By David Rae
July 22, 2019
Knowing the answers to these key four big retirement questions are imperative to boost your chances of a secure financial future. Finding the right answer for your personal financial needs can be confusing, stressful, and complicated. If you are feeling any of these emotions along the retirement planning path, you could likely benefit from getting some professional guidance when answering these four big retirement planning questions.
You’ve been working for years, and you are in countdown mode to Financial Freedom, the day you no longer have to get up early in the morning and trudge to the office uphill in the snow barefoot. Just kidding, sort of. As you face the prospect of the next phase of your life, there are a series of major financial decisions that when answered correctly can mean the difference between a secure and comfortable retirement, or one where a lot of “Hello Welcome Walmart” will disrupt your time doing more enjoyable things like travel or time with the grandkids.
Even if you have been managing your own finances well for decades, you may benefit from another set of eyes helping you clear out the emotional baggage, and making wise financial decisions for your future. For those who are better prepared (or lucky enough to have generous benefits like a pension), this may just be a great way to have more peace of mind and make sure you aren’t missing anything. For others, this may mean some major changes and tough decisions. Better to make them now, rather than later when it’s too late to correct course.
A Fiduciary Certified Financial Planner™ can also be a good resource to have in the case of couples where one spouse handles most of the financial decisions. If something happens to this spouse, the survivor can be left in a precarious position if forced to all of a sudden, be fully responsible for managing their finances. I worked with a widow a few years ago who hadn’t paid a bill or written a check ever and really had no idea about any of their financial other than they owned their lovely home.
Here are Four Common Areas a Financial Advisor Can Help Your Transition into a Happy Retirement:
How Should I Take My Pension?
Is sounds pretty simple, check the box with the biggest retirement income payment right? If you are married, you may think to just pick the joint-lifetime income option. Right? You may also have to contend with the big decision of whether to take the pension lump sum or choose pension lifetime annuity payments? None of these questions have one correct answer. Likewise, the option your best friend happened to choose may not be right for you. The variables are countless on this topic, and a trusted financial planner can help you find the right choice for you and your family.
How Should I Take Income From My Retirement Accounts?
Most people have focused on saving as much as possible for retirement while hoping this money grows over time. In retirement, you will need to have a strategy to take withdrawals from your accounts, which allows this money to last two or three decades. You also want to make sure you are taking the money in a way where you will pay the least amount of taxes possible, which luckily can help make it easier for the money to last throughout your retirement.
This may include which retirement accounts to take money from, and when. Most likely, as time goes on, you will want to adjust your investment asset allocation to reflect your current income needs and overall financial situation. Moreover, as expected, this will surely include how much you should be taking out of the accounts. I told you fun, fun, fun.
When Should I File For Social Security?
There is no financial aid for retirement, and for the most part, there aren’t any do-overs. For single folks, the cost-benefit analysis of Social Security Benefits is pretty straight forward. The longer you wait, the more you get per month. This doesn’t necessarily mean that you should wait till age 70 to start receiving your Social Security benefits. Likewise, it would be best if you didn’t wait until the last minute to decide when you will be taking Social Security.
For couples, these decisions are much more convoluted. Depending on your health, your spouse’s health, the difference in benefit amounts, waiting will be even more beneficial for some couple. For other couples not so much. The point is, you want to make sure you’ve run the numbers and figured out which strategy will work the best for you. Most people find it helpful to have a professional guide them through this process. Ultimately the goal is to find the best Social Security claiming strategy to get the most benefits over your joint lifetimes.
Should I Create A Personal Pension with Guaranteed Retirement Income?
Fewer and fewer people are entering retirement with pensions these days. That being said, it is becoming more and more common for people to try and create their own pensions, with some type of lifetime guaranteed income. This has the benefits of a locked-in stream of income for the rest of your life; on the other hand, it does tie up some of your money. A financial plan can help you figure out how much to put into a plan like this, as well as how to structure it. Single Life, Joint Life are two common options.
What areas do you think you will need to most help with to feel secure as you transition from working full time to retirement? Achieving financial freedom to retire is great, but making smart money moves doesn’t end there. You will need to make sure you have a plan in place to make your money last.
This article was written by David Rae from Forbes and was legally licensed by AdvisorStream through the NewsCred publisher network.