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Is Your Retirement Administered by Qualified People?

Posted on June 27th, 2023
Financial Inclusivity

With an insurmountable amount of tools and resources at your fingertips, you could theoretically plan your own retirement. Examples include Money’s asset allocation calculator and retirement planning calculator, as well as the following guides from Due;

But, let’s be honest here. Preparing for your retirement can get complicated. Gone are the days of pension plans. The cost of living is skyrocketing across the country. And, even if you’re in good health today, you have to take into account the high cost of prescription medication and long-term care.

As if that weren’t enough to lose sleep over, you also need to be aware of RMD rules and when to claim Social security. There are also withdrawal rates and investments to consider as well.

If you aren’t familiar with all this, retirement suddenly becomes overwhelming. Even worse? You may end up making retirement mistakes that could cost you millions.

As such, it’s probably in your best interest with a retirement advisor. But, to ensure that you avoid these costly missteps and achieve your retirement goals, you need to work with a qualified retirement advisor.

What is a retirement advisor?

A retirement advisor is someone who can assist you in planning and saving for your financial future. However, they should also be knowledgeable in a variety of areas, such as investing and insurance. They should also have some familiarity with estate planning and long-term care too.

Generally, you can identify these experts by their credentials and titles, such as;

  • Certified Financial Planner
  • Certified Senior Consultant
  • Chartered Financial Analyst
  • Chartered Retirement Plans Specialist or Counselor
  • Personal Financial Specialist
  • Registered Investment Advisor
  • Retirement Income Certified Professional

Each of these professionals has various training and expertise. They also provide different services. To give you peace of mind though, in order to earn these distinctions they must have enrolled in specialized education and passed an exam.

What do retirement advisors do?

Depending on their specific certification, this will vary among retirement advisors. In most cases, however, they should be able to help you with the following;

  • Help you create a retirement savings goal and the steps you must take to achieve that.
  • Identify any gaps in your retirement savings plan.
  • Which types of retirement accounts to open and how to maximize them.
  • Which accounts to take withdrawals from each year in order to avoid fees and minimize taxes in retirement.
  • Devise a strategy for eliminating your debt.
  • Discuss a plan for medical and healthcare expenses.
  • How to start and diversify an investment portfolio.
  • Whether you should keep life insurance or not.
  • When you should claim Social Security benefits.
  • Inform you about ways to supplement your retirement income, such as through annuities.
  • If you’re self-employed, they can help you pick the right plan and catch up on your retirement.

This is by no means an extensive list. It’s only to give you an idea of how a financial advisor can help you secure your financial future. Just note that they will not make recommendations until they get to know you and understand factors like your goals, time horizon, and investment knowledge.

When do I hire a retirement advisor?

You won’t like this answer. But, it depends. Some experts recommend that you hire a retirement advisor when you’re 10 years away from retirement. Others state that you can actually wait until you’re five years out. And, some even suggest that you don’t have to do this until you’re nearing a decision regarding Social Security or pension elections.

At the same time, it wouldn’t hurt to do this sooner than later. Working with a retirement advisor gives you more time to strategize, plan, and save. They can also protect your savings and investments from market volatility so that you’re no longer sweating your retirement.

What should I expect when meeting with a financial advisor?

“The first thing you should expect when you sit down with a retirement advisor is a detailed look at your complete financial picture,” writes Adam Hayes for Investopedia. They will most likely ask you questions like;

  • What are your assets?
  • Do you have investments, real estate, pending inheritances, or other resources of value?
  • What are your debts? Do you have a mortgage, car payments, credit cards, student loans, small business liabilities, or other loans?
  • How do you service your debt while still saving for retirement?
  • What are your retirement plans?
  • Do you want to retire early or keep working for as long as you can?
  • How much will you collect from Social Security each month, and when is the best time to start collecting benefits?
  • Are you adequately covered by insurance?

“Once your retirement advisor collects all of your information, a report will usually be drafted providing you with detailed financial information about your retirement,” adds Hayes. “This report will include how much money you will be able to withdraw from the account each month and how much you will need to save on a monthly basis to reach that goal.”

Taxes, Portfolios, and Fees — Oh My!

“Your retirement advisor should also take you through the various tax considerations of your financial picture,” he says. “If you have a traditional IRA, should you consider making it a Roth? How can you minimize the taxes you will pay on your other assets? How about your estate? If you end up with a lot of assets, how will you minimize your estate taxes?”

What if the advisor is an experienced portfolio manager? They may be able to “set up a portfolio that fits your goals,” states Hayes. “If your advisor isn’t able to do that, they may recommend someone who can.”

Also, you will be expected to pay your retirement advisor. Each charge differently. Some charge an hourly rate, while others a flat fee.

Additionally, you may be charged a quarterly or annual retainer fee or a percentage of assets that they manage on your behalf. And, some may earn a commission from financial or insurance products you purchase.

How do I find a retirement advisor?

The easiest way to find a retirement advisor would be through referrals. If that river is dry, you start by searching for special certifications, such as certified financial planner (CFP) or the American College’s retirement income certified professional (RICP) designation. You can also check out RIIA, the Retirement Income Industry Association.

Furthermore, your bank or investment firms also have retirement advisors on-hand — either in-house or hired independently. Just be aware that they may push products, such as their bank’s mutual funds.

When you do narrow down your candidates, make sure that you consider;

  • Their background and certification(s).
  • The services that they offer.
  • How you’ll be charged.
  • Whether or not they are fiduciary.
  • The characteristics that they possess, such as integrity, availability, and understanding.
  • Their investment strategy.

Final words of advice.

Even after you find a qualified professional to assist you with your retirement plan, make sure that you keep the lines of communication open. Just like visiting your dentist, you should meet with your retirement advisor twice a year to assess your progress and make adjustments as needed. For example, your needs and goals are vastly different when you’re 35 to when you reach 55.

Albert Costill

Albert Costill

Albert Costill graduated from Rowan University with a History degree. He has been a senior finance writer for Due since 2015. His financial advice has been featured in Money Magazine, Fool, The Street, Forbes, CNBC and MarketWatch. He loves to give personal finance advice to millennials.

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