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Should I work with a financial advisor after I retire?

Do I Need A Financial Advisor After Retirement?

Retirement spans a significant portion of your life– potentially 3 decades or more. Along this journey, you’ll encounter both the carefree years of financial comfort and the unforeseen obstacles that can quickly change your course. Maneuvering through these life transitions can be a daunting thought, especially when you lack the support of an experienced guide.

Through my years of experience as a financial advisor, I’ve gained an understanding of retirement’s unique circumstances and know the stress it creates, particularly if you find yourself less prepared than you hoped you’d be. In this article, we’ll explore the financial challenges in retirement, the advantages of enlisting a dependable financial advisor, and the factors to weigh if you decide to navigate this journey independently.

Can You Manage Your Finances in Retirement Without the Help of a Financial Advisor?

Yes, it’s entirely possible to handle your finances without a financial advisor after you retire, but I don’t advise it. Handing your expenses on a fixed retirement income presents distinctive hurdles and challenges. While many individuals have successfully managed their retirement planning independently, it’s important to recognize that there’s a multitude of factors to weigh if you decide to navigate this path on your own.
  1. Consider crucial age-related financial milestones.
    What’s most important to remember is that retirement planning doesn’t stop on the day you retire. It’s a process that is ever-evolving as you reach crucial age-related financial milestones during your retirement years.
    2. For example:
    • At age 59 ½ you’re eligible to make withdrawals from a traditional IRA or tax-deferred employer retirement savings plan without paying a 10% penalty.
    • At the age of 65, it may be time to enroll in Medicare Part B.
    • At the age of 70, your Social Security benefits reach their maximum amount, resulting in your highest monthly payment.
    • Once you reach 73 or 75, your Required Minimum Distribution (RMD) generally begins from your tax-deferred retirement savings accounts. Beyond this age, there are limited opportunities to further reduce your overall lifetime tax liability.
  1. Pinpoint the most significant expenses in retirement.
    Healthcare costs, tax strategies, estate planning, and market fluctuations are just some of the significant (and important) financial events you’ll navigate in retirement.
    • Healthcare costs
      Healthcare ranks among the most unsettling concerns for my retired clients. In fact, about half of U.S. adults say they have difficulty affording healthcare. Managing healthcare expenses and insurance coverage as you age can be complex. A financial advisor can assist you in addressing these variables to ensure you’re financially prepared. They consider your well-being, promote investing in a healthy lifestyle, and closely monitor inflation patterns within the healthcare sector.
    • Tax strategies
      Taxes represent a significant financial concern that retirees must be ready to address. A financial advisor can assist you in fine-tuning tax strategies during your retirement (especially during the early years of your retirement), ensuring that you can minimize your total lifetime tax obligations while still achieving your financial objectives.
    • Estate planning
      Although this is typically done before retirement, it doesn’t imply a “set-it and forget-it” mindset. Your estate plan should undergo periodic reviews and adjustments to align with your evolving wishes and lifestyle. Regularly revisiting your plan is a good idea and a financial advisor can help ensure that your objectives remain in sync with your current circumstances.
    • Market fluctuations
      The money you’ve saved for retirement is not immune to market fluctuations- leading to stress and a feeling of vulnerability. During uncertain times, a financial advisor can provide guidance and suggest potential changes to your investment portfolio to give you reassurance, peace of mind and uphold financial security.
  1. If you prefer walking this road alone, consider this checklist.
  • Factor in the ever-increasing costs of healthcare and be sure to set aside more for the future.
  • Implement tax planning strategies to lower your long-term tax burden and reduce your tax obligations.
  • Review your estate plan regularly.
  • Balance and diversify your investment portfolio within your risk tolerance and adjust on an as-needed basis.
  • Understand your choices when it comes to Social Security benefits and steer clear of the mistake of claiming them prematurely.
  • Keep inflation front of mind and don’t underestimate its impact on your short- and long-term financial plan.
  • Keep open and clear communication with your spouse about your finances and plans.
  • Don’t let your emotions get the best of you- know your long-term plan, trust in it, and stay your course.

Case Study: No Previous Financial Advisor and Two Years into Retirement

55+ couple posing for picture

At 59 and 62 years old, our clients, two married IT professionals, sought assistance addressing their financial concerns. Their primary goal was to create a personalized financial plan that could seamlessly transition them into retirement and then instill the confidence and assurance necessary for them to successfully navigate their retirement journey.

