Retirement plans offer specialized advice on money distribution.
What advice can a planner provide?
A retirement planner should be able to advise you on when to take Social Security benefits in a way that is most beneficial for you. They can inform you about the appropriate retirement distribution options. They can provide guidance on whether a retirement annuity is a suitable investment. The planner should know which accounts you should withdraw funds from annually and in what amounts. This can help reduce the tax amounts you will pay.
The planner can inform you about how much retirement income you can reasonably expect. They will know the appropriate withdrawal rate when you take funds from a traditional portfolio. How much of your money should be in guaranteed investments?
What type of taxable income will your investments generate? The planner can guide you on how to arrange them to minimize taxable income. They can tell you whether you should leave your money in your company plan or roll it into an individual retirement account.
Other considerations should also be included: a good planner can tell you whether you should pay off your mortgage before retirement or during it. They can provide advice on whether a reverse mortgage might be a good option for you. They will inform you if you should get long-term health care insurance and whether you should keep your life insurance policy.
A good retirement planner will not give recommendations until they know your expected time horizon, your level of expertise in your investments, your goals, and your risk tolerance. They also want to understand your needs for guaranteed income. They would like to get a comprehensive picture of all your current resources, such as assets, liabilities, and sources of current and future income.
A good retirement planner will want to know all your investments to ensure that your portfolio makes sense as a whole. This can help them adjust to generate the best retirement income.
How much do retirement planner fees cost?
The fee structure of a retirement planner can vary in some ways. They may charge an hourly rate or a flat fee for running an income plan or cash flow projections. Some planners charge quarterly or annual fees and commission schedules. Alternatively, they may charge a percentage of the assets they manage on your behalf. They may require commissions to be paid to them from financial or insurance products you purchase through them. Or, they might have a structure that includes a mix of fees and commissions.
Note: Always ask for a clear explanation of how the planner you are considering hiring will be compensated.
What about traditional planning or advising?
Retirement planning falls under the broader definition of financial planning as an area of expertise. However, it requires deeper knowledge.
Investment advising is about how to invest your money. Those who offer this type of advice may not provide much in terms of planning. Many retirement planners may provide this type of advice along with a broader range of financial planning services. However, this does not always apply in the reverse direction.
How do I find a good retirement planner?
Look for someone with experience in tax planning, Social Security, and retirement withdrawals. They should be able to outline a timeline and a plan that tells you how to withdraw funds in a tax-efficient manner. A good planner should be able to advise on using guaranteed income products that can create security.
You can check with the Investments & Wealth Institute under the designation RMA, or Retirement Management Advisor. You can try to find someone with an RMA license if you want someone specialized in retirement planning. They are dispersed throughout the country.
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Sources:
Investments & Wealth Institute. “RMA Certification Curriculum Overview.”
National Association of Personal Financial Advisors. “What Is Fee-Only Financial Planning?”
Investments & Wealth Institute. “RMA Certification.”
Source: https://www.thebalancemoney.com/what-will-a-good-retirement-planner-do-for-me-2388434
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