciary retirement advisor is an independent registered advisor who does not sell you products or answer to a company regarding how much you've been sold. Instead, fiduciaries answer to a law that requires them to put your interest first and to disclose any potential conflicts of interest. So, how can you be sure you're working with a fiduciary?
- Seek a retirement advisor with fee-only compensation: Fiduciaries are typically fee-only, meaning they don't get paid commissions on products they sell.
- Check certifications and registrations: A Retirement Management Advisor (RMA) designation indicates that an individual is a financial planner who has received specialized training in retirement planning. Other reputable retirement planning credentials are Retirement Income Certified Professional (RICP) and Certified Retirement Counselor (CRC).
- Read through disclosure documents: Many advisors are required to provide disclosure forms that detail their conflicts of interest and fiduciary duty.
A strong financial advisor can be worth their weight in gold. However, when it comes to retirement planning, there's nothing like a financial advisor who has dedicated themselves to making your retirement years more comfortable.
