As you get closer to retirement, it becomes increasingly important to have in-depth conversations with your financial planner about the years ahead. Not only should you talk about different financial scenarios, but you should also speak honestly about your retirement goals and any concerns that may be on your mind.
Open the conversation with your personal financial advisor about retirement by asking the questions below. Start with a few big picture questions, then move onto more details about your goals, cash flow, taxes, and more.
If you’re wondering what questions to ask your financial advisor about retirement, here are three that come up most frequently. They’re a great starting point for what should eventually become a more granular conversation — which we’ll talk about next.
This is a very broad question that most people use to kick off their retirement planning conversation with their financial planner. You can use this as a jumping-off point, but the answer depends on a number of variables. Your financial planner can’t simply crunch some numbers and give you a retirement date.
That’s impossible because as an individual, you have unique dreams and goals. You can certainly expect to walk through your current investments and other assets with your financial planner to get a sense of a retirement timeline. But what you want to do when that day comes is just as important as how you’ll pay for it.
Expect to have a more in-depth conversation with your financial planner to craft a plan that gives you fulfillment when the time for retirement arrives. We’ve got some more questions on the way that can help guide this conversation in a fruitful direction.
This is another question that quickly opens the door to a greater conversation. After all, what kind of lifestyle are you saving for? What other income do you have access to beyond your own investments?
There’s no set number for net worth that makes sense for everyone. Your financial planner helps evaluate your assets, debts, and lifestyle goals to craft a retirement savings goal. Your retirement portfolio should be completely tailored to meet your needs and level of comfort, particularly as you get closer to retirement age.
Life is always full of uncertainties, from how well your health will fare to how long you can expect to live (and need those retirement savings to last). Your D&Y financial planning team, for instance, walks you through potential scenarios to make sure you’re able to handle different risks as they arise. By accounting for factors that you both can and cannot control in life, you’ll have better flexibility to plan through surprises that pop up along the way.
This question is on the minds of many individuals as we experience unprecedented uncertainty in both the economy and our daily lives due to the COVID-19 pandemic. No matter what’s happening in the current economy as you approach your retirement, it’s always smart to discuss a contingency plan with your financial planner.
As you discuss these concerns with your financial planning team, the outcome should always be a financial plan based on conservative assumptions. Your financial planner should also help you create a withdrawal plan that applies to multiple scenarios, both good and bad. Be wary of anyone who overpromises stock returns or timing the market. No financial professional can predict the future.
In addition to preparing for a potential recession in the future, a reputable financial advisor also helps you explore options in the midst of a downturn. You may consider tactics like using accumulating and accessing excess cash, claiming Social Security early, or using tax loss harvesting strategies. Responses such as these may illustrate that your financial planner has experience with and incorporates recession strategies as part of their retirement planning process.
In addition to the big picture questions we’ve discussed, don’t be afraid to get into the weeds with your financial planner. These are the questions you should be asking to make sure you’re not only on track for retirement, but on track for a life that gives you meaning.
Retirement goals should be associated with financial metrics, but it’s important to think about the reasons behind them. Transitioning from a career into the retirement stage of life is an emotional process as well as a financial one. Think about your retirement goals in two ways: what do you want to do more, but also what do you want to do less?
If you’re a business owner, for example, you may talk to your financial planning team about winding down the business or narrowing your focus to a niche that you’re most passionate about. Having this conversation early on can help you prepare mentally for a shift in both lifestyle and finances. You can still do meaningful work in retirement while also placing a greater focus on recreational activities or travel. Your financial advisor can help you think outside the box about your retirement goals before you focus on how to start a retirement plan to help you get there financially.
Once you have greater clarity around your retirement lifestyle goals, it’s time to figure out a plan to get there. Your financial planner can help you shift your thinking from “when” to “how.” At Dowling & Yahnke Wealth Advisors, each client has a dedicated financial planning team that consists of both a Financial Planner and a Lead Advisor. Together, your team provides an in-depth analysis of your current financial situation which helps reveal how your progress towards reaching your financial goals and what changes you may make to steer closer towards your desired retirement.
If you do have changes to make, your financial planner can help you develop a plan that is broken down into manageable goals. This is especially important as you get closer to retirement age because you have less time to prepare. With a strong focus on specific short-term goals, you’ll be better positioned to meet your longer-term goals that you’ve discussed with your financial planner.
Asking your financial planner this question lets you address two retirement issues: funding and spending. It’s important to create a financial plan for both issues, especially as you shift from the accumulation stage to the withdrawal stage of your finances.
Before you look at the source of your retirement income, discuss what you plan to spend. Think about your current spending habits and how your spending in retirement may differ, if at all. Do you wish to stay in your current home or move to a different location? Do you want to buy a second property? Do you want to travel more? Will you be financially supporting your children less (or more) in the future? A financial planner walks you through these sorts of considerations and how they can impact your retirement goals.
It’s also important to account for future expenses that are less exciting to think about. Future medical expenses and long-term care needs, for instance, may not be at the forefront of your mind when you’re in your 50s or 60s. But it’s important to plan for potentially major expenses somewhere down the road. Tapping into the expertise of an entire financial planning team gives you insight into possible scenarios and costs that are otherwise difficult to project but are critical to informing a well thought out retirement plan.
This question lets you get into the details of what your cash flow will actually look like in retirement. You’ll no longer rely on a steady paycheck or bonuses. Instead, you’ll likely have multiple income streams, some of which may fluctuate based on market performance. Your financial planner can help identify and estimate your retirement income based on multiple scenarios for things like interest, dividends, capital gains and any other retirement income, such as a pension.
You can also discuss when to begin receiving Social Security benefits, since the amount you receive can vary based on the age you start taking withdrawals.
When you reach retirement age, you’ll likely have accumulated accounts with various tax treatments. Your traditional IRA withdrawals would be subject to income tax, while withdrawals from a taxable investment account could be subject to either short-term or long-term capital gains and withdrawals from Roth IRAs would be tax-free.
Bringing up this issue before you reach retirement age allows your financial planning team to facilitate distribution strategies from your various accounts to fund your cash flow needs in a tax-efficient manner.
Working with an experienced financial planner helps to ensure that you’re making the best possible plans in the years leading up to retirement. But it’s still valuable to come to the table with your own questions to make sure you have a concrete understanding of what you want to get out of retirement and how your finances can help you achieve those goals.
If you’re still wondering, “How do I find a financial advisor for retirement?” you’re not alone. Get the conversation started by contacting Dowling & Yahnke Wealth Advisors so you can feel confident about your upcoming retirement plans.