Are You Working with a Retirement Specialist?

Many financial planners are great at managing investments but fall far short on other critical areas of retirement planning. Is your planner equipped to go the distance?

(Image credit: baona)

Have you ever had the nagging feeling that there’s a lot more to retirement planning than what your financial professional is providing?

Maybe you heard someone on the radio or saw a Sunday morning TV show about retirement advice. Or, perhaps you attended a free retirement seminar at a local restaurant or read an article online. And now there’s this worrisome question pinging around in your brain: Why hasn’t my adviser been talking to me about any of this stuff?

Concerns might include maximizing Social Security, choosing the right Medicare plan, what to do if you get sick or what your family will go through when you die. And, most significantly, making sure your money lasts at least as long as you do.

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If your financial professional hasn’t touched on these and other relevant topics, the answer is simple: You probably aren’t working with someone who’s a retirement specialist. And though your adviser may have done a great job of getting you to retirement, you’re going to need a different kind of help to get you through retirement.

The Retirement Planning Bases You Need to Cover

If you’re in or nearing retirement, you should be seeking advice regarding:

  • Transitioning your investments. Yes, you’re still going to require investment help. No shocker there. But in retirement, remember, instead of putting money into your accounts, you’re going to be taking it out. If you don’t adjust your investing style to better protect your nest egg — and shift from accumulation to preservation — one bad year in the market could mean a devastating loss that will affect the rest of your retirement years. If you’re five to 10 years from retiring, your adviser should be reassessing your risk tolerance and reducing your vulnerability to market volatility.
  • Creating a written income plan. You’re going to have to generate your own paycheck in retirement, and that means putting together a stable income that lasts as long as you do and grows throughout time. That’s a very different goal than going for all-out growth, and it can take a different set of tools. You may find that along with Social Security and a pension, insurance products are required to get the predictable income you need. A retirement adviser who is a fiduciary can help you compare those strategies and products in an objective manner.
  • Working on tax efficiency. Taxes can be one of the biggest threats to your nest egg — especially if you’ve done a good job of saving in a tax-deferred account (a 401(k), IRA, 403(b), etc.). You have a future financial obligation that may have a dramatic impact on your post-retirement planning. Don’t confuse tax preparation (which is all about reducing your tax costs in the current year) with tax planning (which can help you hold onto your hard-earned money year after year). Your adviser should be knowledgeable about tax rates, tax brackets, taxes on Social Security, how to take the required minimum distribution (RMDs), and much more.
  • Preparing for health care costs and the possibility you’ll need long-term care. When you retire, you’ll likely lose the health benefits offered by your employer. If you retire before you turn 65, you’ll need to figure out coverage until you qualify for Medicare. When you’re eligible for Medicare, you’ll need help again, assessing how various plans can best meet your needs. Your retirement adviser also should be well-versed in long-term care coverage options, including annuities and insurance policies with long-term care riders, which can help pay expenses that aren’t covered by Medicare.
  • Protecting your legacy. Most people want their assets to be distributed to their loved ones quickly, easily and privately after they’re gone. They would prefer to leave as little to the IRS as possible. Your retirement adviser should be informed about the pros and cons of wills, trusts and other strategies that affect your estate and beneficiaries.

Is Your Financial Professional Up to the Task?

How can you tell if the person who’s handling your finances is a retirement specialist? It isn’t always easy. If you ask an adviser if he or she can work with you on the issues listed above, you’ll likely hear, “Of course I can.”

With that in mind, here are questions that could help determine the person’s skill level:

  • Can you show me a copy of a written retirement income plan? (If the example provided is limited to taking money from investment accounts year by year, you probably aren’t working with a retirement adviser.)
  • Do you use both managed accounts and annuities when helping your clients, and if so to what degree? (If the adviser says, “No, I never use annuities,” you’ll know he or she is not a retirement adviser. Like ’em or hate ’em, nothing generates income as well as an annuity. They aren’t for everyone, but they are right for many retirees.)
  • Can you share with me some IRA exit strategies? (If your adviser’s experience with “bracket management” is limited to NCAA tournament predictions, you may find yourself with a ticking tax time bomb in retirement. A retirement specialist should be able to offer strategies to help control your income and income taxes.)
  • How often will we meet specifically for tax planning? (If you’re told, “we have a list of CPAs we recommend,” you may want to consider looking elsewhere. Tax planning should be an annual event led by your adviser.)
  • How will you protect my family against long-term care costs? (Again, if the answer is to send you to someone outside the office who “specializes in that area,” you may not be getting the comprehensive planning you need.)

The biggest red flag, of course, will be that you had to ask about retirement planning strategies in the first place. If you’re working with a true specialist, you won’t have to bring up these issues; the adviser will discuss them early and often in the overall planning process.

So maybe the most important question is this one:

Your retirement is likely to be 20 to 30 years or more of unemployment. Do you want to go on worrying about whether you’re getting all the advice you need?

Kim Franke-Folstad contributed to this article.


This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Michael Reese, CFP®
Founder and Principal, Centennial Advisors LLC

Michael Reese, CFP, CLU, ChFC, CTS is the founder and principal of Centennial Advisors LLC, with offices in Austin, Texas, and Traverse City, Mich. Michael's vision is to help American retirees "re-think" how they manage their financial portfolios during their retirement years. His focus is to help retirees enjoy financial security in any economy, something that he believes is sorely lacking in today's financial world.