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Retirement planning is the process of determining retirement-related financial goals and creating a plan for achieving them. This planning typically includes assessing income sources, identifying current and expected expenses, implementing an updated savings plan, and more.
A retirement financial advisor is, simply, a financial advisor who specializes in retirement. These advisors are experts in retirement planning. They develop individual strategies to help clients maximize their benefits both before and during retirement. Their main goal is long-term income protection.
Retirement financial advisors provide:
By tapping into the expertise of a financial advisor, future retirees can ensure they're going to receive all the benefits they're entitled to. It also prevents them from having to plan for retirement all on their own or with someone less experienced.
Without the guidance and expertise of a professional, future retirees are at risk of not receiving all of the benefits they're entitled to. For instance, they might pay more in taxes than they would otherwise need to. They could also end up collecting less income or accumulating less in savings than they should due to inefficient strategizing. Additionally, they miss out on certain types of valuable advice, such as family and beneficiary planning. Wealthy individuals and couples could risk exposing their substantial assets to unnecessary risk without the income-protection guidance of a professional.
Q: Where will my retirement income come from?
A: Retirement income generally does not come from a single source; rather, there are several cash flows involved. Retirement income sources may include a pension, Social Security benefits, a systematic withdrawal program, laddered bonds, an inheritance, and more.
Q: When do retirement plans need to be set up?
A: If your company sponsors a retirement plan and you intend to remain employed for an extended period of time, you should set up your retirement plan sooner rather than later. If your current employer does not sponsor a retirement plan, you have the option of implementing a safe harbor 401(k) plan. The deadline for the safe harbor option is October 1st, ninety days prior to the end of the year.
Q: When should I retire?
A: A retirement financial advisor is the best person to help you answer this question, as there are a number of factors involved. The average age of retirement in the United States is currently 65 to 66 years old; this is the age individuals are able to receive full Social Security retirement benefits. A person may retire before age 65 or later than 66 depending on their financial standing and personal goals.
Q: Should I use a Traditional or Roth IRA for my retirement account?
A: The answer depends in part on your individual financial situation. A Roth IRA or 401(k) is more ideal for those who expect to generate more income after they retire than they are currently earning. For those who expect their income to drop after retirement, however, a traditional retirement account is likely the wiser option. Traditional accounts typically require lower contributions prior to retirement, meaning you do not have to invest as much of your current income in them, allowing more cash to be available after you retire.
Q: How do I determine my long-term financial goals?
A: Determining your long-term financial goals begins with figuring out your short-term and mid-range financial goals. You can begin your financial assessment yourself — such as by creating a spreadsheet of money earned versus money spent — to gain greater insight into your current fiscal circumstances. Beyond these initial steps, however, it's best to meet with a retirement financial advisor and lean on their expertise. They will be able to review your options with you and provide a comprehensive approach to effective long-term goal setting. This assistance is invaluable, as it will allow you to maximize your earnings both before and after retirement for the benefit of yourself and your family.