7 Reasons Boomers Should Speak To a Financial Advisor Before Retiring
Written by
Cynthia Measom
Edited by
Molly Sullivan
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If you’re a boomer born between 1946 and 1954 and you haven’t yet retired, one thing to consider is speaking with a financial advisor. “Retirement is a significant milestone that requires careful financial planning,” said Ryan Jacobs, the founder and managing partner of Jacobs Investment Management, LLC,
“For Baby Boomers, who are either on the cusp of retirement or already enjoying their post-work years, the financial landscape is complex and filled with potential pitfalls,” Jacobs said. “Speaking to a financial advisor can provide invaluable guidance in navigating this critical transition.”
Here are specific reasons why boomers should consult with a financial advisor before retiring.
Understanding the 4% Rule
Jacobs said that one of the most commonly cited guidelines for retirement spending is the 4% withdrawal rule.
“This rule suggests that retirees can safely withdraw 4% of their retirement savings annually, adjusting for inflation, without running out of money for at least 30 years,” he explained. “However, the simplicity of this rule belies the complexities of individual financial situations.”
Jacobs added that a financial advisor can help Boomers understand how the 4% rule applies to their unique circumstances by considering factors, such as the following:
- Market Conditions -The rule assumes stable market returns, which may not hold true in volatile economic times.
- Longevity – With people living longer, advisors can adjust the withdrawal rate to ensure funds last throughout a potentially extended retirement.
- Spending Patterns – Advisors can tailor withdrawal strategies to fit changing spending needs over time.
Maximizing Social Security
“Social Security is a vital component of many retirees’ income, but it should not be the sole source of financial support,” said Jacobs. “Relying entirely on Social Security can leave Boomers vulnerable to shortfalls and lifestyle reductions.”
Jacobs explained that a financial advisor can help boomers devise strategies for optimizing Social Security benefits, such as delaying claims to increase monthly payments.
Assessing and Adjusting Investment Strategies
Dennis Shirshikov, head of growth at Summer and professor of finance, economics and accounting at the City University of New York, explained that, as retirement approaches, it’s imperative to review your investment strategies to reduce risk and ensure that your portfolio aligns with your retirement goals.
“Boomers often need to shift from growth-focused investments to more conservative, income-generating assets,” he said. “A financial advisor can help identify appropriate investment vehicles and reallocate assets accordingly.”
Understanding How To Best Fund Your Retirement
Devin Carroll, lead advisor at Carroll Advisory Group, said that in his 21 years as a financial advisor, he’s seen many retirees exit their jobs without knowing exactly how their retirement will be funded.
“They may know they have enough to retire, but they don’t know what accounts to take from first, when to file for Social Security and many other unanswered questions,” he explained. “Without this clarity, these retirees can never have the confidence they need to enjoy a worry-free retirement. This is where a financial advisor who specializes in retirement income planning can help.”
Understanding Tax Implications and Strategies
“Retirement brings different tax implications, and understanding these is crucial for maximizing income,” Shirshikov said. “Financial advisors can offer strategies to minimize tax burdens, such as Roth conversions, strategic withdrawals and utilizing tax-advantaged accounts.”
Finding the Best Healthcare and Long-Term Care Plans
Shirshikov said that healthcare costs can be one of the most significant expenses in retirement, and many Boomers underestimate these costs.
“A financial advisor can help plan for these expenses by discussing options like long-term care insurance and creating a healthcare savings plan,” he added.
Creating or Updating Estate Plans
“Effective estate planning ensures that assets are distributed according to one’s wishes and can help minimize taxes and legal complications for heirs,” explained Shirshikov. “Financial advisors can guide Boomers through the complexities of estate planning, including setting up trusts, wills and beneficiary designations.”
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