Jane Tanaka (60) and her husband, Greg Chick (57), retired in 2021 after long careers as a psychiatrist and plumber, respectively, according to CNN News.
Overall, the two did a good job preparing for retirement and, at times, saved close to 40% of their pre-retirement income. But, unfortunately, recent inflation levels have tightened the couple’s purse strings, and they’ve chosen to live on $2,000 less per month than they had initially planned. For them, this means cooking more meals at home, delaying their travel plans, and donating their time to causes rather than donating money.
As another example, we recently met with a surgeon; he and his partner are both high-earners. This year they are really connected to how much they are paying in taxes. Furthermore, they are more committed than ever to start building on the amount of money they are saving overall.
With this top-of-mind for them, they are going to take on managing their burn rate and paying close attention to their financial plan. Being diligent about deploying some of the tax strategies we built out for them and funding more pre-tax accounts to reduce their tax bill will be highly valuable for this couple. They are clear that without fierce discipline and intelligent financial planning they will be working longer than they want to.
And unfortunately, these stories are often the rule, not the exception, as a recent McKinsey study revealed that more than 80% of US pre-retiree households are financially unprepared for a secure retirement.
But you don’t have to enter retirement unprepared and live the one you’ve always envisioned. A straightforward step the wealthy use to get on the right path toward financial security is to hire a financial advisor before retirement.
Here Are 3 Reasons The Wealthy Hire a Financial Advisor Before Retirement.
Hiring the services of a financial advisor is not exclusive to the wealthy. If you emulate their decisions early on, you will have a better chance of living a comfortable retirement life, including hiring financial advisors to work out your retirement plans.
1. A financial advisor can help you get on the right track
One of the primary benefits of hiring a financial professional before retirement is they can help you get on the right track and hold you accountable.
For most advisors, this involves a detailed analysis of your current financial situation that looks at your assets, liabilities, insurance coverage, investment portfolio, and goals. Then, a typical advisor will help you build a plan that can get you from where you are now to where you want to be in the future. For many, retirement is a centerpiece of that financial plan.
Fortunately, by hiring a financial advisor before retirement, you’ll still have time to make necessary adjustments and modifications before leaving the workforce. This is a great way to ensure you can live the retirement you’ve always imagined rather than having to cut back on your retirement plans after your transition.
2. A financial advisor can help you avoid common pitfalls
While some aspects of retirement planning are relatively straightforward, others require individual analysis and detailed expertise to provide the best outcome.
For example, when filing for Social Security benefits, it’s essential to choose the option that will maximize your total lifetime benefit. But, many don’t understand the options or strategies available and simply file for Social Security at the earliest available date. While this option can be right for some, for others, it can mean reducing their lifetime benefit by tens of thousands of dollars or more—a suboptimal outcome.
In addition, while many target a retirement age of 65 and can transition directly from their employer-sponsored health insurance to Medicare, some choose to retire early and have to decide how to bridge the gap until they’re eligible for Medicare benefits. Again, this is another area where a financial advisor can help you understand and explore the various options available for early retirement.
That’s a key benefit of hiring a financial advisor—they are specifically trained in the nuances of retirement planning and can identify critical ways to help you maximize your retirement income while avoiding many common retirement pitfalls.
3. A financial advisor can help you course correct along the way
Lastly, while a financial advisor can help you get on track and avoid common pitfalls before retirement, they can also be critical in helping you course correct along the way during retirement.
Think back to Jane and Greg, who had to reduce their retirement spending by $2,000 per month due to inflation—they could have benefited from the help of a financial advisor. That’s because a good financial advisor will be able to identify these issues before they arise and help you make modest modifications before your retirement plans get out of alignment.
To use an analogy, it can be helpful to think about retirement like flying a plane.
As you’re flying, you may get pushed off course and need to make a correction. If you make the correction early, you’ll only need to make a minor adjustment to get back on track for the remainder of your trip. But, the longer you wait to make an adjustment, the more severe a correction you’ll need to make.
Retirement is no different.
If you can identify course corrections early enough, they may be modest. But, the longer it takes to notice, the more severe the retirement modification you’ll have to make. With a financial advisor by your side, you can feel confident that they are trained to identify and advise you and your spouse when it’s time to make a course correction in retirement.
Tencap Wealth Coaching is here to help
If you want to work with a financial planning professional to ensure a durable and secure retirement, Tencap Wealth Coaching is here to help.
At Tencap Wealth Coaching, we’re dedicated to helping you achieve your financial goals and more through academically sound financial planning. As a trusted financial advisor in Utah, we specialize in investment management, retirement planning, and tax strategies, managing the complexities of your finances so you can relax and enjoy life. Learn more or schedule an introductory meeting below.
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The information contained herein should in no way be construed or interpreted as a solicitation to sell or offer to sell advisory services to any residents of any State other than the State of Utah or where otherwise legally permitted. All content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Nor is it intended to be a projection of current or future performance or indication of future results. Moreover, this material has been derived from sources believed to be reliable but is not guaranteed as to accuracy and completeness and does not purport to be a complete analysis of the materials discussed. Purchases are subject to suitability. This requires a review of an investor’s objective, risk tolerance, and time horizons. Investing always involves risk and possible loss of capital.
Greg Black, CFP®, ChFC®
Greg Black is the owner and founder of Tencap Wealth Coaching, an independent investment advisory firm founded on academic investing principles. As a Certified Financial Planner, Greg takes an educational approach to helping his clients be settled and responsible with their financial circumstances. Greg specializes in helping his clients create a proactive plan to minimize the exposure of market conditions while still harnessing the incredible power of global financial markets.
Greg specializes in "complexity" and is skilled at turning a complicated situation into an organized strategy for the families he serves. Greg, and each advisor of Tencap, is a stated fiduciary. You never have to wonder if your best interest is being served. Greg has been transforming the investor experience since 2012.
