8 Ways a Financial Advisor Can Help You With Retirement Planning
Retirement planning can take years and years of effort and strategy to be successful. Usually, people begin saving for retirement from their first paycheck. This can account to roughly 35- 40 years of your life. Despite having saved for so long, a majority of retirees end up with inadequate savings. This often leads to frustration, forced frugality, and constant stress. Having a financial advisor can eliminate the chances of all of these things in retirement. Financial advisors are equipped to offer you the best suggestions and recommendations that can help you to enjoy a comfortable retirement.
Here are 8 ways in which a financial advisor can help you with retirement planning:
- Help with budgeting
- Make sound financial investment decisions
- Provide strategy for tax savings
- Recommend ways to combat Inflation
- Help fight market volatility
- Help devise sound retirement withdrawal plans
- Help create wealth
- Provide you with peace of mind
Retirement planning is a combination of various strategies and one of them is budgeting. Saving adequately and spending up to a strict limit ensures that you are able to allocate a major portion of your earning towards your retirement fund. While most people struggle with sticking to their budget because of devising unattainable and unrealistic plans, financial advisors bring an element of practicality to this activity. They can help you arrive at a figure that can sustain your current needs and at the same time secure your future.
Retirement is not just about saving in a pension plan. A number of investments, such as stocks, bonds, equities, etc. together make up your retirement fund. Investment is a great way to grow your financial worth over the years and achieve your short-term and long-term goals without having to depend on loans. However, as lucrative as this option sounds, investments are also complicated and tricky to follow. Finding the right instruments and investing at the right time is crucial to see your money grow. Since you may not always have a sound understanding of what is suitable for your profile and risk appetite, a financial advisor can make these judgments based on their years of experience and expertise in the field.
Income tax, property tax, capital gains tax, estate tax, etc. are some types of taxes that you are likely to encounter on your way to retirement. All of these taxes, although legally mandatory in a number of cases and situations, can be reduced or even avoided. A financial advisor can help you come up with a plan to minimize your tax liabilities by staying within the realms of legality. Right from suggesting a suitable state to settle in post-retirement to planning your returns in a manner that does not increase your yearly income, a financial advisor can be instrumental in this regard.
While saving and investing make for a smart way to plan for retirement, they may not always be enough to combat the ill effects of inflation. It is important for your savings to grow faster than the rate of inflation in order for you to earn remarkable gains. Most times, people assume that they have earned a profit, but when combined with the rise in the general prices of goods and services, the profit seems negligible. A financial advisor can ascertain whether or not your portfolio shows a growth that is high enough to counter inflation. If not, they can recommend buying or selling some investments in order to make better profits.
Market forces may be beyond your control and understanding, but they can impact you in more ways than one. A volatile phase can overthrow your portfolio, causing you considerable losses. It is hard for most people to keep track of the cycles of the market. This could be due to a lack of time, knowledge, or even interest. However, financial advisors track the market for a living and are therefore able to find the right gaps when buying or selling can be advantageous. They can also suggest when your portfolio needs to be rebalanced for the best possible gain.
Every retirement account comes with a set of fixed rules and regulations. Not abiding by these rules can result in heavy penalties. Therefore, it becomes crucial to have a withdrawal plan in mind. Required minimum distributions (RMDs), withdrawing or postponing Social Security benefits, using a Health Savings Account (HSA) for qualified expenses only, are some areas where many retirees falter. A financial advisor can help you devise a competent plan to withdraw your savings while maximizing returns.
The one thing that is more important than saving is to create wealth. This can be done with timely investments, purchasing life and health insurance, creating assets that rise in value, and keeping a check on your expenditure. It may be straightforward to save money but creating wealth is a different genre of financial planning altogether. It requires careful assessment, evaluation, verification, and revision of your financial plan from time to time. It is also a more hands-on job that requires the professional expertise of a financial advisor. Creating wealth can help ensure that you have a luxurious and comfortable retirement.
Lastly, having a financial advisor as your companion on the road to retirement offers you the surety that you are headed in the right direction. Retirement planning can sometimes seem confusing and intimidating. This is also one of the reasons why people give up midway and reach their golden years with insufficient funds. A financial advisor can offer you sound advice and timely assessments to make sure that you do not make any mistakes.
To sum it up
A Financial Advisors not only helps you plan for retirement but can also ensure that you reach there with the financial means to enjoy it, without having to make too many compromises. Make sure that you hire an advisor that you can openly communicate with and do be honest about your financial goals.