5 Things Your Financial Planner Isn't Telling You About Retirement

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5 Things Your Financial Planner Isn't Telling You About Retirement

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Personal finances can get complicated fast, which is why many people seek the assistance of a financial adviser. Especially when considering your retirement, it can give you extra confidence to know that a professional is helping ensure you make the best decisions for your future.

See Also on Kiplinger: Read Insights From Financial Pros in Kiplinger’s Wealth Creation Channel

It may therefore come as a surprise to know that historically, financial advisers haven't been required to put your best interests first. But in April 2016, the Labor Department finalized a new rule that requires financial advisers who deal with retirement accounts to respect what's known as the fiduciary standard, meaning they have to put the client's interests first.

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Before, financial advisers just had to follow the suitability standard, which meant they were only required by law to provide clients a "suitable" plan, which might satisfy your basic requirements but isn't necessarily the best plan for you.

When they're doing their job well, a financial adviser can help you invest your money wisely and plan for retirement. But it's always important to do your own research and stay informed. When it comes to retirement, here are some things your financial planner may not have brought to the table.


1. Fees May Grow With Your Assets

Financial advisers often charge based on a percentage of the assets they are managing for you. Unfortunately, the fees compound over time, just as your returns do. By the time you're ready to retire, that could mean you're paying thousands of dollars a year in fees.

As your nest egg grows, keep an eye on your fees and renegotiate your rates, so you don't end up paying too much for their services.

2. Retiring Abroad Can Halve Living Costs

If you're feeling tight on funds for retirement and you're not sure how to make your money go further, there's an important alternative that you should be considering. Retiring abroad can cut your retirement costs in half. (See also on WiseBread.com: 4 Exciting World Cities You Can Afford to Retire In)

However, many U.S.-based financial advisers are entirely focused on domestic retirement and that's what they'll help you plan for. Plus, it may be in their interest to keep you close so you don't decide to move your funds elsewhere.


If retiring abroad is something you want to truly consider, seek an expert who brings that specialty expertise to the table. You should also do your own research, including finding online forums for expatriates to answer your questions about retiring abroad. (See also on WiseBread.com: 5 Incredible Places to Retire)

3. Travel and Retirement Go Hand in Hand

If you've written off the idea of traveling as being too expensive, and these views are being reaffirmed by a conservative financial planner, it's time to re-evaluate. Retirement affords you great flexibility and the price of travel may be within closer reach than you realize.

Costs in many countries are often much lower than at home, and if you plan carefully — especially if you're able to start socking away money early in your career — your monthly budget may be able to absorb the extra expense of plane tickets, accommodations abroad, food, and entertainment. Rewards credit cards can help you earn free travel, too.

See Also on Kiplinger: Best Rewards Credit Cards for Your Wallet

4. An HSA Could Lower Your Health Care Costs

If you have a high-deductible health insurance plan, you may be eligible for a Health Savings Account. As with an IRA, HSA contributions are tax-free and they grow tax-free. You can leave money in the account for years and if you withdraw the funds to pay for qualified health care costs, you will still not pay taxes on the money. If you have a balance at age 65 and want to use it for nonmedical expenses, you can, but the withdrawals will be taxable.

Keep in mind that only people enrolled in qualifying high-deductible health care plans are eligible. But if you're one of them, an HSA could be an important part in reducing your health expenses during retirement.

5. You May Be Able to Ditch Your Life Insurance

Having a life insurance policy is useful if someone else will be financially hurt when you die. However, depending on your particular situation, you may no longer have dependents after you retire. Or you may have investments and pensions that pay 100% to the surviving spouse. In that case, your spouse won't suffer financially from your death and you probably don't need life insurance.


See Also on Kiplinger: Guide to Buying Life Insurance at Every Stage of Life

There are a lot of variables to consider when planning for retirement, and a financial planner can clarify your options. But while a financial planner can be a helpful resource, they aren't the ultimate authority on what's best for you. Stay informed and choose what's best for you and your family.

This article is from Nick Wharton of Wise Bread, an award-winning personal finance and credit card comparison website.

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This article is from Wise Bread, not the Kiplinger editorial staff.