Toberman Becker Wealth started with a discovery meeting where we learned about the clients’ financial situation, circumstances, and goals.

The clients acknowledged the following:

  • They were facing the possibility of an unplanned early retirement due to external circumstances.
  • They lacked prior financial guidance and had never consulted with a financial advisor before.
  • They lacked a consistent and well-defined investment strategy.
  • They were uncertain about the optimal timing for tapping into their Social Security benefits.
  • They felt disorganized and sought reassurance that their funds were being managed in their long-term best interests.

Toberman Becker Wealth used financial models, information gathered through our initial consultation, and supplementary financial documentation. We tailored a customized financial model that considered their premature retirement, evaluated their financial risk tolerance, considered their existing health and financial status, factored in their Social Security options, and aligned with their long-term goals.

Throughout the portfolio design process, we worked together to:

  • Conduct a comprehensive, top-down review of their unique financial situation.
  • Prolong Social Security, optimizing the expected life-time retirement benefits received.
  • Reduce expected investment portfolio risk and implement asset diversification for long-term success.
  • Utilize the interactive features of our advanced planning software to input “what if” scenarios to visualize and stress test the impact of their long-term finances.
  • Leverage the planning software to generate hypothetical investment scenarios, illustrating the potential outcomes of portfolio allocation and diversification.

As a result of our comprehensive plan, we addressed areas of concern and provided peace of mind. Because they were in reasonably good health, they decided to extend collecting Social Security benefits until age 70, while diversifying their portfolio to ensure a more robust financial future.

What Should I Look for in a Financial Advisor?

While the search for a dependable and honest financial advisor can feel daunting, it is a necessary piece to safeguarding your financial well-being. Keep an eye out for two key terms before considering a consultation: “Fee-only” and “Fiduciary.” This means:
  • As fee-only, we receive no other compensation from anyone other than the client. We don’t sell any products or receive any commissions. This relationship helps remove conflicts of interest since we receive no incentives to invest your money with securities that won’t help you meet your goals.
  • As a fiduciary, Toberman Becker Wealth holds a legal and moral responsibility to ensure that we have our client’s best interest in mind. The Securities and Exchange Commission (SEC) requires this of all Registered Investment Advisor practices. Financial advisors and insurance agents who are licensed to sell financial products are not required by their regulatory body to uphold the fiduciary standard of care. This distinction is important to recognize when it concerns who you hire to invest your money.
Recognizing these two factors will help ensure that you’re engaging with a dedicated professional who always prioritizes your best interests. While it might seem like common sense that a professional would operate this way, it’s not guaranteed. Before making your decision, be sure to conduct thorough research, ask plenty of questions, and delve into the financial advisor’s qualifications, reputation, and past performance. It might seem a bit overwhelming initially, but the effort will ultimately prove worthwhile.

Conclusion

Having a trusted partner when navigating complex financial milestones is an invaluable resource that ensures a smoother ride through retirement. Though it’s possible to travel that road alone, the experience and knowledge that a fee-only fiduciary can provide will maximize your savings and peace of mind – always building you a customized plan for your unique situation. Toberman Becker Wealth is a fee-only, independent fiduciary firm based out of St. Louis. Our priority is to help you live comfortably now, without sacrificing your financial future later. Whether starting to invest for retirement in your 50s or actively planning for retirement in your 60s, I help people nearing a transition build a resilient retirement plan. I operate in the best interests of our clients, always, and my top priority is to help you live comfortably now, without sacrificing your financial future later. If you’re looking for an investment advisor to help you build a diversified strategy that hedges against risk, feel free to book a meeting or give us a call.
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Disclosure: Any mention of a particular security and related performance data is not a recommendation to buy or sell. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Nothing on this website should be considered as personalized financial advice or a solicitation to buy or sell any securities.

Craig Toberman, CFA, CPA, CFP®

Craig Toberman is a Partner at Toberman Becker Wealth – a fee-only, fiduciary financial advisor based in St. Louis. He assists families and businesses with strategic financial planning and long-term wealth management. He has over a decade of experience in financial services and has crafted custom financial plans for hundreds of families and businesses.